First Milk 'is not the next DFB'
FIRST Milk is not the next DFB, its bankers did not impose the sale of a third of its Wiseman shares, and a merger with Milk Link is by no means inevitable any time soon.
Those were three clear statements from the co-op’s new chairman, Bill Mustoe, who was anxious to dispel some myths circulating since First Milk announced its first loss.
Mr Mustoe, who admitted initially knowing nothing of dairying and not having heard of First Milk until a few months ago, said what he did know was how to run a business. However, he was not going to make bold predictions of how the co-op would be placed two years from now.
“I will say what the position will be in 30 days, 60 days and 90 days. What is really important is the way in which our running of the business affects your lives,” he said.
“I hate where we are now on milk price. The fact is if we do not earn it we cannot pay it to you.”
Mr Mustoe was, however, adamant that, while no-one could influence the marketplace, much could be done and in the case of First Milk, the priority was taking out cost. Savings equivalent to 0.5ppl had been identified, but “we have only scratched the surface,” he said.
He assured the business was not going the way of DFB.
“DFB had four years of losses before it failed - we have had one. DFB had £39million worth of goodwill in the business which became worthless and without it, its assets were not really worth having. We have none [goodwill] and our assets are worth more than £60million.”
He said the plan to raise capital from the sale of a percentage of the co-op’s stake in Wiseman was already in place when he took over. It was a good plan, so it went ahead and the money would be used to bolster the cheese business.
Despite speculation, a merger with Milk Link was not inevitable - not at present anyway. “Our cheese businesses are at different stages, for one thing,” he said.
Even if the two did merge, he said, it would not necessarily mean greater muscle in dealings with major retailers. They would not let it happen and would simply look to additional suppliers.