Interim mid-year financial metrics showed:
- Operating profits up to £9.2 million (vs. £1.2m in the prior year)
- Profits before tax were up to £6.8 million (vs. a loss of £2.4m in the prior year)
- Bank debt had fallen to £26.1 million (vs. £46.1m in the prior year)
Over the last twenty months First Milk has undergone a radical transformation, with a new business strategy, the divestment of loss making subsidiaries, improved operational performance and a more effective co-op governance structure. To date the programme has delivered a £33m improvement in business performance.
The benefits of the rapid financial turnaround are being passed to members through milk price increases that are running ahead of the market. The farmer co-op has increased its milk prices to members by 8ppl since July, with a further 2ppl increase forecast in January.
CEO Mike Gallacher, who took on leadership of the business in March 2015, commented:
"The huge challenges at First Milk were very evident in early 2015 and required us to make rapid and significant changes to the business. The combination of strategic, operational and governance issues have all needed to be addressed and the new leadership team have worked with focus and pace. Clearly the aim of these changes has been to deliver a better result for our members, customers and employees.
"Twenty months on, First Milk is now a simpler and more efficient business. This is demonstrated through significantly improved financial results and most importantly through increasingly competitive milk prices to our farmer members.
"To align the company better, we now have employees targeted on an index which measures our milk prices versus other leading UK dairy processors. We have implemented all the recommendations of the independent Greenburn Report and our new Board and Member Council provides a governance structure that is fit for the future.
"Having divested loss making parts of the business and stepped up our operational performance we are now focused on our blue chip long term contracts and joint ventures. The new First Milk has a simple business model that will provide strong and stable returns for our farmer members. It is particularly pleasing to see their loyalty now being repaid. The largest challenge for all UK Dairy farmers over the last two years has been the wider market performance and it is encouraging now to see both First Milk and the market recovery well underway."
Chairman Clive Sharpe commented:
"First Milk is now a focused and profitable business. Rapid surgery was required from the new management team over the last twenty months and it is a testament to our farmer members that they recognised and supported this through the most difficult market conditions.
"Along with member support, we now have had a highly experienced executive team working closely with a smaller, more commercial Board and strong farmer council to make improvements in every corner of the business.
"The continued improvement in performance has given us the platform to increase our milk price faster than the market over the last six months and we are confident of further significant price increases for all our members over the coming months."