First Milk dairy co-operative has announced positive financial results in its annual report for the year ending March 2014.
The results, published on 28 January, showed a 15% revenue growth to £610m (2013: £530m) and a 210% growth in operating profits before exceptionals to £6.5m (2013: £2.1m). There was a 31% growth in members’ return on investment to £2.5m (2013: £1.9m).
The co-operative, which is 100% owned by its farmer members, also cut its net debt by 14.5% to £62.7m (2013: £73.3m).
“The year to 31 March 2014 was a good one for First Milk,” said Sir Jim Paice MP, chairman. “[First Milk] returned to profitability, benefited from increasing global demand for dairy products and the consequent uplift in revenue, and underwent significant strategic changes that will benefit First Milk over the long term.”
However, Sir Jim acknowledged that trading subsequent to the financial year end had been “challenging”.
“Since 31 March 2014 there has been considerable volatility in the returns generated from globally traded dairy commodities,” he said in the annual report, citing a “perfect storm of increased volumes and falling prices” that resulted in First Milk incurring a £12.1m trading loss in the six months to the end of September.
On 8 January, it emerged that the falling prices had restricted the cash available to give to farmers, and that all First Milk payments to farmers would be deferred for two weeks.
Alongside a continued two week deferral of all future payments, First Milk has also announced the amount of capital a member is obliged to have invested in the business will increase from 5p to 7p per litre for the average volume supplied in a year, while the retention in respect of members’ capital investment will be increased from 0.5p to 2p per litre for milk supplied from December 2014 to August 2015.
Since the first announcements, more than 700 of the co-operative’s 1,300 members have met with First Milk to discuss the recent crisis.
The organisation also addressed member concerns at its annual meeting on 30 January, where Gerry Sweeney, finance director, emphasised the stronger position the co-operative will be in by the end of this financial year as a result of January’s measures. He also confirmed that First Milk is now making profits month-on-month.
This was echoed by Kate Allum, chief executive at First Milk. “We are now in very good shape for a tough year ahead,” she said, adding that “the business is trading profitably today”.