The firm, which manufactures a variety of products including cheese and dairy ingredients, recorded turnover of £579m (1% increase on 2011) for the fiscal year (FY) ending 31 March 2012 and pre-tax profits of £13.3m – an increase on the £7.2m reported in 2011.
Of this, £9.6m relates to the profit made on the sale of its shareholding in Robert Wiseman Dairies, which was acquired earlier this year by German dairy giant Müller in a deal worth nearly £280m.
The results mark the end to a difficult year for First Milk, which saw it reduce its milk prices to combat the current lack of demand and increase the price it pays to milk producers.
Despite these “tough market conditions”, the firm recruited 195m litres of new milk during the year.
Tough market conditions
“We have set out a clear path to develop First Milk into an added value food business and 2011/12 was notable for the opportunities we realised, as well as the delivery of a robust financial performance in tough market conditions,” said First Milk chairman Bill Mustoe.
“It was with great regret that for the first time on my watch we had to reduce our milk prices recently. Right now the global demand for dairy has been hit by come short term over-supply. However the market will recover as supply and demand move back into balance, and returns will be strong in the long-term.”
The firm also increased the milk prices it pays to its farmers during the years.
Farmers in it liquid pool saw the price paid to them increase by 2.9 pence per litre (ppl) and those in its cheese and balancing pools benefitted from a price increase of 2.98ppl.
Investments and acquisitions
The firm made a series of acquisitions and investments during the year, which contributed to a £3m increase in the firm’s net debt, taking the total to £47m.
This however was offset by the sale of its Robert Wiseman Dairies shares, said the firm.
During FY 2012, First Milk bought two businesses – a soft and grated cheese operation in Scotland and a sports nutrition business in Manchester. The firm also launched a joint venture with New Zealand-based dairy exporter Fonterra to produce premium whey products.
“These purchases have not only enabled us to diversify our product and customer base, but more importantly they provide a broader platform to drive cash for our farmer shareholders,” said Mustoe, commenting on the acquisitions.