(Image: Getty Images)
A Scottish dairy giant has reported a 5% rise in turnover to £293 million in new accounts.
However, earnings were squeezed by higher costs and profit before tax dropped to £573,000 from £2.3m at major Stranraer employer and Galloway cheesemaker Lactalis McLelland.
The company pointed to increased cost of sales, which rose by £17m, and limited scope for further price increases of its own, despite the increase in turnover, in accounts for the year ended December 31, 2025.
The French-owned company posted a profit after tax of £540,000, set against £2.3m the year before.
The directors said in the strategic report: “Operating profit fell in 2025 compared with the previous year, mainly because of increased cost of sales and limited scope for further price increases, even though turnover improved."
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Key brands such as Président, Galbani, Leerdammer, and Galloway experienced higher sales than in 2024, "thanks to greater marketing support and investment".
“Sales of smaller brands performed reasonably well, while private label sales remained unchanged due to a heightened price war," the firm, which employs 123 staff, said.
Scottish cheesemaker increases turnover to £293m (Image: Getty Images)
“Both modern and traditional trade channels achieved volume growth, but there was no increase in volume within the hospitality and food service sector, which had a challenging year with the shift to value, quick-service format and consumer trading down.”
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Last year, inflation and interest rates saw a gradual improvement, “however, the marketplace remained highly competitive, with consumers seeking more affordable products due to persistently high food inflation”.
“This trend is evident in the sustained growth of discounters and the increased sales of private label products across certain categories,” the firm said.
“Growth and profitability continued to be modest due to profitability being adversely affected by elevated manufacturing, labour, and energy costs.”
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The directors “remain confident that the company is well positioned to address these ongoing challenges”.
Looking ahead, it said it faces ongoing risks “due to global economic changes and persistently high inflation”.
The firm said: “The board reviews and updates risk mitigation strategies regularly. In 2025, price increases were implemented to address some of the rising costs in milk, transport, energy, and labour.”
The directors also said: “Lactalis McLelland continues to encounter significant risks and uncertainties associated with the evolving global economic landscape, where inflation levels remain elevated.
“Regular reviews of product range and market trends are conducted, and new products are launched to address shifts in consumer and customer demand.”