United dairy farmers products

The UK’s largest British farmer dairy co-operative has achieved an increase in profits, despite a fall in overall group turnover.

United Dairy Farmers, which is supplied by 1,800 farmers, made a profit before tax of £6.82m in the year to March 2016. This was a 433% increase on the previous year.

The driving force behind the increases has been the strong performance of their leading brand – Dale Farm, which bucked market trends and delivered sustained growth in consumer products, said UDF.

Overall group turnover was down 12.2% from 2015 (£421m to £370m) as a result of low commodities prices for milk and dairy products, with Dale Farm turnover falling by 5.1% (£320m to £304m).

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Consumer product sales rose by 2.8% (£226m to £220m), which helped to offset a 31.8% fall in commodity sales (£39.2 to £26.7m) and a 17.5% decrease in ingredients sales turnover (£79m to £65.5m).

Improved profitability and a £10.4m reduction in working capital helped to generate a strong cashflow with net debt decreasing by 19.3% (£82.5m to £66.6m).

The co-op is seeing the benefit of a £39m investment in cheddar making facilities, finished in 2014. The state-of-the-art cheese-making and packing facilities delivered volume growth of 25% in 2015-16 in packed cheese products.

“Dale Farm has delivered another year of strong volume growth especially in consumer cheese and whey protein products,” said United’s group chief executive, David Dobbin.

He added: “However overall turnover was down due to depressed market returns.

“The outlook for the current year remains challenging with Brexit adding to market volatility and uncertainty. On a positive note, UK milk production is falling, and this, together with a fall in the value of sterling, is leading to some recovery, mainly in cheese and butter returns. However, it is too early to call a market recovery, especially in milk powders.

“The United Group is in sound financial shape with increasing profit and a falling level of debt. Dale Farm is well placed with the majority of its output now in consumer products being sold into the UK market.”

United Dairy Farmers was created in 1995 and has dairy operations in England, Scotland and Wales as well as Northern Ireland where the co-op originated.