UK dairy co-op Milk Link has reported an increase in annual underlying pre-tax profits on the back of cost cuts and higher commodity prices, which boosted sales.
Milk Link booked a 42.7% rise in comparable profit before tax for the year to the end of March to GBP14.3m (US$22.6m). It also reported a 15.4% increase in comparable EBITDA to GBP33.7m.
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Chief executive Neil Kennedy said the co-op benefited from “strong” prices for its skimmed milk powder, cream curd and whey products. He also cited cost savings from productivity measures.
However, he added: “Nevertheless, the results also reflect that Milk Link’s trading performance in our main retail and foodservice markets held up well despite highly challenging conditions. Indeed sales both in terms of value and volume increased year on year in relation to our core Cheddar business, speciality cheese and flavoured milks.” Group turnover increased 7.1% to GBP628m.
Kennedy said the trading conditions facing Milk Link in the next year “are likely to remain very challenging”. Weaker returns from the dairy ingredients and fresh liquid milk sectors have already led Milk Link to cut the price it pays farmers for milk.
He said: “The consumer products market will continue to experience considerable pressures whilst in the short term returns from dairy commodities look set to be sharply down in comparison to the prices seen over the last two years.”
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By GlobalDataNevertheless, Kennedy said Milk Link was “positive about the long-term prospects for the dairy sector and the role that a strong farmer-owned business can play within it”.
He added: “We are committed to implementing an ambitious growth agenda both through delivering organic growth and through corporate business development.”
