Lakeland Dairies pre-tax profits slightly up to €1.4m in tough year

LAKELAND Dairies, the Cavan-based dairy co-op, made pre-tax profits of €1.4 million in another tough year for the group.

The profit was marginally higher than in 2008 despite sales of €325.7m being more than €100m down on the previous year’s figure.

Lakeland’s chief executive, Michael Hanley, said 2009 was the toughest year for farmers in nearly 40 years and what he characterised as “the most challenging of market conditions”.

Last year was one of progress with the completion of a €20m investment in a new milk powder facility at Bailieboro, Co Cavan, which has reduced the number of plants from four to one. Its Lough Egish facility closed last week as the new facility was fully commissioned.

The group believes the worst of the volatility in global markets is nearly over and Hanley expects markets will continue to improve “gradually throughout 2010”.

Last year the group did well to “stabilise” profits despite the huge pressure on it to support farm incomes as milk prices hit lows of close to 21 cents at one point.

They have recovered about 20% in the meantime and the group is optimistic the return to more “average prices” will result in supply and demand balancing out, which should see milk prices return to more sustainable levels of Irish farmers.

Its foodservice division, the group’s added value operations, performed “strongly” achieving sales of €114m, while it accounted for a growing percentage of total revenues at 35%.

In 2009 the group’s combined foods services and food ingredients divisions sold dairy products across 70 countries and accounted for €291m of total sales, with Agri trading contributing €33.9m of sales, down 27%.

Meanwhile, a survey by the group found the majority of Lakeland Dairies milk producers found up to 92% said they will stay in milk production while 61% will increase their milk production between now and 2015. 72% said they have a sufficient volume of herd replacements.