Milk Link: Turnover Down But Profits Up
Milk Link have issued their first half 2009 trading update today, reporting a 2.5% fall in group turnover from GBP278 million to GBP271 million.
Despite that, profits before tax are up a whopping 250% to GBP4.9 million, from GBP1.4 million.
Milk Link say that this is due to "exceptional costs in relation to the disposal of its Staplemead creamery" in H1 2008.
But I think it's more likely to be down to their policy of insisting on having everything for free for the first six months of any contract.
Strangely, they never did get back to me on my request for free milk and cheese on a trial basis though.
Milk Link My Arse #2
I read with avid interest this morning that my old chums at Milk Link have proudly announced the opening of a new Innovation Centre located at the multi award-winning Taw Valley Creamery in Devon. Way to go, I will certainly be paying it a visit next time I'm in the area.
To kick off the opening with a bang they've launched a new product: Tickler…Cheddar That Spreads.
I've just written their Customer Services Dept. the following letter:
Dear All
I see that you have been busy opening a new Innovation Centre and guess that is probably why you haven't been able to find the time to respond to my previous letter.
Luckily for you I too have been very busy clearing the shed out for winter, so despite repeated efforts by Arla and Dairy Crest to secure my business, my order is still very much yours to be won.
You will recall, if you check your records, that I'm in the market for six months supply of free milk, having grown tired of my existing arrangement with Arthur my local milkman and his irritating electric milk float that sounds like a Dalek whisking up my road at 6am. I've checked with my solicitor, and he says that a verbal agreement, such as the one that exists between Arthur and myself, can be terminated by either party at any time. That leaves the door open for Milk Link to step in and commence supplying me without any legal ramifications.
If Arthur decides to play difficult, don't worry I can handle myself and I have got a border terrier. Just in case though, it may be an idea to make sure that the delivery lad is fairly 'handy' if you get my drift. Not that I'm condoning violence you understand, but it's sadly a dog-eat-dog world we live in and Arthur may take exception to you muscling in on his 'turf' I think they call it.
In a nutshell all you have to do is supply me with free milk for the next six months and I will consider paying for it after that. Seeing as you are now launching Tickler…Cheddar That Spreads, you may wish to also tender for my cheese order. I'm all for helping you get a new product off the ground, but warn you that you are going to have to undercut some serious competition from Mr Jackson, my local cheesemonger. He already supplies me with all my cheese-related requirements for free, so I'm afraid if you want to get Tickler into my fridge you are going to have to do better than that.
Please note that formal written tenders must be in by 5pm Friday 11th September, so you are going to need to get your skates on. Please clearly mark your sealed bid MILK or CHEESE as appropriate, to enable your tender to be processed as quickly as possible. Happy bidding.
Your sincerely etc
PS the Arla lads are coming down the path right now, I'll pretend I'm not in.
For some background on this, if you don't know where I'm coming from see here: Milk Link My Arse
Milk Link My Arse
After a year of pratting about over whether to have some cutting-edge Nogger content on their website, UK milk-buyer Milk Link finally bit the bullet last week and emailed me to say that they've got the go ahead.
"However this would need to be on the basis of a 6 month free trial with the option to continue past that period at the price that you’ve already indicated. Could you please confirm that you would be in agreement with this and reply to my colleague Steve X also," they said.
Well, I thought, they only reported £10 million in pre-tax profits in June, things must have taken a pretty dramatic downturn since then.
I strangely felt compelled to decline their generous offer of six months work for such a handsome sum. I also felt moved to pen this missive to their customer services dept., although I don't hold out much hope of a reply:
Hi there,
I'm in the market for some milk and wondered whether you might be interested in supplying me?
All the papers keep telling us that we're in a buyer's market, whether it's houses, cars, whatever. So, hell, why not milk as well I thought?
Here's the deal, I'm looking for you to supply me with free milk for the next six months. If I like your milk, then I'd be happy to consider paying for it after that. Sounds like a fair deal to me, what do you say?
Could you please confirm that you would be in agreement with this, so I can crack on and cancel my existing order. Arthur, my local milkman, simply isn't in touch with the ever-changing super-competitive market in which we now find ourselves. He also makes a bit of a noise some mornings, which I find most irritating. It's a dog eat dog world we live in, as Arthur is shortly about to find out, and if I hear one more time about his wife's impending hip operation then I think I'll scream.
We're not mucking about here, we're talking two or three pints of the stuff every day, and more at Christmas, so it's quite a big order. I've got Arla and Dairy Crest chasing me for my business, but I thought I'd give you first shout.
Please revert soonest.
Best regards
Milk Link Offer To Take On Remaining DFoB Members Without A Contract
Milk Link have offered to take on the remaining 143 former Dairy Farmers of Britain members who have yet to find an alternative outlet for their milk, and are currently selling it to receivers PricewaterhouseCoopers at 10ppl.
Milk Link have offered to pay the farmers involved 18ppl for a trial three month period.
Milk Link, who acquired the DFB-owned Llandyrnog Creamery earlier this month, say that they can offer a better price due to their improved efficiencies and a larger milk field.
“The provision of this contract, we believe, will provide those DFB farmers without an alternative buyer, a much needed period of stability and a secure outlet for their milk. It will also allow them time to assess how they want to move forward in dairy farming,” said Milk Link.
Well done Milk Link I say. I guess that the bulk of the 143 are small-scale producers, some in rather remote and inaccessible places or they'd have secured an alternative outlet by now. I don't suppose that Lord Granchester is one of them.
Milk Link Completes Acquisition of Llandyrnog Creamery
Milk Link has announced that it has completed its acquisition of the Llandyrnog cheese creamery in North Wales.
The acquisition which was negotiated with PriceWaterhouseCoopers, receivers to Dairy Farmers of Britain, was undertaken for an undisclosed sum. The transaction secures the future of the Welsh creamery, preserving jobs and safeguarding the livelihoods of approximately 300 dairy farmers.
Neil Kennedy Milk Link’s Chief Executive said, “The acquisition of Llandyrnog is another positive development for Milk Link and reinforces our leadership of the British cheese market. The creamery in terms of its assets and staff, the products and brands it produces, and its customer base are of good quality and we believe that it will be an important contributor to our value added processing business.
“In securing the future of the creamery, we have also ensured that there is a long term requirement for high quality milk produced by dairy farmers in North Wales, Lancashire and the Midlands. In the last couple of days our milk procurement team have signed up over 200 farmers and we are confident that we will have secured the milk required for the creamery by the end of this week.
“Looking forward we will now focus on developing the business using as a basis the undoubted quality of the cheese it produces.”
Stephen Oldfield, joint receiver and manager of Dairy Farmers of Britain Ltd, said: “We’re pleased to announce a sale that secures jobs for all the Llandyrnog Creamery workers and new milk contracts for the relevant farmers a week into our appointment and wish Milk Link well with their new acquisition. There was significant interest in the plant as it is modern and has a clear differentiated offering of Welsh traditional cheese. We’ve been grateful for the support of farmers, hauliers and employees in keeping the milk flowing and the cheese maturing while a suitable sale was agreed.”
Milk Link Posts 2008/09 FY Results
UK dairy business Milk Link today announced its results for the year ended 4 April 2009.
Key financial highlights included:
- Turnover increased from £523 million in 2008 to £547 million in 2009 (+4.6%); whilst turnover per litre increased from 37.7ppl in 2008 to 42.7ppl (+13.3%).
- Earnings Before Interest, Tax, Depreciation and Amortisation (EBITDA), reduced from £30.5 million in 2008 to £28.7 million in 2009 (-5.9%). This reflected the higher milk price paid to Members, the need for less profit to be retained in the business to meet bank covenants and the absence of cheese stock profits enjoyed in the previous year.
- Profit Before Tax (excluding exceptionals) increased from £8.9 million to £10.1 million (+13.5%).
- Operating costs reduced to £81.7 million from £83.6 million (-2.3%), despite significant increases in input costs, particularly those relating to energy.
- Operating cash flow was £23.9 million - up from £17.0 million on previous year (+40.6%).
- Net bank debt fell by £8.5 million to £76.1 million – down from £84.6 million at March 2008.
- Total Member funds rose to £60.9 million as at year end.
- Group gearing improved from 1.66 times to 1.25 times.
- Average Member milk price paid out across the year increased by 4ppl to 25.6ppl.
- Processing Interest Payment relating to 2008/09 financial year increased to £4.1 million representing a 10.8% return on Members’ Qualifying Loans.
Founded in 2000, Milk Link says it is the UK’s most progressive integrated dairy producer and processor. Wholly owned by British dairy farmers it processes their milk into a wide range of high quality dairy products including long life milk, creams, flavoured milks, custards, milk powders, yoghurts and dairy ingredients, supplying all of the UK’s major retailers and many of its leading food service and food manufacturing organisations. It is also the UK’s largest manufacturer of cheese, making a comprehensive range of award winning British cheeses.
Milk Link Agrees Acquisition of Llandyrnog Creamery From DFoB
Milk Link has announced that it has agreed in principle to buy the Llandyrnog Creamery and its associated operations from Dairy Farmers of Britain, which went into receivership last week.
The agreement will be subject to the finalising of all necessary legal documentation and is expected to be completed by Friday 12th June at the latest.
Neil Kennedy, Milk Link Chief Executive, said: “This is great news both for Milk Link and the loyal staff and farmers who are at the very heart of the Llandrynog Creamery. The acquisition of Llandyrnog will complement our existing market leading cheese business and we believe will deliver, over time, substantial business benefits.”
Lets hope that the rest of the beleagured DFoB operation gets up mopped up equally quickly, and that the farmers involved all get alternative outlets for their milk asap.
Milk Link Strikes Chinese Deal
Progressive UK dairy business Milk Link has struck a deal with leading Chinese dairy company Yili to supply Stilton & Cheddar to the Chinese market.
As part of the deal, Milk Link’s award winning Stilton and Cheddar will be available in major supermarket chains and leading hotels located in major cities across China.
The first shipment of cheese arrived in China this month and regular shipments are scheduled to supply the country’s rapidly growing supermarket chains. The market for cheese in China is seeing strong growth and Yili – which is already one of China’s largest dairy companies – is focused on becoming the market leader in this sector. Yili is already at the forefront of supplying dairy products through its yoghurt, long life milk, milk powder and ice cream businesses.
Milk Link Half Year Results
Milk Link says the group performed satisfactorily in the first half of the 2008/09 financial year:
• Group EBITDA in the first six months of the year was in excess of £17.5 million (07/08 H1 £15.3 million): up 14%
• Underlying profit before tax was c. £9.3 million (07/08 H1 c. £7.5 million): up 24%. This was before an exceptional non-cash charge relating to the sale of Staplemead and accruing of Membership Processing Interest Payment
• Group turnover was £278 million (07/08 H1 c. £236 million): up 18%
• Group turnover per litre was 41.8ppl (07/08 H1 33.8ppl): up 24%
• Group borrowings were up £5.3m year on year to £92.7m reflecting the increase in value of stock funding required (stock value has increased by £27.1m to £86.7m due to the increase in milk prices and a higher proportion of mature cheese required to serve our customer base)
