First Milk Counts its Losses
UK dairy co-operative First Milk has confirmed that the pre-tax losses accumulated for the last financial year (2014/15) will be in the region of £22 million. The announcement follows the recent appointment of Mike Gallacher as new chief executive of the business. Since his arrival, the business has embarked on a turnaround programme and is concurrently engaged in a full strategic review. The programme has included setting up focused Business Unit Teams, a range of significant cost reductions and the establishment of new milk pools.
Following the announcement of the turnaround programme in early May, Mike Gallacher called farmer member meetings across the UK where he outlined his view on the business and shared plans now in place to address the performance. He has also held a number of briefings with Government, farming union and industry leaders. The dairy context continues to be extremely challenging, with global prices having now declined by over 50% since last year’s peak.
Mike Gallacher comments: “The year to 31 March 2015 was clearly an extremely difficult one for First Milk. The 2014 losses we are announcing reflect the market context, but also poor operational performance that impacted at the same time as the business paid out higher milk prices to our famers in 2014 than was received in commercial returns.”
“In face to face meetings with our farmer members in recent weeks I have shared a frank assessment of the business, explained the performance issues and outlined our plan to stabilise the financial position. I was very open and direct about the challenges and that member milk prices must be consistent with our commercial income. We will only pay out what we get in.”
“In early May, a few weeks after my arrival, I announced significant changes in how we run the business, including cost reductions, a much smaller central team, the establishment of a Business Unit structure and a refocus on our core businesses. At the same time, we initiated a full Board review of our strategy. The turnaround actions that we have taken over the last two months have started to address core business issues and have improved our trading position.”
Headquartered in Glasgow with seven manufacturing sites across England, Scotland and Wales, First Milk is the UK’s only major dairy company, 100% owned by British farmers. It supplies a wide range of dairy products and dairy ingredients to customers in both national and international markets including block cheeses, soft cheeses, raw milk, butter, skimmed milk powder, whey proteins and sports nutrition brands.
