First Milk chief says co-op is on track for growth

First Milk is now “on track” to deliver a strategy that would drive improved shareholder returns, according to the co-op’s new chief executive. But she acknowledged communication with members could still improve.
Chief executive Kate Allum, who was appointed earlier this year, told farmers at Harrison & Hetherington’s recent dairy conference her priorities for the co-op were: “To grow our own brands, diversify our product and market mix, lower our cost base and seek value in partnerships with other major companies.”
Acknowledging that there had been “enormous changes” at First Milk over the last 12 months, she said the co-op had been working hard to establish better communication with its farmer customers.
“We’ve adopted a steady, solid programme that’s continuing the forward momentum to deliver results to our shareholders. We’re determined that we’ll earn it first and only pay out when we’ve earned it. To do anything else would be a recipe for disaster,” she said.
First Milk brands were now being consumed by one in four UK households – that compared with one in 33 households in 2008.
“We’ve got the fastest-growing Cheddar brand in the UK worth £35m. It’s even worth more than the breakfast cereal Sugar Puffs. Lake District Cheddar is now being purchased by 5.6m households in the UK.”
Ms Allum said First Milk’s half-year results to the end of September showed the company had made “good progress”.
“The aim has been to get the fundamentals of the business right and we’ve been able to deliver an £11.8m improvement in operating cashflow, a £12.2m improvement in pre-tax profits and a reduction in our net bank debt by £32m.”
But she believed consumer confidence was low and that retailers were well aware of the influence dairy product prices could have on “foot fall”. “These products are key drivers in getting customers into supermarkets, so when it comes to prices we must be prepared for a competitive time ahead. We’re prepared to takes risks where appropriate but not undue risks with our members’ money.”
First Milk supplies over 1.6bn litres annually, approximately 16% of the country’s supply.