The substantial loss was caused by plummeting market values and performance problems in a number of areas, according to its annual report published this month.
First Milk chairman Sir Jim Paice said the prices paid to farmers had been out of sync with business returns due to the rapid “collapse” in the value of dairy products.
Level of losses ‘not acceptable’
“The level of losses incurred was not acceptable and the board have taken steps to ensure that they do not recur,” Paice said.
“The last financial year has been a disappointing one for First Milk but steps have been taken in recent months to address the trading issues that were experienced.”
First Milk also highlighted a breakdown at its whey processing facility in the Lake District and the underperformance of its sports nutrition subsidiary CNP.
Earlier this week the dairy co-operative announced plans to overhaul its governance structure in the wake of an independent review by consultancy Greenburn Associates.
Under the plans, the board would downsize from nine to seven members and its group of 13 area representatives would be replaced by a seven-member council.
‘Pitfalls of recent years’
First Milk chief executive Mike Gallacher said the new board structure with significant commercial experience would allow the co-operative to avoid the “pitfalls of recent years”.
“This change continues the pace of transformation at First Milk, which has included the setting up of business units within the group, significant restructuring, a step improvement in the financial transparency of the business and a drive to focus on our core cheese and liquid contracts businesses,” Gallacher said.
“Dairy remains a tough category but I am confident that the rapid pace of change will create a business that will deliver for our members, our customers and business partners.”
Meanwhile, dairy farmers protested at Dairy Crest and Arla Foods sites in Derbyshire on Monday night as crippling milk prices continue.
Annual results at a glance
- Turnover: £442M, down from £610M in the previous year
- Pre-tax losses: £25M, compared to losses of £4M in the previous year