Carbery chief: We're not Kerry in terms of just sheer size and scale and there are pros and cons to that
Carbery Group chief financial officer Liam Hughes, chairperson Vincent O’Donovan, and chief executive Jason Hawkins, launch the Carbery annual results 2024 at the group headquarters in Ballineen, Co Cork. Picture: Andy Gibson
You’d think there might be some tension for a Kerry man in the heart of West Cork in the days not long after a meeting of Munster's great GAA rivals.
Not so in Ballineen, where Kingdom native Jason Hawkins leads boardroom affairs, as chief executive of Carbery Group.
“This time of year around here, we keep the Kerry jersey hidden a little bit,” jokes Mr Hawkins.
“The boards and the farmers of West Cork have been very welcome to this Kerry man.”
In the boardroom, it’s certainly no time to grumble at Carbery, the cheese, dairy, flavours, and ingredients group headquartered in Ballineen and with operations in the UK, US, Italy, Brazil, Singapore, Thailand, and Indonesia.
The group has just released its 2024 annual returns, reporting turnover up 8% to €668m, while operating profits jumped 20% to €24.8m.
“We’re in a good position and had a really good year, but in West Cork we don't get carried away with it,” said Mr Hawkins.
Group earnings before interest, tax, depreciation, amortisation is up 12%, from €46.4m to €52m. Group operating profit before interest, tax, amortisation of goodwill and other intangibles and exceptional items increased 20% to €30.5m from €25.5m.
Net debt decreased to €39.5m from €60.4m in 2023.
“We beat our own expectations in many ways,” said Mr Hawkins.
“Last year was very strong right across all of the business.
"Profits are very strong [up 20%], that's after we put €8.6m aside as well for our stability fund, which is a rainy day fund for farmers.
"So, on a true trading basis, if you add back that €8.6m, it was an incredibly successful year.
"But it's less about the reported number and more we've got the balance sheet and the core business in a really good spot.”
Globally, Carbery enjoyed significant growth in the whey protein market catering to various segments, including infant formula, sports nutrition, and clinical nutrition.
The taste business in the Americas had a strong year with significant volume growth in both the US and Brazil in particular.
And the Japanese mozzarella cheese market has also proved a positive.
Carbery had been very reliant on the UK market for its cheddar production, which prompted the increased investment in mozzarella and diversification in markets in South-East Asia.
“The Japanese customer base is very discerning but willing to pay for quality and good consistent products,” said Mr Hawkins.
“The cheese they want has to stretch a certain bit. It has to look a certain way. Japan historically would have been heavily supplied from Australia and New Zealand, but New Zealand in particular has had a very China-first strategy so the Japanese were looking for alternative suppliers.
"New Zealand is a grass-based system, like ours, and grass-based mozzarella produced looks a bit more yellow than in mainland Europe which uses milk from an indoor system which is feed-based, which looks more white. So we fitted the bill perfectly.”
Total cheese production at the Ballineen plant in 2024 was 61,000 tonnes, 47,000 tonnes of cheddar and 14,000 tonnes of mozzarella, serving markets in Ireland and around the world, from premium offerings like Dubliner cheese to store own-brand products.
Back in West Cork, Carbery processed 574m litres of milk into cheese, nutrition ingredients, and bioethanol in 2024.
Owned by the four West Cork Co-Ops — Barryroe, Bandon, Lisavaird, and Drinagh — Carbery continues pay a higher quoted milk price to its suppliers than any other Irish cooperative.
“If we pay an extra cent per litre, that's €5,000 extra into those average farmer families. That's all profit on top of the base price that others will be paying and that makes a huge difference to those farmers,” said Mr Hawkins.
But if Irish agriculture has learned anything over the past half century, it’s that there are no certainties.
The 2024 results from Carbery have been extremely positive, but like all others in the Irish dairy sector, they must await a decision at the end of the year on Ireland’s nitrates derogation, which allows farmers to operate at higher stocking rates.
The nitrates reduction was reduced for many Irish farmers in 2023.
While hopes are very high the derogation will continue, an expansion of the 220kg/nitrogen per hectare zone has already been mooted for some areas in the 250kg/n areas, which could mean affected farmers having to reduce their stock to comply.
That’s before any wider decision from the European Commission.
Mr Hawkins admits derogation remains a “huge challenge”.
“It’s something we put a lot of time and discussion into. Approximately 65% of our farmers are in derogation. So if you were to lose derogation then that would obviously have fairly drastic implications.
"The business can always adjust but for farmers and farmer families, this can be existential.
"It's like asking somebody 'can you build an extension on your house and I'll tell you in three years, whether or not we're going to get planning permission’. It is a leap of faith.
“We strongly believe there is a very strong business and farming model in Ireland that works from a sustainability perspective and an economic perspective.
"But at the end of the day, the decision gets made in Europe at the end of the year, so that uncertainty is hard.”
Mr Hawkins previously worked at Dairy Farmers of America, the world’s largest dairy cooperative, and for the Kerry group, two global food supergiants.
Kerry is now a huge public company. Could a public offering ever be on the cards across the border in West Cork?
“We're not Kerry in terms of just sheer size and scale and there are pros and cons to that. We have a great business model here," said Mr Hawkins.
"We are in many ways a mini-Kerry but I think the ownership structure and the capital structure we have in place works today.
“I don't see any huge desire from our shareholders to change. For us, it's always about returning value to shareholders.
“We’re owned by the four co-ops but there's a very strong cohesion when we sit around the board table, they come together and it's very much a West Cork mentality.
"There's no competition, there's very little politics around this. Local issues or co-op specific issues don't come inside the door here.
"When they come here it's all about having the Carbery hat on.”
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