UK: First Milk FY profits climb

First milk delivers a robust performance

First Milk has delivered a robust performance and solid financial results for the year to 31 March 2012.

The key financials are:
· Pre-tax profits were £13.3m (2011: £7.2m). £9.6m of this figure relates to the profit we made on the sale of our shareholding in Wiseman Dairies

· Group turnover was £579m (2011: £573m), an increase of 1%.

· We increased the milk prices that we pay to our farmers during the year: farmers in our liquid pool saw their price increased by 2.9ppl, whilst those in our cheese and balancing pools saw their prices increase by 2.98ppl

· We are committed to reward our farmers for the money that they have invested in First Milk. In the last 12 months we have made two payments, in July 2011 and January 2012, which together represent a return of 6% on members capital for the year. In March we also declared a preference dividend of 3.5p per share which we paid in April.

· Our net bank debt at 31 March 2012 was up marginally on the prior year at £47m (2011: £44m). Net debt rose during the year, mainly as a result of increased stocks required to facilitate the growth in the sales in our Lake District Cheese brand, investments at our manufacturing sites and the acquisition of Kingdom Cheese and Kingdom Dairies, but reduced in February 2012 following the sale of our Wiseman shares

· £6.3m was invested in capital projects during 2011/12 and we are continuing to invest at all our sites to drive our efficiencies

· During the financial year we were able to recruit 195 million litres of new milk

Chairman Bill Mustoe commented:
"We have set out a clear path to develop First Milk into an added value food business and 2011/12 was notable for the opportunities we realised, as well as the delivery of a robust financial performance in tough market conditions.

"Over the last 12 months we have bought two businesses - a soft and grated cheese operation in Fife and a sports nutrition business in Manchester. These purchases have not only enabled us to diversify our product and customer base, but most importantly they provide a broader platform to drive cash for our farmer shareholders.

"Also notably during the year we set up a joint venture with the New Zealand company Fonterra to produce premium whey proteins at our Lake District Creamery, with the first product for the joint venture being produced over the last few weeks.

"As well as paying members a return on their investment related to our performance in the first half of this financial year, we also announced a dividend payment in March as a result of the margin we made on a range of business activities.

"It was with great regret that for the first time on my watch we had to reduce our milk prices recently. Right now the global demand for dairy has been hit by some short term over-supply. However the market will recover as supply and demand move back into balance, and returns will be strong in the long-term."

"Over the last couple of years we have consistently delivered: strong profit delivery, improved milk prices, regular returns to members and added value acquisitions, the benefits of which, are still developing."

"We have clearly demonstrated from our actions that we can visibly reshape the business. First Milk is evolving every day into the business that British farmers want, deserve, and most importantly control."

Original source: http://www.firstmilk.co.uk/