DAIRY co-operative First Milk has reported an operating profit of £6million in the year to March 31, 2016, following a loss of £22.1million in 2015.

The company, which has a creamery in Haverfordwest, reported group turnover down to £291.5m, compared with £442.2m in 2015.

Net loss for the year was £5.1m (2015: loss £28.1m) - a £23m improvement.

Chairman Clive Sharpe commented: “The financial performance of the business improved significantly in the year to March 31 2016 reflecting the results of the turnaround plan executed by the new management team, and the focus on delivering operational efficiencies and quality improvements in the core business.

"Overall we returned a modest operating profit in the year, compared to a large loss in the previous year – a £28.1m improvement (before exceptional items).

“Milk prices continued to decline throughout the course of the year as a result of continued growth in global supply not matched by growth in demand.

"The reduced value of milk and other dairy ingredients, accompanied by a significant reduction in the volumes of bought-in milk and the impact of divestment of loss-making businesses, led to a significant drop in group turnover in the year. The business is smaller, but is in much better shape than last year."

The turnaround plan executed by the new management team included restructuring and downsizing of central functions to reduce overhead costs and improving operational performance and product quality in the hard cheese business.

Mr Sharpe added: "We continued to develop the long term relationship with Ornua Foods (previously Adams Foods) and worked with them to ensure that our product specifications and recipes meet customer requirements.

"Through our enhanced collaboration we significantly reduced the impact of inconsistent quality and the volume of surplus cheese sold at a discount that had cost us dearly in the previous year."

He added that although it had been a difficult year, First Milk’s business was now on a firmer footing.

"Milk prices are finally starting to rise, and we have been pleased to deliver the first fruits of the turnaround plan in the form of higher, non-market driven, milk prices to members, with 2ppl business performance supplements paid as promised, and a substantial 7ppl increase in the B price from July/August 2016."