Dairygold Co-op profits jump 20% to €22.3m
Dairygold Co-op has reported pre-tax profits of €22.3m for 2011, up by about 20% on its 2010 profit of €18.2m.
Turnover at the Cork-based co-op was €757.8m, up 9.3%, or €64.3m, on the previous year.
The increase was generated across the main business activities of dairy processing and agri-trading.
Dairygold chairman Bertie O’Leary said: “2011 was another good year for Dairygold, where the society paid a leading milk and grain price, recorded a robust financial performance and strengthened its balance sheet.”
He said the co-op was a “strong and stable business that is ready to take full advantage of the opportunities that post-quota expansion offers”.
The results also incorporated an asset swap with property holding company Reox, thus resolving issues in relation to a number of 4Home hardware stores. Reox, which is 26% owned by Dairygold, still owes the co-op around 19m. Dairygold spent €18.5m buying a portfolio of strategic property assets from Reox.
Dairygold also invested 15.4m in capital expenditure in other areas of its business. It invested a total of €33.9m in the business last year.
It plans to invest in two new driers to deal with an anticipated output increase of 60% by 2020.
Dairygold expects that soaring output volumes in future years — following the end of EU milk quota restrictions in 2015 — will require some investment of the co-op’s own funds, some banking finance, government support and a contribution from milk suppliers.
Dairygold chief executive Jim Woulfe said: “Our approach will seek to minimise the impact on our milk suppliers.
“A revolving fund is a structure that has worked well in the co-operative sector in the past and we are looking closely at this option.
“The impact on members would be minimised and appropriate safeguards will be built in to protect supplier income in volatile markets.”
He continued: “We believe that milk supply agreements will be necessary, based on the society’s commitment to its milk producers to process all milk supplied, with each milk supplier being required to predict their milk supply volumes for a number of years ahead.
“We recognise that it will be necessary to regulate supply to ensure that investment in production capacity takes place only when needed and that processing is cost-effective.
“Overall, our thinking is now well-advanced and we intend to be in a position to confirm our post-quota strategy in the coming weeks.”
