CHEESE and dairy product maker Lactalis McLelland has blamed a competitive market as it fell to a near £4 million loss in spite of increasing turnover by more than eight per cent.
The company, based at its creamery in Stranraer but owned by French conglomerate BSA, said it has been operating in a difficult trading environment but had continued to invest in its brands.
Those include President, Galbani, and Seriously Strong cheese as well as Rachel’s organic yoghurt .
Annual accounts recently lodged at Companies House show Lactalis McLelland, which is also involved in Orkney Cheddar and Galloway Cheddar, increased turnover from £186m to £201.7m in 2014.
In the UK turnover grew from £164.9m to £173.1m, while the European Union edged up from almost £21.1m to £22.27m and there was £6.5m of sales to the rest of the world in the most recent year compared to zero in 2013.
However even with that overall rise in sales Lactalis McLelland booked a pre-tax loss of £3.8m compared to a profit of £2.3m in the prior 12 months.
Writing in the accounts the directors said: “Despite the difficult trading environment and the market for dairy products remaining highly competitive and challenging the group has continued to invest in its major brands to retain its market positions.
“The cheddar market has continued to be extremely competitive in 2014 and the business has encountered difficulty in transferring the input cost for milk and ingredients to its customers in the light of competitive activities.
“However our main brands, President, Galbani, Rachel’s and Seriously Strong, performed well and delivered category growth in 2014.”
Lactalis Groupe said it had a no comment policy when asked about the financial performance of Lactalis McLelland.
However the accounts outline that the company, which also has a plant at Chard in Somerset, has plans to invest in more innovations for Seriously Strong alongside investing in marketing for its other main brands.
The directors said priorities in 2015 will be "costs reduction, brand investment, product and process innovation and manufacturing efficiencies”.
The accounts show staff costs rising from £14.5m to £14.8m even though average monthly employee numbers fell from 392 to 369.
Total director’s emoluments fell from £1.2m to £1.06m with the highest paid dropping from £220,000 to £209,000.
Many dairy farmers across the UK have protested at the prices being paid to them by supermarkets in recent months.
Writing in the accounts about its supply Lactalis McLelland said it has “well developed relationships” and works closely with the Milk Supplier Association to “balance competitiveness with the imperative to pay a competitive milk price.
Lactalis bought Stranraer based A. McLelland and Son in 2005 in a deal which included The Caledonian Cheese Company and McLelland Cheese Packing.
Along with the Seriously Strong brand the acquisition included a shareholding in the Orkney Cheese Company and Dairy Solutions.
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