Operating profit before exceptional items was £11.7M for the firm, up from £6M in the previous year, while net profit was £6M compared with a loss of £5.1M last year. Sales for the company dropped 30% to £206.5M compared with last year.
Chairman Clive Sharpe said the results reflected a transformation of First Milk, which created a more focused business. The changes led the firm to specialise in hard cheese and liquid milk contracts.
“The transformation of our business is complete and, as a result, First Milk today is now a more focused and financially secure business,” he said.
More focused and financially secure business
“This is demonstrated through these significantly improved financial results and, most importantly, through our ability to increase milk prices to our farmer members ahead of the market during the last financial year.”
Operational highlights listed by the company included a new long-term contract for fresh milk supply to Nestlé UK and Ireland and a deal to supply Tesco and Ornua Foods with cheese. The past year also saw First Milk dispose of its loss making CNP sports nutrition business.
Shelagh Hancock, First Milk chief executive, added: “It is clear that, following the transformation process that was completed before I joined [March 2016], we have a focused and financially stable foundation to build from.
“We will put customers at the heart of our business, creating value through strong, long-term partnerships and exploit the advantages we have to grow the business. The combination of these efforts is to deliver competitive total returns to our members.”
Cut 30 jobs
Last month, First Milk revealed it was to cut 30 jobs across two sites in the Lake District and Wales, as part of plans to increase efficiency at its factories.
Hancock said the changes were part of the company’s strategy of “driving more for less” and producing a consistent, good quality cheese, while concentrating on high productivity and factory optimisation.
Commenting on First Milk’s results, the National Farmers Union’s (NFU’s) Scotland milk policy manager George Jamison said the company’s success was attributed to sacrifices made by the dairy processor’s members. See box below for his comment.
NFU’s comment on First Milk’s results
NFU Scotland milk policy manager George Jamison said First Milk’s results were very encouraging and indicative of the businesses hard work and sacrifice. However, these results would not have been delivered without the sacrifices made by First Milk’s members.
“The low prices First Milk members received over the recent difficult market conditions were amplified by the very poor financial position the co-op was in,” said Jamison.
“More can be done to build trust and while there are new governance structures in place, there is need to improve genuine communications, constantly review whether the governance structures ensure members are well represented and consulted.”