Crediton Dairy has reported a significant fall in profits for the financial year ending 3 January. The manufacturer of the Arctic Coffee and Pro Mlk brands has reported a decline in annual profit from £10.4m to £7m. The company attributes this to a generally challenging market environment in the European dairy industry. Although markets weakened, milk prices did not fall until late in the year, which weighed on profitability. At the same time, the previously high cream prices fell as supply exceeded demand. Despite the fall in profits, the company increased its turnover by £6.3m to £137.6m. This was achieved through an improved product mix strategy in the retail sector, as well as higher volumes of bulk milk and cream. Net assets rose by £3.8m to £58m.