Dairy Crest, Britain’s biggest cheese maker, moved yesterday to reduce its exposure to the rising euro and to cut the risks attached to its pension scheme.

The company, whose brands include Cathedral City cheddar and Yoplait yoghurt, said it had converted some €200 million of debt into sterling-denominated debt — leaving it less exposed to further rises in the euro.

Dairy Crest, which is using former Sex Pistol John Lydon to promote its Country Life butter, said it now had just €170million worth of debt denominated in the single currency.

Alastair Murray, group finance director, said the company’s debts were now in line with the nature of its operating profits, just 25 per cent of which come from the euro-zone, specifically France and the Irish Republic.

Meanwhile, the company’s group pension fund has bought a £150million bulk annuity policy with Legal & General, covering around half of the fund’s £658million liabilities for future pension payments.

Mr Murray said the purchase would protect both the fund and Dairy Crest, in particular, from the risk of members living longer than expected. He said both Dairy Crest and the pension fund’s trustees would explore further similar arrangements in the future.

He added: “Reducing risk, and more specifically exposure to financial markets, is a priority for the group given current levels of volatility. The two initiatives being announced today are an important step in achieving this aim.”

Shares of Dairy Crest, which has announmced plans to cut up to 315 jobs during the last two months, fell 3.25p to 189.75p on the news.

Nicola Mallard, of broker Investec, said: “Whilst there is no guarantee that the group will not be required to put more cash into the pension fund in future — its current extra payments cease after March 2009 — this should help reduce the amount.”

She said that, while it was not an ideal time to be converting euro debt back into sterling, it would insulate Dairy Crest should sterling deteriorate further.

Ms Mallard said the fall in sterling against the euro had already added an estimated £25million to the group’s debt.

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