Wyke Farms enjoyed a £4m-plus increase in profits last year on the back of a solid showing across its renewable energy operation, rising demand and new business wins.
The West Country-based cheese and butter maker delivered a 68.4% rise in operating profits to £10.9m in the year to 31 March 2023, according to latest accounts posted at Companies House.
Turnover also rose significantly – by 20% to £149.5m – on the back of record farmgate prices during the accounting period and the subsequent increase in the price of Wyke’s products across various retail channels.
The business cited the performance of its anaerobic digestion-based energy business – which sold over 60% of the surplus green gas it produced back to the National Grid at “record prices” – as one driver. Increases in distribution globally also helped to grow sales, it added.
However, Wyke caveated the “pleasing” rise in profits with a warning of a “very challenging” year ahead.
Soaring demand for older cheese with more flavour meant the business had been forced to lay down more stock when farmgate milk prices were at their peak, said Wyke MD Rich Clothier.
This meant cheese had been produced at a higher price than in previous years – and given how it took at least two years to mature, this stock was therefore unable to earn the business money for the duration of that maturing period.
Stock values peaked at the end of the financial year at almost £50m. Its cheese stock finance facility increased from £17.5m to £30m during the accounting period, putting “significant pressure on the business as we finance at a higher working capital requirement”, he added.
“In a much higher interest rate environment, we have seen a marked increase in financing costs in order to hold a high level of aged cheese stock,” Clothier pointed out – leading Wyke to seek price increases from its customers.
But despite these challenges, he said the business had continued to invest, ploughing £10m into an automated butter plant that could prove crucial for the business.
“Only by continuing to invest in the business and automation can we achieve higher outputs and upskill jobs so that we can pay people more,” Clothier said.
“In terms of what went well, we are lowering our carbon emissions on farm and in our operations all of the time,” Clothier told The Grocer this week.
“The technologies around dairy cow breeding for low carbon are extremely exciting as are the development of gut additives and the global work around transparency of feed proteins for ruminants,” he added. “Growth in global exports for British food has also been exciting and is likely to continue.”