Dairygold Co-op’s operating profits soar to €18.9m as sales rise sharply

DAIRYGOLD CO-OP’S operating profits rose sharply to €18.9 million from €11.8m in 2009, while sales increased to €693.6m, up €138.4m on the previous year.

Profits were further boosted by share trading activities undertaken by the co-op to part finance the planned acquisition of a range of properties from Reox Holdings

That resulted in a flow of additional income of €7.3m, pushing the total operating profit up to €26.2m for the year.

The increased turnover and profits were underpinned by solid performances across all divisions, the group said

Commenting yesterday, Dairygold’s chief executive, Jim Woulfe, said the dairy divisions’ good performance “reflects the improved efficiency of our plant, the continued optimisation of our product and customer portfolios, combined with strong returns from international dairy markets which triggered an increase in on-farm milk production and drove dairy sales volumes.”

Retail sales improved following the first full year’s operation of the seven stores acquired from Reox Holdings plc in late 2009.

Agri trading benefited from the increased demand for farm inputs to support higher milk production on farm, with the group boosting its share of the feed and fertiliser market, he said.

Mr Woulfe said last year’s dairy performance has to be seen in the context of dearer raw material costs as the group paid a market-leading milk price throughout the year, reflecting the uplift in returns from international dairy markets.

The dairy processing operation, Dairygold Food Ingredients, continued its focus on two core areas — cheese solutions and dairy ingredients, especially the infant milk sector.

During 2010 the group got a major boost by the decision of Danone to retain it as a key raw material supplier to its expanded Infant Milk Formula facility in Macroom. Danone is to treble its production capacity to 100,000 tonnes annually as a result of the upgrade at Macroom, and is set to take 50% of the dairy group’s demineralised whey product output, a key ingredient in baby milk formulations.

China, where the group has been active for the past 10 years, accounts for the remainder of the group’s demineralised whey output and with the number of babies being born there expected to rise form 16m last year to 20m by 2016, the potential for the group in that market “is significant”, The dairy processing operation said Mr Woulfe.

The other big challenge is the post-quota milk environment during the second quarter of 2015.