Dairygold €19m profit down 34%

Dairygold says it will continue to give its suppliers a strong milk price during 2016, despite global market pressures having driven its 2015 profits down 34% to €19.2m from €28.6m in 2014.

The co-op paid €20m in milk price top-ups to its 3,000 suppliers in 2015. The company’s net asset value rose €19.4m to €315.5m.

In 2015, it invested €50.9m in the business, the latest tranche of €215m invested in the past seven years to process extra post-quota milk.

Year-end, net bank debt rose to €96m, up from €71.6m in 2014, but well within its banking covenants.

The company delivered earnings before interest, tax, depreciation, and amortisation of €41.2m on a turnover of €785m.

Its overseas operations, agri-business, and other units all delivered stable performances versus 2014, bar the dairy ingredients, the division most exposed to global market prices factors.

Suppliers delivered 18.7% more milk, up 182 million litres to 1.157m litres. However, the product’s value was down 10%, with global markets weakening for 27 successive months, during which global milk prices have fallen 57%.

“It was a challenging year from the farmer’s perspective, but we still made €19m in profit while supporting our suppliers,” said Dairygold chief executive Jim Woulfe.

“With the increase in milk volumes, we have geared up our processing capacity, and this was vital in helping to ensure we have the routes to market in place to sell that extra product.

“I don’t have any crystal ball about global markets, but I can say that all of the global market underlying trends are still right, particularly from a population- growth perspective.

"But global milk output has risen 5% from 2013-15, there have been no weather events to dent global supply and oil prices are very low.”

Among all these milk price-reducing factors, Mr Woulfe said the low oil price was perhaps most significant, effectively nullifying the natural advantage of Ireland grass-based systems over countries with stall-fed cattle.

Closely aligned to oil, animal feed prices are also low at present.

More than 93% of Dairygold’s suppliers have signed supply contracts. The co-op has long since calmed disquiet among pockets of its membership about growth strategy.

The company has suspended its members’ revolving fund payments while the milk price remains below 27c per litre.

Meanwhile, the co-op’s members will also note that the 2015 accounts for the first time publish details of the salaries of the board’s nine full-time senior executives.

With their basic salaries totalling €1.66m plus bonuses and other emoluments, the average pay package of these executives came to around €185,000.

This pay seems relatively modest compared to some other Irish processing companies, notably the €9m shared by Ornua’s nine top executives in the two years of 2014 and 2015.

“My concern in announcing these figures will be the retention of our top performers,” Mr Woulfe said.


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