First Milk has delivered solid financial results for the six months to 30 September 2011.
The key financials are:
· Despite challenging economic conditions, a positive swing in operating profit was achieved. This resulted in an operating profit of £4.7m (2010: £3.8m)
· Pre-tax profits were steady at £3.2m (2010: £3.2m). This figure is net of £0.9m that was paid out in June as a return on members' capital for the six months to 31 March 2011
· Group turnover was £272m (2010: £280m), a small decrease on 2010/11
· At 30 September, bank debt was up slightly at £70m (2010: £63m) mainly as a result of increasing cheese production in response to the rapid growth in branded sales
First Milk chairman Bill Mustoe commented: "We've set quite a pace over the last 18 months, but despite the tough UK and global economy, we will not be slowing down. Members tell us they want change in this market. They want us to re-work the old ways and look at new opportunities. "In addition to continuing to deliver solid financial results, we have moved our milk price by more than any other national dairy company in 2011. Equally importantly, we know from feedback that our producers appreciate the transparency of our milk price.
"Last year, we paid out a return on members' capital for the half and full year results. Likewise, we intend to pay a return on members' capital linked to our performance in the six months to September 2011 and will contact members later this month to confirm the details of this payment."When we speak with farmers who are not part of First Milk, the message that we're picking up is that they see their future in farmer co-operation, not division. That's been borne out by the fact that we have recruited well in excess of 100 million litres of new volume over the last few months and this adds value to the business and contributes to improved returns for members. "We wake up every morning thinking about how we can increase returns for producers, and that's what sets us apart from other companies."
Some other notable activities over the last six months are detailed below:
Brands: Our Lake District cheese range is now worth over £60 million in retail sales - quite an achievement for a brand that didn't exist four years ago. This summer we saw the launch of Dairy Maniacs, our new dairy brand that appeals to young families. Our first product, Cheddar Stix came as part of a licensing agreement to promote the Kung Fu Panda 2 film, and we have got off to a fast start, already selling over 2.5 million cheddar stix.
Acquisitions: In May this year, we bought Kingdom Cheese and Kingdom Dairies in Fife. Since then we've renamed the site Glenfield Dairy. It now means that we're able to offer customers a selection of cottage cheese, soft cheese and grated mozzarella and cheddar. The purchase broadens the number of customers and markets that we supply and the business comes with well-developed export sales
Joint ventures: The joint venture with Fonterra that we announced in September works for us on a number of levels, primarily as a route to provide whey proteins to European consumers. Most importantly for us, it allows us to create a new profit stream. We will start producing whey protein concentrate at the Lake District creamery next Spring.