West Country cheesemaker Wyke Farms grew both sales and profits last year, despite facing significant production cost inflation.
The supplier registered sales of £124m for the year ending 31 March 2022, according to its annual report and accounts, posted at Companies House.
This represented a 7.8%, or £9m, increase in turnover compared with Wyke’s previous accounting period. Operating profit rose by 27.5%, from £5.1m to £6.5m, while its total profit for the financial year edged up by 2.4% to just under £3.5m.
Wyke’s farmgate milk price rose by 25% during the accounting period, driven by big increases in a variety of input costs – with the supplier citing wage inflation of 20%, fuel prices up 70%, wheat rising 83%, fertiliser pricing climbing by 179% and packaging up 50% as key factors.
These inflationary pressures meant its total farmgate price increase since the start of the accounting period and into the current 2022/23 period – which has seen industry average farmgate prices rise even further – was put at 73%.
But despite operating in such a “challenging” trading environment (where the cost of producing cheddar had effectively doubled), the supplier said its cheese business had performed well, benefiting from good growth in exports, both to the EU and the rest of the world.
“We have seen more markets opening up, in more countries across the world,” its annual report said. “We are increasingly selling more older, long-aged cheeses into these markets and have continued to invest in our maturing cheddar stocks to service this growing sales mix.”
To meet this growing demand, Wyke said it had moved to increase its borrowings post-March 2022 by £20m in order to build its aged cheese stocks. “Challenges around interest rate rises will increase the cost of holding this cheese stock,” it added.
Elsewhere, the supplier’s renewable energy producing arm performed strongly, MD Rich Clothier told The Grocer, helping to further burnish the company’s performance.
“We use about a third of the gas we produce so we are selling two thirds back to the grid,” he added.
Clothier warned 2023 could be challenging for many cheesemakers, with farmgate milk prices now falling quickly.
“I’ve never seen pricing so dynamic as we are seeing now,” he added, noting how record farmgate prices in 2022 were quickly falling off.
However, the current trading period was looking “reasonable” for Wyke, he suggested, with “solid results and more growth”, and the business expecting turnover to top £150m.
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