Financial highlights for year to 31 March 2008:
- Group turnover up 24% to £602m (2007: £484m)
- Operating profit up to £9.66m (2007: £0.52m)
- Profit before tax up by £5.5m to £3.5m (2007: £2.01m loss)
- Processing interest payment of £1.85m made to members
Peter Humphreys, chief executive, commented:Strong results
"After a year of consolidation in 2006/07 while we integrated the cheese and ingredients businesses we purchased in late 2006, we have delivered very good financial results in 2007/08.
"Group Turnover is up £118m (24%) to £602m, compared with the previous year. We achieved an operating profit of £9.66m, an improvement of £9.13m on the prior year. Our profit before tax of £3.5m shows significant improvement from the prior year's loss of £2.01m, showing a £5.5m turnaround. Our strong balance sheet underpins our future plans and gives us resilience against a challenging economic environment. The health our business enabled us to return £1.85m to members through a processing interest payment for 2007/08. We are currently consulting our members on broad capital structure proposals, and they will vote on these at our AGM in November.Commercial successes
"Throughout the year we continued to deliver high levels of service to our raw milk customers including Dairy Crest, Wiseman Dairies and Nestlé, while minimising the cost of haulage through efficient planning. From August 2007, as a result of our relationship with Wiseman Dairies, Tesco customers in Wales were able to buy fresh milk sourced from a dedicated group of our farmers in Monmouthshire and Glamorgan.
"Our cheese business is now well established in the marketplace. We have demonstrated that we can bring a detailed understanding of consumer demand alongside detailed category insight to our relationships with customers including Asda, Morrison's, Somerfield, Tesco and Sainsbury's. During the year, we were also successful in winning half of the co-operative's retailer brand business. Our capability to supply award-winning cheddar from five creameries across England, Scotland and Wales is proving a key differentiator for us in a competitive marketplace.
"Over the last twelve months, our regional cheese brand offering has really taken shape. The relaunch of Scottish Pride in Scotland in June 2007 has been hugely successful. We quickly achieved listings with all the major retailers and Scottish Pride is already Scotland's second top selling Scottish origin cheese brand. In England, we launched the Lake District cheese range in November. The brand is now well established in Cumbria and we are rolling it out now with multiple retailers. The Pembrokeshire Cheese Company range was launched in June 2008. The brand has huge potential to capture market share as only 6% of cheese currently consumed in Wales is of Welsh origin, compared to 27% in Scotland.
"Despite only being established in April 2007, our Ingredients division performed well during the year in a turbulent market. We have positioned ourselves well within a small number of attractive sectors, and have ensured that we are flexible enough to maximise opportunities depending on customer demand.
Reshaping our business
"We have streamlined our organisation structure over the last twelve months to facilitate direct communication and quicker decision-making, and ensure that we maintain a low cost base. As a result, we have closed our cheese-packing site at Mauchline in Ayrshire in October 2007 and our warehousing operations at Mauchline and at Castle Kennedy in South West Scotland in August 2008. At the beginning of May 2008, we also announced plans to reduce our number of office locations and streamline our organisation. We are cognisant of the challenging economic environment in this country and we will continue to align our business shape and product offering to meet market conditions.
"We continue to invest in our business to focus on consumers and customers, improve our operational efficiency, and reduce our environmental impact.
"These results demonstrate the strength and diversity of the First Milk Group. We have delivered a good profit; we were able to pay members a processing interest payment a year ahead of schedule; our business strategy remains firmly on track and we end the year as a stronger, more competitive business.
Notes to editors
First Milk is the largest dairy farmer co-operative in the UK. Its members' farms stretch from Central Scotland to the South of England, and from West Wales to East Anglia.
The business has three divisions: Milk Operations; Cheese; and Ingredients.
Milk Operations handles approximately 1.8 billion litres of milk per annum from around 2600 producers. This milk is supplied to First Milk's cheese business and to many of the leading names in the industry.
The First Milk Cheese Company is the largest UK-based cheese supplier.
First Milk's Ingredients business supplies a range of customers with milk powder and whey products for functional foods, protein drinks, pro-biotics, pre-biotics, pharmaceutical, bakery and confectionery products.
For further information please contact:
Paul Flanagan, Group communications director, on 07767 241452
Jill Coyle, communications manager, on 07825 625205