First Milk has today released annual results for the year to 31 March 2013, as well as for the six months to 30 September 2013. The two reporting periods show a contrasting picture.
The results to 31 March delivered a total pre-tax loss of £7.8million, with turnover down £40million to £530million. In comparison, the results for the six to 30 September show pre-tax profits up to £1.1million, and turnover up £41million to £280million.
First Milk chairman Bill Mustoe commented,
"We are well aware of the impact that 2012 has had on farm accounts over the last eighteen months, and from analysing other dairy processor results over the last few weeks, it looks like last year was a challenging one for most in the dairy industry. However, our performance in the six months to 30 September demonstrates clear progress on our strategy, and makes us confident about our ability to increase returns to members in the remainder of the current financial year.
"In the year to 31 March we made a small pre-tax loss, before exceptional costs, of £0.8m during the year. This reflected the Board's decision to support members with a milk price which was not directly in line with the timing of market returns coming through in the second half of the year.
"However, exceptional charges incurred during the year totalled £7.0m, leading to a total pre-tax loss of £7.8 million. Included in the exceptional charges is a £4.5million charge relating to an acceleration of the amortisation of goodwill and depreciation of certain assets at our Glenfield operation. This followed our decision to transfer production of grated cheese to another First Milk site and the reshaping of our customer base during the year. In addition, we incurred exceptional costs of £1.1m relating to the uninsured element of charges arising from a product recall during the year, £0.9m from the impact of restructuring and redundancies, and £0.5m on professional fees.
"I appreciate that the impact of these various charges is disappointing for members, but it is important that we took the necessary steps to prepare the business for the future.
"In contrast, our performance for the six months to 30 September 2013 has been strong. Turnover was £279.8m (six months to 30 September 2012: £238.5m) and we generated a pre-tax profit of £1.1m (six months to 30 September 2012: £0.1m).
"We recognise that we can deliver improved returns for members by operating across a range of sectors and markets, and a range of products.
"In practice, this means we are concentrating our spend on fastest growing markets like exports, foodservice and lifestyle nutrition; developing new products like Lake District Dairy Company Quark and Frumoo that move us up the margin ladder; exiting unprofitable, uncompetitive and non-core categories and markets; building our nutritional expertise; ensuring everything we do drives greater value for our farmers' milk.
"None of these activities individually is going to be a silver bullet. However, add them all up and we've got a stream of returns that is better, and more robust, than what we had before.
"Five milk price increases in the last six months and a record-breaking return on capital, are a clear signal of the progress being made. We will look to further increase returns to members through the remainder of this financial year."
For more information, please contact the First Milk Communications team:
DL: 0141 847 6786
M: 07984 349 936
About First Milk
First Milk is the UK's only major dairy company owned by British dairy farmers.
As a business with a passion for brand innovation and sustainability, it is constantly seeking fresh ways of working with partners across the supply chain to drive pioneering solutions to industry challenges.
This has been supported through the recent acquisition of added value businesses, by rapid progress on launching new products and securing new customers in the UK and international markets.
A copy of First Milk's sustainability report is also available to download via its website - www.firstmilk.co.uk/sustainability/