North Cork Co-op is investing €3.85m of its own funds in new facilities to cope with an anticipated 25%-30% increase in milk output post-2015.
Having announced its record-breaking 2011 financial results yesterday, the co-op said its post-quota expansion plans will be funded by €2.5m from the sale of some of its Aryzta shares. The rest of the money comes from internal funds.
The co-op’s turnover rose to €57.2m in 2011, up around 30% from the €39m of 2010. The Kanturk-based company also recorded an historic 68% increase in operating profit to €1.1m.
The company enjoyed an excellent year of production and sales. The co-op produced 7,500 tons of butter in 2011. Some 91 million litres of milk were processed, up 32% on the previous year, with milk suppliers gaining a very competitive 34.69c per litre on average for the year.
North Cork Co-op’s financial controller Gerry Meehan said: “We have 40 million litres of our own, and we bring in up to another 60 million. Our main products are butter and casein. We will also be producing WMP and skim milk.
“The €3.85m will be spent on installing a milk evaporator/drier, upgrading the casein production and streamlining the milk intake facilities. When milk production is going full belt, we will be in a position to take in milk from other entities.
“The fact that the investment is coming from our own funds rather than from a bank loan is a huge vote of confidence from our suppliers.”
The co-op’s accounts for 2011 show it experienced the most successful year in its history, with production, sales, and profitability reaching record levels.
Mr Meehan predicts the milk price will fall during 2012. He also said the average price for the past seven years comes to around 30cpl.
Reviewing dairy markets, co-op’s general manager Sean McAuliffe said markets were generally strong, and this was reflected by good prices across all categories.
Store sales rose 12%. The store was revamped and a programme of promotional activity continued through the year. Good weather helped cut the cost of farm inputs and the continued improvement in the dairy sector contributed to a much more positive outlook among suppliers.
In line with the policy of rewarding customer loyalty, bonus shares were again issued to shareholders who bought feed and fertiliser from the co-op.
Mr McAuliffe said the immediate outlook for the dairy sector is for market prices to fall.
“The effects of the increase in milk supplies are now being felt across the EU and worldwide. Short-term dairy markets are weak and this has an adverse affect on milk prices. However, they may recover later in the year.
“Long term, there is cautious optimism, as demand for dairy products increases globally, but we remain vulnerable to ongoing volatility of supply and demand on world markets,” said Mr McAuliffe.
© Irish Examiner Ltd. All rights reserved