Milk Link has almost doubled its profitability, according to the dairy co-op’s latest results.
Pre-tax profit for the year ending 31 March 2007, including members’ capital contributions, was up 98% to £15m. But turnover fell 11% from £574m to £509m as the business moved away from milk brokering.
Chief executive Barry Nicholls said: “Despite continuing downwards market pressures and significant change across the dairy industry, we were able to implement important structural developments, and strengthen ourselves both financially and commercially.
“The group is financially stronger than ever before. Over the year we successfully refinanced our cheese business, made substantial inroads into our total third party debt, and have gone a long way to reducing the reserves deficit in our balance sheet.
“We were also able to halve our members’ investment levy (from 1p/litre to 0.5p/litre) and repay £5.7m to them in relation to their initial investment in Milk Link,” he added.
Mr Nicholls said commodity Cheddar markets had been weak at the beginning of the year, but stabilised during the second six months with some signs that prices were starting to firm.
He said Milk Link was also able to take advantage of record whey prices and had increased the proportion of added values products, like Tickler mature Cheddar cheese, that it sold.
Efficiency at the business’s factories had also improved, added Mr Nicholls. There had been £2m in cost savings at its Staplemead Creamery and haulage costs had been slashed by £9m in the past 18 months.