Milk Link chief executive Neil Kennedy has targeted further acquisitions following the purchase of the Llandyrnog Creamery last week.

The purchase of the hard cheese business from Dairy Farmers of Britain, due for completion this week, would be just the start of a series of acquisitions by the farmer-owned co-op, Kennedy told The Grocer.

"I see us adding to the business rather than subtracting from it," he said. "This is most definitely the start of further acquisitions. The market needs to consolidate, there are too many players and sites." Although he didn't specify targets, the cheese sector was particularly ripe for further consolidation, he said.

Part of Milk Link's growth strategy involved securing further milk supply, he said. The company has already picked up 160 farmers from DFB this week and aims to reach 300.

The company's hopes of further acquisitions have been boosted by good annual results. Turnover for the year to 4 April rose 4.6% to £547m, with pre-tax profits up 13.5% to £10.1m. Net bank debt fell by £8.5m to £76.1m, but EBITDA slipped from £30.5m a year ago to £28.7m on the back of a higher milk price paid to members, less profit retained in order to meet banking covenants and the absence of cheese stock profits recorded in the previous year.

Milk Link has been working on stripping out inefficiencies from the business over the past year, but Kennedy ruled out further internal consolidation following the closure of the Kirkcudbright factory and transferring of operations to Crediton last month.

Cash generation had improved as a result of keeping low cheese stocks and ensuring customers paid on time, he added.

NPD and product improvement were key, said Kennedy. "We've got a very full programme of new products and improvements in the pipeline," he said. Niche speciality cheeses would be a particular area of attention following the completion of a new speciality cheese packing operation in October.