Lakeland Dairies reports €1.37m profit as chief prepares for ‘long year’

THE country’s second largest dairy processing co-op, Lakeland Dairies, reported an operating profit of €1.37 million for last year.

The figure was well down on the previous year, reflecting a very tough global dairy market undermined by a major fall in demand, created by the global economic slump. Sales for the year amounted to €435m.

The group also confirmed a €20m investment in milk-powder processing facilities for its Food Ingredients Division at Bailieboro, Co Cavan.

This will make Lakeland the most efficient producer of powdered milk products and leave it well placed to supply its network of global clients, said Michael Hanley, group chief executive. He warned the setting up of the plant will result in a loss of about 50 jobs when operational.

“While turnover and operating profit were down on the prior year, this is mainly attributable to the very difficult dairy market conditions that prevailed throughout 2008.

“Lakeland has turned in a very satisfactory performance in a highly volatile international marketplace,” said Mr Hanley.

Operating profits fell from €5.7m to €2m and underlined the extent to which the group supported the milk price to farmers he said.

Its core divisions, Food Ingredients and Foodservice, delivered good results in difficult circumstances.

Foodservice sales grew by 9% to €121m while the ingredients business saw sales dip 12% to €267m.

Mr Hanley sounded a note of scepticism, however, saying that 2009 was going to “a long year” for the industry.

Overall, Mr Hanley said the group was well placed to cope with the pressures of the changing market. Its network of clients for its range of dried milk products ensured a solid result in a tough year, he said.

The sector would have been in much deeper trouble but for the fact that Germany, France and Holland were also hit hard, forcing the EU to reintroduce intervention and export credits which saved the sector here from a much worse fate, he said.