Graham's the Family Dairy has posted a 30 per cent increase in profits for the year to March and said it is on course to achieve further growth in the current period.
The Stirlingshire-based dairy firm grew pre-tax profits to £1.3 million in the year to March from £1m in the preceding period helped by growing sales of products ranging from milk to ice cream.
The company, which has invested heavily in developing a brand that appeals to shoppers, increased sales by 25 per cent in the year to March, to £85m from £68m.
In July the company become Scotland's best-selling butter producer, overtaking its closest competitor Lurpak. The company said recent research from the Kantar Worldpanel consultancy confirmed more than 1.1m Scottish shoppers now purchase a Graham's product at least once a year. It said this accounts for almost half the households in Scotland.
While the company has big growth plans, Graham's cut the price it paid to farmers for milk earlier this month amid reports of plentiful supplies. The company buys from than 90 dairy farmers across Scotland.
Managing director Robert Graham said the company didn't want to be cutting prices but had to act to ensure it remained competitive in a market dominated by giants.
He said Graham's is paying more for milk than big rivals such as Muller and Dairy Crest. Mr Graham is in talks with farmers about proposals for new ways of working that the firm says will provide them with more financial security and visibility for the future.
Noting that Graham's £1.3m profit in the latest year represented just 1.5 per cent of sales, he said the firm operates in a low margin business.
Mr Graham noted the company had spent around £2m on capital projects to support growth.
In May the company secured £20m funding from Royal Bank of Scotland to invest more in its cream and butter ranges, as well as to enhance its brand south of the border.
Mr Graham said the company needed to proceed with a controversial plan that involves building 600 homes on its Airthrey farm near Stirling to help raise funds for a planned expansion move. He said the development Graham's proposes to complete with housebuilder Mactaggart and Mickel would help fund the building of a new £20m dairy and research centre in Stirling. The company says this will secure more than 400 jobs and create a further 450.
"We think we have a strong case in terms of lack of land supply and the huge economic benefit," said Mr Graham. He said the new dairy would be incredibly important for the long-term future of the dairy industry in Scotland.
Mr Graham believes there is huge scope for growth at the company.
This could be achieved by winning market share from foreign-owned rivals whose products take up much of the supermarket space given over to dairy products.
The company will continue to expand its range to capitalise on the strength of its brand.
Mr Graham said it expects to launch a line of spreadable butters and to introduce new ice creams in the first three months of 2015.
He is pleased with progress in the current year.
Asked if the company is on course to increase sales and profits in the year to March 2015, Mr Graham said: "It looks like we will be moving forward this year."
Graham's cut the farm gate price it paid for milk by 1.5p per litre to 27.5ppl. In June it cut the price by 0.75p.
Mr Graham said the company is discussing a scheme under which farmers would be rewarded for producing milk in accordance with its year-round requirements.
Graham's recently launched a court action in the latest stage of its plan for the Airthrey Green development,
The company said it has appealed against the adoption of the Stirling Council Local Development Plan, adding that this excludes sustainable development on Airthrey Kerse. The appeal concerns what the company said were procedural inaccuracies in the examination of the plan by the Scottish Government's Directorate for Planning and Environmental Appeals.
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