Competitive markets and continuing investment in its facilities cut profits at Graham's The Family Dairy by nearly a third during the year to the end of March.
The family-owned business said its results for the latest financial year, which fell almost entirely before the onset of the Covid pandemic, reflected the "incredibly competitive nature" of the dairy market. Capital investment of £5.6 million, including £2.7m spent on its Glenfield dairy in Fife, proved a "significant drag" on performance.
Graham's said revenues were 4.4 per cent higher on the previous year at £114m, but pre-tax profits fell by 32% to £1.55m. Underlying earnings also fell, down 9% to £4.2m.
READ MORE: Graham’s cream of the crop with Scottish consumers as dairy firm tops Kantar WorldPanel poll
The company said it has pulled back on capital investment in the current year as it "works through" the uncertainty created by Covid-19. Spending will be cut to just a quarter of that during the 12 months to March 2020.
However, it plans to ramp up invesment again next year at sites in Glenfield, Nairn and Bridge of Allan, where Graham's is headquartered.
The company has submitted plans to build a bioenergy plant at Glenfield that would use whey from cheese production to provide heat and power for the Cowdenbeath facility. The zero carbon system would be a first for the dairy industry in Scotland, but has drawn objections from more than 300 people as nearby residents fear it will be noisy and smelly.
Managing director Robert Graham said the priority now for the business is to improve its bottom-line performance to a position that is sustainable for the company and its 100 farming partners. This will focus on continued product development.
READ MORE: Number of Scottish dairy farms continues to decline
“It has been a challenging year which saw profits fall by 32%, however we have seen sustained growth across our categories with exciting new product launches, such as our milk in glass bottles, Kefir, Skyr pouches and flavour extensions to our Goodness ice cream range," he said.
"Looking forward we have potential and opportunities with both our products and our brand as provenance and authenticity are only going to matter more to consumers. Our family business produces not only great tasting products but they align themselves with almost all the key health trends, either in or about to enter the market while our brand reinforces values important to our consumers, such as provenance, authenticity, and quality from a family business they can trust”.
Graham's, which was founded in 1939, acquired the Glenfield dairy in 2015 from First Milk. The company is currently in the second of a five-year agreement to supply fresh milk to all Aldi stores throughout Scotland.
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