NORTH YORKSHIRE milk business Paynes Dairies has made its first profit since 2012 despite reducing volumes which contributed to a £16m drop in sales.
Its revenues were also affected by the falling milk price, an issue which came to public attention last summer as farmers protested against being squeezed so supermarkets could use milk as a loss leader.
The group expects “trading to continue to be challenging” but, in a going concern note in its accounts, said it expects to continue to generate profits based on its current production forecasts.
Paynes’ first dairy was in Ripon in 1972, which produced 100 litres of milk a day to supply the milk round of Brian Payne and his son Charles.
Charles, as managing director, oversaw huge growth up to 2014, when the business achieved £100m turnover for the first time, having doubled sales inside five years.
The growth had come at a cost, with its 2013 and 2014 financial years each producing losses of more than £400,000. Those years had followed a five-year period when net profits had averaged £1m a year.
Mr Payne described the company’s return to profitability as a “significant achievement”, which was done despite writing off bad debts of £790,000.
The group took “a strategic decision to reduce volumes” during the year to April 2015, which resulted in turnover dropping to £87.1m. However margins improved, enabling Paynes to record a marginal profit of £67,000.
“We continue to focus on customer relationships and the level of service we provide to our customers,” said Mr Payne. “However there has also been a continuing focus on cost and restructuring of our arrangements with farmers so as to ensure that we pay a fair and equitable price for our raw material supply.
The Boroughbridge-based business employs about 130 people.
