Strong results fuel milk price progress at First Milk

Over the last twenty months First Milk has undergone a radical transformation
Over the last twenty months First Milk has undergone a radical transformation

First Milk, the UK's only major dairy company owned by British farmers, has released its latest mid-year financial results (for the six months to 30 September 2016) showing progress in operating profits and driving improved returns to members.

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) and 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.

'Huge challenges' at First Milk

CEO Mike Gallacher, who took on leadership of the business in March 2015, said the 'huge challenges' at First Milk were 'very evident' in early 2015.

He said: “It required the company 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."