Pre-tax profits at Dairygold Co-op fall to €16.85m

Pre-tax profits at Dairygold Co-op fell to €16.85m in the year to Dec 2012, down from €22.32m a year ago.

However, the co-op delivered operating profit on its core activities of €20.6m for the year ended Dec 2012, having paid out a €4.3m year-end bonus to its milk suppliers and customers.

The bonus comprised a 0.35c per litre top-up payment on all 2012 milk and a milk production subsidy/refund of €5 per tonne on animal feeds sold to suppliers. Its earnings before interest, taxation, depreciation and amortisation of €38.1m are largely in line with 2011.

Dairygold also linked its banking partners’ commitment to a €240m facility for the coming years to the co-op’s financially robust expansion plan and its net debt level of €56.8m, which is €10.4m lower than 2011. Net debt stood at €68.2m in 2008.

The co-op’s net asset value increased by €7m to €251m. Dairygold’s lead banking partner is Bank of Ireland. Its other banking partners are AIB, Ulster Bank, Rabobank, and HSBC.

Investments in 2012 included processing plant expansion at the cheddar factory in Mitchelstown, the speciality cheese facility in Mogeely, the demineralised whey processing facilities in Mitchelstown, and an anaerobic digester in Mitchelstown. A further €33m is being invested in upgrading capacity at Mitchelstown to cater for additional milk intake up to 2015.

Dairygold chief executive Jim Woulfe said: “2012 marks a fourth consecutive year of solid financial results for Dairygold and the society is in strong financial position as it prepares for expansion arising from the removal of EU dairy quotas in 2015.”

Weather-impacted market returns across global dairy markets saw Dairygold’s turnover fall by 3.5% to €731.2m in 2012. Despite the challenging environment, consistent with its co-op ethos, Dairygold delivered a strong milk price to suppliers. It is supplying animal feed credit-free to members who are faced with fodder shortages.

Dairygold’s immediate focus now turns to its two meetings with its members on April 11. The co-op is seeking approval for its post-quota expansion plan from its 2,950 milk suppliers, plus its 4,500 A1 shareholders and 500 A2 shareholders.

These members will vote on three motions. A group opposed to Dairygold’s Milk Supply Agreement is asking members to shelve it — around 80% have signed up — and independent milk testing to be introduced. Dairygold is tabling a motion asking members to vote in support of its expansion plan.

Dairygold said the €200m investment required to fund its expansion plan would be funded through a prudent mix of bank and member funding and the new MSA.


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