First Milk has confirmed that its turnaround plan is delivering tangible results, with its financial performance in the 6 months ended 30 September 2015 showing significant improvement over the previous year.
Operating profit for the first six months of the year was £1.1m compared to a loss of £7.6m for the same period last year - an improvement of £8.7m. It is anticipated that the results for the second six months to March 2016 will also show a positive operating profit - compared to an operating loss of £12.3m in the second half of last year. As a result for the current financial year as a whole, the business will also make an operating profit.
Debt has continued to reduce, and at the end of September 2015 was £46.1m, compared to £60.7m as at March 2015.
As part of the turnaround plan announced in May, new chief executive Mike Gallacher announced the establishment of business units, significant restructuring, the appointment of a new experienced executive team and new commercially based pricing scheme.
Mr Gallacher commented: "The actions taken to reduce costs, improve quality, and drive operational performance are delivering results, with further progress planned over the next year. We are confident that this will deliver improved milk prices and a more sustainable business model for our farmer shareholders.
"My team and I are very aware of how tough it is at present on farm and the need to sustain this improvement trajectory to deliver benefits to our members."
NFU Scotland chief executive Scott Walker said: "A successful First Milk is hugely important to the Scottish dairy industry as many Scottish milk producers are wholly dependent on First Milk as their milk purchaser.
"The turnaround plan has returned First Milk to profit and delivered a sustainable platform for the company but it is clear that, in doing so, much of the risk has now been passed back to members through an unsustainable price for their milk.
"In his comments, it is clear that Mr Gallacher recognises the severe financial position of his members and the need to deliver a much improved price that allows both First Milk's producers as well as the company to be sustainable. That can't come quick enough for many grass roots farmers."
Market round-up
Wallets Marts sold 2029 prime lambs in Castle Douglas on Tuesday to a top of £80 per head and 183.5p per kg to average 156.6p (+2.9p on the week).
There were also 653 cast sheep forward that met a similar trade to last week with ewes selling to £77 for Texels and £54 for Blackfaces.
Messrs Craig Wilson Ltd sold 9 prime heifers at Ayr on Tuesday to a top of £1357 per head and 236p per kg to average £1229.65 and 225.1p, while three prime bulls peaked at £1222.50 and 187p to level at £1044.87 and 161.6p.
In the rough ring an abundance of lean dairy types were cheaper, especially if they weren't Scottish Farm Assured. Eighty-five beef cows averaged 100.7p and 210 dairy cows levelled at 73.4p. Seven bulls averaged 81.4p and 10 clean OTM cattle levelled at 121.8p.
A small offering of 11 dairy cattle sold to £1520 for a Holstein Friesian heifer and averaged £1225.
The firm went on to sell 1339 prime lambs in Newton Stewart yesterday to a top of £80 and 190.5p to average 151.8p (+2.4p).
There were also 246 cast sheep that were easier to sell with ewes peaking at £124 for a Suffolk, while Blackfaces sold to £58.50.
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