First Milk has "turned the corner" having converted last year's £9.9m loss into ­a profit in its latest results.

Chairman Bill Mustoe made the claim as the Scottish dairy posted a £360,000 pre-tax profit for the year to 31 March 2010. Mustoe attributed the £10m turnaround in its fortunes to efficiency savings and better market returns.

The co-op slashed its head count by 117 during the period and reduced its ­administrative expenses by £2m. It has also secured better returns by putting more milk into ­butter and milk powder through the Westbury Dairies joint ­venture.

Turnover fell 8% to £536m as the co-op ditched several low-value cheese contracts, but Mustoe stressed the company had not lost any distribution it had wanted to keep. First Milk was "coming towards the end of the woods", he said, adding: "We can see a lot more ­daylight."

Mustoe refused to be drawn on targets for the financial year, but said he would be happy with an improvement akin to the £10m in its latest results. "I would like to see the same amount again only if you do that can you continue to improve the milk price," he said.

Efficiency savings and ­better returns had already delivered profits ahead of target for the first quarter and First Milk expected to develop some "differing and new ­relationships". First Milk had also made savings through changes to its haulage arrangements in the first quarter.

Former CEO Peter Humphreys and former chairman Richard Grenhalgh were paid a ­respective £430,000 and £120,000 in compensation after they left the business earlier this year and last year respectively.

First Milk has since ­reduced executive ­remuneration by 30% and, in future, bonuses will be linked to improving cash earnings and its relative ­position on milk price.

Last year's loss was ­sustained after First Milk used its reserves to fund its members' milk price as they were suffering from high on-farm costs.