Wyke Farms gift box

Wyke Farms faced a 68% increase in butter and cream commodity prices during the first half of its financial year

Challenging commodity prices and market conditions have eaten into the profits of Wyke Farms, First Milk’s cheese operation and Graham’s The Family Dairy.

Wyke saw turnover rise 26.3% to £85.2m for the year ending 31 March 2018. However, operating profit fell 26.7% to £2.7m, while pre-tax profit fell 31.6% to just over £2m on the back of a “very challenging retail landscape” and in the face of soaring commodity prices.

Wyke said the price it paid for cream and butter rose by 68% from the start of the financial year in April 2017 to the end of its second quarter in September 2017.

“It has proved difficult to pass some of these sharp increases on,” which had resulted in pressure on butter margins, the supplier said in its accounts. Cheese performed better, but margins tightened during the second half of the financial year. It stressed the company’s performance showed “the merits of running a diversified and balanced business”, with export volumes through its strategic alliance with Omsco increasing.

First Milk’s main manufacturing subsidiary The First Milk Cheese Company saw turnover jump 24.6% to just under £190m during the same period, but operating profit before exceptional charges of £426k for redundancy costs fell 53% to £4.2m, with pre-tax profit after exceptional items down 50.1%.

Meanwhile, Graham’s saw its turnover increase from £100.5m to £104.1m.

However, the supplier’s failure to secure planning permission for a new dairy and housing development at Airthrey Kerse led it to write off more than £861,000, with operating profit after that exceptional item falling 56% to £789,591, and pre-tax profit falling 71.5% to £372,644.

“Maintaining the overall balance between supply and demand in raw milk continues to provide both opportunities and challenges,” it said.