Ehrmann Faces Losses in UK Amid High Milk Prices and Volume Decline
German dairy processor Ehrmann reported a sharp decline in profitability in the United Kingdom last year, citing high milk prices as a primary cause. The prices of milk in Britain surged to their highest levels since 2022, leading to Ehrmann's losses doubling to £3.6 million for the year ending December 31.
Ehrmann also experienced a notable 60% drop in volume after one of its co-packing customers decided to move production to their own facilities. However, Ehrmann indicated that this decrease was largely balanced by increased sales in other sectors.
2022 marked the first complete year since Ehrmann acquired the Cornish supplier Trewithen Dairy, which was part of a strategic expansion into the UK market. The acquisition's financial details remain undisclosed, but Ehrmann invested £20 million to enhance Trewithen Dairy's processing capacity in Cornwall. The dairy has since been rebranded as Cornish Dairy Co.
In its latest financial statements, Ehrmann noted that as milk prices began to stabilize towards the end of 2025, the company returned to profitable operations, with expectations of continued growth throughout the current year. With the current decline in milk prices, Ehrmann has embarked on constructing a new modern desserts facility, expected to be completed by the end of 2026.
The company is also planning to initiate efficiency projects aimed at achieving significant cost savings, with completion slated for early 2027. Although specific details were not disclosed, Ehrmann emphasized that these projects would be crucial for the business's future.
The reduction in milk prices has led to a decrease in production across the UK. As a result, two UK processors, Arla and Saputo, increased their prices to 37 pence per litre for deliveries in July and August. This move is anticipated to encourage other processors to follow suit. However, dairy commentator Chris Walkland noted that despite the rise in milk prices, falling prices for dairy products like cream, butter, and cheese pose challenges for processors to increase payments to farmers.
