Kerrygold Drives Ornua’s Strong Performance
Ornua, Ireland’s largest exporter of primary Irish dairy products, delivered a strong trading performance in 2016, with group EBITDA up 18% to €43.1 million and turnover ahead by 9%, on a like for like basis, to €1.75 billion. This performance was achieved in a year of volatile milk prices and political uncertainty in a number of key markets.
This result includes investment in new and existing facilities, a €6 million increase in brand and market development bringing total group investment to €51 million in 2016 and delivery of strong product prices returns to members.
The group closed the year with net cash of €57.2 million compared to net debt of €17.3 million in 2015 and a very strong Balance Sheet with net assets in excess of €500 million. This provides the Group with significant flexibility to fund future growth and support the working capital requirements of its members.
Irish product purchases rose by 7%, year-on-year, outstripping the rise in Irish milk supply of 4%. Over the last four years, Irish purchases have grown by 33%. This growth demonstrates Ornua’s strong product price returns.
Reflecting 2016’s strong performance, a Members’ Bonus of €14.5 million was declared, including a final bonus from the gain on disposal of DPI Specialty Foods of €5 million (in addition to the DPI related bonus of €15 million already paid in 2016). In May 2016, Ornua suspended the monthly Ornua milk levy in recognition of the on-farm challenges experienced by Irish dairy farmers, due to the global dairy market downturn.
Brand Performance
Ornua’s brand portfolio had an excellent year with growth across all core markets. Kerrygold reported record annual global retail sales of €900 million. Ornua’s ambition is to move Kerrygold from being a world-class butter brand to an instantly recognisable €1 billion global dairy brand in the coming years. 2016 saw the successful launch of Kerrygold Yogurts in Germany, Kerrygold Spreadable in the UK and the continued roll-out of Kerrygold Irish Cream Liqueur across Europe and the US.
Kevin Lane, chief executive of Ornua.
Kevin Lane, chief executive of Ornua, comments: “We are very pleased to report a strong 2016 performance. Excellent performances in established markets such as Germany and the US were accompanied by continued expansion in our developing markets of Africa, China and the Middle East. These results were achieved against a backdrop of significant market volatility and political uncertainty. We have built a diverse global business by investing in our brands, technology, in-market presence and our people. Ornua now exports to over 110 countries around the world. This strategy is ensuring our ability to continue to deliver for our members and for the Irish dairy industry, even in more uncertain market conditions.”
In-Market Expansion
2016 saw significant progress in terms of continued in-market expansion with the opening of a new Ornua facility in Saudi Arabia, upgrade works to the existing production facility at Neukirchen-Vluyn in Germany and the development of a purpose-built production line for yogurt brand, EasiYo, at Ornua Nutrition Ingredients UK. In addition to organic expansion, Ornua acquired US powder ingredients business, CoreFX Ingredients. 2016 also saw investment in Ireland with the opening of Kerrygold Park, the new global home for the Kerrygold brand. The €38m butter production and packaging plant, with a production capacity of 50,000 tonnes, enables Ornua to deliver new product formats to its consumers around the world.
In early 2017, Ornua acquired F.J. Need (Foods) Limited, a UK-based cheese ingredients company. This acquisition significantly strengthens Ornua’s presence in the UK ingredients sector. F.J. Need’s strong competencies will also strengthen our UK business capabilities in the post-Brexit environment. 2016 saw the completion of a business transformation strategy which has underpinned Ornua’s growth for the last number of years. The goal of this strategy was to prepare Ornua for the post-EU milk quota environment. Ornua 2021 is the new strategy which will guide the Group’s growth for the next five years. Ornua 2021 details the Group’s ambitious, yet achievable target – to build sustainable and value-added routes to market for Irish dairy products, generating revenues of €3 billion and a sustainable EBITA margin of 3% by 2021, whilst ensuring strong product price returns for our members.
