Farmer owned milk processor and cheese manufacturer First Milk has reported increases in profit and revenues form its latest full year of trading, despite what it calls a “year dominated by politics and Brexit, leading to a lack of clarity and uncertainty throughout the period”.
The Glasgow based co-operative has posted an operating profit of £7.5 million on revenues of £283m for the year ended March 31st 2020, compared to £7.3m and £272m in the previous full year. The period saw net debt fall 20% to £33.1m and net assets increase by 25% to £39.8m.
“As the year progressed, whilst clarity improved on Brexit, we ended the financial year in even greater turmoil, this time of a global nature, as the COVID-19 pandemic emerged,” notes First Milk chief executive Shelagh Hancock.
She notes that 2019 saw the end of a relatively long ‘bull run’ in dairy markets, with weakening butter and cream values having a negative impact on milk prices. First Milk had to reduce its milk price by 1.25ppl across the year.
The period saw First Milk strengthen its long-term partnership with Ornua, the Irish agri-food co-operative that supplies more than 40% of the hard cheese sold in British stores. It also increased exports which now reach more than 26 countries. The business remains Nestlé’s single largest UK supplier, and has a well-established partnership with Yeo Valley. First Milk is also working with McQueens – a family liquid milk and doorstep delivery business.
First Milk is working with Havero Hoogwegt for whey protein production. The company acquired its joint venture partner Fonterra’s 51% share of the Fast Forward JV and is now sole owner of the whey protein concentrate manufacturing facilities at its Lake District Creamery. Havero Hoogwegt is a global specialist in dairy proteins, supplying more than 50 countries.
The latest year saw First Milk completed a £6m investment at its Haverfordwest Creamery to unlock capacity and improve efficiency, with a Combined Heat and Power (CHP) plant to be installed this year to improve environmental performance. There has also been investment in upgrading the equipment at the Lake District Creamery. In addition, the cop-operative has acquired Lake District Biogas from the receiver. This business ran an anaerobic digester supplying gas to the national grid from the Lake District Creamery to manage and process the plant’s effluent.
But the company has had to close its Arran and Campbeltown Creameries in Scotland as buyers could not be found for the assets.
First Milk has a long-term strategic alliance with Anglia Farmers, allowing its farmer members access to inputs at competitive prices, while saving time and resources.
“Thus far, First Milk has weathered the storm of COVID-19,” concludes Ms Hancock. “Our exposure to the foodservice sector, which effectively shut down overnight, is limited, with most of our products and fresh milk customers focused on retail markets, which continued to see strong demand due to concerns over food availability.”