Co-op’s fortunes on the rise

DRINAGH Co-op expects to improve on its satisfactory 2010 performance with its plans for suppliers to increase milk output by 40% when the quota era ends in 2015.

The west Cork company’s 2010 results show a healthy turnaround following a difficult three years for the dairy sector.

Turnover surged to €81.3 million, up from €67.7m in 2009, delivering a near 150% lift in profit after tax to €3.75m, from €1.44m in 2009. Milk bonuses of €2m were paid out during 2010.

Chief executive Joe O’Sullivan said: “We have ambitious plans for growth after 2015, but we’re not alone in that. All of the co-ops and the farming sector generally is enjoying a good spell right now.

“Farmers were paid a good milk bonus per gallon. Our members are all very positive about the way the co-op is going, and with our plans.”

Co-op members have also endorsed a number of changes, including the switch to the A+B+C milk payment system, which is expected to encourage and reward higher milk solids.

Drinagh’s members also endorsed the co-op’s decision to close down its defined benefit (DB) pension scheme at the end of June, moving all pension recipients onto the defined contribution (DC) scheme.

The DB scheme guaranteed retirees a set income, regardless of rank or years of service. The DC scheme is based on the contributions made by the employee during his or her years of service with the co-op.

Mr O’Sullivan said: “This decision was taken to address a deficit in the scheme. The DB scheme has now been closed, and everyone has moved onto the DC scheme. That has taken a lot of the uncertainty out of that side of our financial planning.”

Drinagh has also made an equity investment in an international renewable energy company as part of its asset diversification strategy. It also has property interests in Germany, and holds a 50% stake in a unit in Clonakilty Business Park.

Drinagh has seen the value of its One51 investment fall from a boomtime high of €10m to about €2m. The company also retains €10m worth of shares in Aryzta.