FDBusiness.com

Dairygold Co-operative Society, Ireland’s largest farmer-owned dairy processor, has reported a substantial operating profit of €27.2 million on core activities for 2014. Turnover reached €848 million, marginally up on the 2013, despite the significant decline in international dairy market returns. The results are in line with the previous year’s record financial performance and continue the co-op’s trend of achieving strong operating profits, while paying a leading milk price.

Dairygold’s earnings before interest, taxation, depreciation and amortisation (EBITDA) on core activities rose by €1.8 million to €47.2 million. The Society invested a total of €50.1 million in the business in 2014, while maintaining net bank debt at a prudent level, rising modestly from €60.9 million to €71.6 million. The underlying strength of the 2014 performance is reflected in the net debt to EBIDTA ratio, which despite the continued substantial capital investment, has marginally increased to 1.5:1 from 1.3:1 in 2013.

Dairygold processes almost 20% of the Irish milk pool and last year processed its highest ever volume of milk of almost 1 billion litres. Dairygold’s 3,000 Milk Suppliers have forecasted up to a 60% increase in post quota milk production output by 2020.This will result in Dairygold processing an extra half a billion litres of milk annually by 2020.

Jim Woulfe, chief executive of Dairygold.

During 2014, Dairygold completed the €33.5 million expansion of its Dairy Processing Campus at Castlefarm, in Mitchelstown, which enhances the facilities nutritional ingredients’ capability.

Meanwhile, the €83.5 million investment in the first phase of the regeneration of the Mallow Milk Processing Site is progressing on schedule with full commissioning targeted for early 2016. Overall, the Society’s investment will bring the total weekly milk processing capacity to between 45 and 50 million litres by 2016, depending on product mix. The investments are creating pharmaceutical standard food processing facilities which will facilitate greater volumes of higher value dairy ingredients.

Jim Woulfe, chief executive of Dairygold, says: “Dairygold achieved its strong financial performance by optimising its diversified product portfolio to track the best market returns available and delivering processing and operating efficiencies following the continued investment in Capital and Continuous Improvement. The 2014 performance was noteworthy, particularly considering that it was achieved against a backdrop of an almost 50% fall in dairy market returns between February and year-end. In addition to supporting milk price beyond market returns and investing significant resources in farm development programmes and assisting suppliers with on-farm planning for post-quota expansion.”