Henchy upbeat on co-op future

THE boss of Dairygold, Jerry Henchy, said yesterday the proposed plans for Dairygold “definitely gives us a co-op that is financially robust”.

And he said it is also very strong in terms of adding value to milk in a cost-efficient manner.

Mr Henchy also dealt with the lack of value to farmers involved in the existing structure.

That has changed in the past two years, when a farmer with 12,000 shares has seen its value rise form €12,000 to €42,000.

At €2.34 per share, however Mr Henchy believes the shares are undervalued by at least 30% and internal trading among the 8,000 farmers has run its course.

Dairygold wants to protect milk price by separating the dairy and agri divisions from non-core assets.

Mr Henchy said: “The co-op is set up to add value as effectively as any other milk processor in Europe.”

But he warned milk price cannot be supported “by burning furniture elsewhere, unless you are going to undermine the value of other assets”.

In the past 12 months the group has invested heavily in the dairy business. Up to €20 million was spent in increasing efficiencies and the cheddar cheese plant has been expanded to produce 30,000 tonnes per year, up from 14,000 tonnes.

A further €20m will be spent on the group’s baby food division, Nutricia, and that will be followed by an additional €18m investment as demand grows.

What the new proposals aim to achieve is to allow the co-op pay a leading price for milk and create a pension or alternative income stream for farmers.

Mr Henchy believes shares were undervalued by 30%, implying a total current value of over €3 per share.

Mr Henchy also believes the company’s property portfolio is the hidden jewel in Dairygold’s crown.

Last year 4Homes doubled its profits. Elsewhere consumer food sales rose 12%.