Carbery profits fall 13.7% to €4.4m
Carbery Group, owned collectively by the four West Cork co-ops said more expensive energy was among the key factors that upset its performance in 2006, while the group also suffered from weaker cheese markets.
Earnings before interest, tax and goodwill amortisation of €7 million were achieved represented a fall of €600,000 on the 2005 figure of €7.6m.
Sales decreased 2.5% to €176.5m, from €181.1m in 2005. Profit before tax came to €4.4m, down €700,000 on 2005, when a €5.1m PTP was generated by group activities.
Margins, always a key barometer of how a company is doing, fell from 3.4% in 2005 to 3% last year. It’s not surprising that Carbery Group chief executive Dan MacSweeney described the year as more challenging than previously.
“Even though it was a year of significant investment and progress, the weaker cheese markets and energy costs in particular contributed to the fall in turnover and profitability.
“Nevertheless, the company was still able to pay a strong milk price to its four shareholder co-ops.”
The group continued to make acquisitions in the non-dairy ingredients sector, purchasing the New York (Rochester)-based Van Lab, in November 2006, increasing it’s net debt to €32.8m from €17.5m in the year.
The 40-year-old Carbery group produces food ingredients and flavours as well as alcohol and 20 well-known cheeses, including Dubliner. It sells into the food market, and food, beverage and nutrition producers.
Ingredients enjoyed steady rather than robust performance in 2006, falling short of growth expectations.
Cheese returns, meanwhile, fell reflecting the a competitive British market.
The problem for the group was increased production levels across Europe, in 2006, and rising stock levels which undermined prices as the year evolved.
Dubliner Cheese sales continued to grow on export markets, particularly in the US, where it has a significant retail presence, and where it is marketed by the Irish Dairy Board.
Assessing the year and future outlook, Carbery noted that the EU’s review of agriculture continued to hurt dairy markets where refunds were cut substantially and product prices suffered.
The chief executive said the group minimised and delayed milk price cuts for as long as possible during the year, in an effort to reduce the impact on its suppliers and that too cut into earnings.
The acquisition of Van Lab in November adds significantly to Carbery ‘s US sweet and savoury business, which is located outside Chicago. East Coast Van Lab specialises in the manufacture of sweet flavours for the ice cream, dairy, pharmaceutical and bakery sectors, specialising in natural Vanilla flavours and possessing unique Vanilla extraction technology.
Also of interest from the Ballineen, West-Cork based group was the signing of a joint venture recently with Earthanol, a Florida-based bio-fuel operation.
One new bio-fuel plant per week is currently being built in the US to meet burgeoning demand.
NTR is already active in that market, and Carbery is the second Irish firm to enter what some have warned could become the next bubble in the US.
However, Carbery has a long tradition of making alcohol in it’s Ballineen plant and who knows how significant that move could turn out to be in another few years.
Its lactose fermentation facility was the first of its type in the world which produces over 10m litres of potable alcohol annually that’s sold into the beverage, industrial and biofuel sectors at this stage.
