First Milk has today confirmed that the losses accumulated for the last financial year (2014/15) will be in the region of £22M. The announcement follows the recent appointment of Mike Gallacher as new CEO 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, 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.
Chief executive Mike Gallacher commented:
“The year to 31 March 2015 was clearly an extremely difficult one for First Milk. The 2014 losses we are announcing today 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 2 months have started to address core business issues and have improved our trading position.