Co-op’s operating profits hit €4.24m

ARRABAWN Co-op, which is headquartered outside Ballinasloe, Co Galway, generated operating profits of €4.24 million before exceptional items last year against €1.26m in 2009.

Chairman Michael Flaherty announced the figures at the group’s AGM in Nenagh yesterday.

It was gratifying to report a significant improvement in the financial performance of the group for last year, Mr Flaherty said.

Turnover for the year rose by €43.3m to over €169m.

Within that, the dairy operations accounted for sales of €116.7m compared with €76.4m in 2009. Its trading division saw turnover rise to €52.4m from €49.5m in 2009, while shareholders’ funds amounted to €30.6m compared with €28.9m the previous year.

The increases in turnover and profit were driven mainly by improvements in world dairy product prices, increases in milk volumes from suppliers, and the acquisition of the Dawn Dairies business from the Kerry Group.

That acquisition made sound “commercial sense” due to the spare capacity in the group’s Kilconnell plant.

“It provides us with opportunities for significant improvements in our liquid milk business which will increase our competitiveness and make us a very attractive low-cost producer for the major retailers,” he said.

During 2010, milk supply was constrained up to May as markets were relatively weak, but they picked up as a result of the high surge in milk volumes as global demand gathered pace.

Demand continued to grow in emerging markets, but Mr Flaherty expressed concern that the rising milk prices could prove counter productive if consumers are put off by the higher prices in the period ahead.

A strong dollar against the euro was critical for the EU to be competitive on world markets, he said.

For 2011, the outlook is that the markets will remain firm for powder and butter in the short term, while high prices could impact demand as buyers switch formulations to cut costs.