Interim results for First Milk show the dairy co-op is continuing to make big improvements while it ploughs through its financial turnaround plan.
The dairy co-op, which is fully owned by its farming members, recorded profits before tax of £6.8m in the six months to 30 September, compared to £2.4m loss in the same period last year. Bank debt fell by £20m to £26.1m.
CEO Mike Gallacher, who started in March 2015, said the improvements meant First Milk was now more financially stable, which, crucially, allowed it to pass on better milk prices to its members.
A rapid turnaround plan was implemented after the co-op recorded £22m losses in the year to March 2015. Payments to suppliers were delayed in January last year to help it rebalance the books and the then chairman, Jim Paice, resigned a few months later.
Over the last 20 months, First Milk said it had implemented all 41 recommendations from an independent review into the business, divesting from loss-making enterprises, focusing on its core business of British cheddar and liquid milk contracts for customers such as Nestle, and improving its governance.
In its first full year results after the plan was implemented, the dairy co-operative made a net loss of £5.1m in the year to March 2016, but this was a £23m improvement on the large losses recorded the previous year.
To date, plan has delivered a £33m improvement in business performance, including an £11m divestment in loss-making subsidiaries, £5m of cost cutting and a £3m improvement in commercial contracts.
The co-op said the benefits of the turnaround were being passed back to members through improved milk prices – it has increased its milk price by 8p/litre since July and forecasts a further 2p/litre rise in January.