UK dairy co-op First Milk has reported an increase in half-year pre-tax profits on the back of higher sales - and said the result shows a recovery after a year of losses.

First Milk said today (8 October) it generated pre-tax profit of GBP1.1m in the six months to the end of September, compared to a profit of GBP100,000 a year ago. Turnover was up 17.3% at GBP279.8m.

The company released these figures at the same time as annual results for the year to the end of March 2012, when it ran up a pre-tax loss of GBP7.8m and sales fell 7.1% to GBP530m.

First Milk pointed to "exceptional charges" such as costs linked to its move to switch grated cheese production to another site and to a product recall. Excluding such charges, First Milk booked a pre-tax loss of GBP800,000, which chairman Bill Mustoe said was due to a decision to support the price for milk paid to its farmer members.

Reflecting on the results, he said: "We are well aware of the impact that 2012 has had on farm accounts over the last eighteen months, and from analysing other dairy processor results over the last few weeks, it looks like last year was a challenging one for most in the dairy industry. However, our performance in the six months to 30 September demonstrates clear progress on our strategy, and makes us confident about our ability to increase returns to members in the remainder of the current financial year."

Mustoe said First Milk had taken the "necessary steps to prepare the business for the future" in recent months.

"We recognise that we can deliver improved returns for members by operating across a range of sectors and markets, and a range of products," he said.

"In practice, this means we are concentrating our spend on fastest growing markets like exports, foodservice and lifestyle nutrition; developing new products like Lake District Dairy Company Quark and Frumoo that move us up the margin ladder; exiting unprofitable, uncompetitive and non-core categories and markets; building our nutritional expertise; ensuring everything we do drives greater value for our farmers' milk.

"None of these activities individually is going to be a silver bullet. However, add them all up and we’ve got a stream of returns that is better, and more robust, than what we had before.