Yeo Valley has bucked the general trend of tightening margins within the dairy sector by posting a “strong performance” for the 2014/15 financial year, which saw it increase revenues and pre-tax profits.

Accounts filed by Yeo Valley Group with Companies House for the year to 31 May 2015 revealed the processor enjoyed a 3.3% (£9.2m) increase in sales to £284.2m, and an increase in pre-tax profits of 92% to £6.6m.

The increase in sales was driven by “continuing growth” in production subsidiary Yeo Valley Farms, it said, with a good year for its core yoghurt operation, and the Yeo Valley brand in particular, which saw sales rise by 22% year on year.

The group’s acquisition in December 2014 of Coombe Farm Fruits - which manufactures fruit conserves used in a large number of Yeo Valley’s products - in addition to tight cost control by the business, also contributed to an improvement in Yeo Valley’s net margin from 1.25% to 2.3%, and strengthened its supply chain and future organic fruit supplies, it added.

However, Yeo Valley warned the dairy sector faced increased volatility in the wake of the abolition of EU dairy quotas last year, while the impact of the slowdown in the wider European economy, foreign exchange risk and the continued uncertainty over a potential Brexit all posed risks to the business during the next 12 months.

The results come a week after Yeo Valley became the sole supplier of own-label yoghurt to Tesco after the retailer pledged to source only from the UK, a move the processor described as “great news” for British dairy.

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