Dairy co-op First Milk has announced a significant improvement in profitability for the last financial year.

Pre-tax profit in the year to 31 March 2011 was up £6.8m from 2009-10 to £7.2m, on group turnover £37m (7%) higher at £573m. Bank debt was cut from £69m to £44m, mainly as a result of stronger operating cashflow and lower stocks, while total net assets were up £5m at £51m.

The company said its focus was on growing profits so that more could be passed back to producers. This was achieved by increasing sales of branded products, reducing the cost base, building business partnerships and developing new markets.

First Milk’s standard litre liquid milk pool price increased by 3.35p/litre and its cheese pool price increased 3.15p/litre during the 2010-11 year. So far this season, a further 1.4p/litre has been put on the liquid price and 1.98p/litre on the cheese price. It has also paid a 6% return on members’ capital in 2011, totalling £2m.

“[The year] 2011-12 has started well and we have been able to make further milk price moves and another return on members’ investment,” chairman Bill Mustoe said.

“Additionally, in May, we announced the acquisition of Kingdom Dairy and Kingdom Cheese, which greatly broadens our product, customer and market mix.

“Thanks to the efforts of our farmers, our employees and our partners, the business is moving forward on all fronts.”