Troubled milk processor First Milk posted a boost in profits and turnover before entering troubled waters this year.
Figures released by the Glasgow-based farmers’ co-operative, reveal a return to profit in the year ending March 31, 2014.
Pre-tax profits before exceptionals were £3.5million, compared to a loss of £800,000 the year before.
This was against a 15% boost in turnover to £610million, from £530million previously.
The processor has been at the centre of the current dairy crisis.
Earlier this month it was forced to delay payments to its farmer suppliers after revealing it was suffering from cash-flow problems.
It also asked members to increase their capital payments into the co-operative to keep it afloat.
Chairman and former Defra farm minister, Sir Jim Paice, said the year to March 31, 2014 had been a good one for the co-operative but warned the group had incurred losses since the year end.
“Despite seeking to align milk prices with milk returns, the losses incurred have restricted the amount of cash available to the business,” added Sir Jim.
“For several months the board has been in discussions with our lenders and has had a series of very short-term increases in our facilities. This is despite the considerable fall in the value of the cheese stock against which the borrowings are secured.”
He said the decision to delay payments and ask members to increase their capital payments was needed to help First Milk “stand on its own feet and rebuild the fundamentals of the business ahead of the spring flush”.
“The board recognises the additional financial pressure that these decisions will have placed on members, but they are necessary measures to secure the business for the future,” added Sir Jim.
“Deferring milk payments by a fortnight improves First Milk’s cash-flow significantly. Furthermore, increasing members’ capital investments into the business for a period of time ensures that First Milk’s financial position will continue to improve over the coming months.”