Dairy Board profits up by 10.2%
The Board also said that a recovery in world prices, coupled with a stronger global demand for dairy products, had contributed to a more balanced market last year.
The IDB, which exports Irish dairy products to over 90 markets worldwide, said an overall improvement in the global economic situation stimulated demand for dairy products. It said this improvement in export demand, allied to drought-related supply problems from Australia, led to stronger world prices generally.
However, a weaker US dollar, and cuts to export refund levels, eroded most of the benefit of these higher prices for EU operators. An improved EU dairy market balance and reduced sales volumes to intervention resulted.
Conversely, surplus cheese and casein stocks from 2002, plus the need to intervene over surplus butter and skim milk powder (SMP), restricted any significant rise in EU internal prices.
While turnover, expressed in local currencies, increased by 4%, a weakening of both the dollar and sterling against the euro led to a 4% fall in the group turnover at €1,815 million. Pre-tax profits rose 10.2% to €36.5 million.
The strong subsidiary performances enabled the Board, which has Michael Cronin of Newmarket Co-op as chairman, to pay a total of €14.5 million in cash bonuses to its members.
Cash bonuses, including redemptions of loan stock, paid by the Board over the past 10 years amount to more than €90 million. The Group's debt to equity ratio is down from 39% in 2002 to 22% in 2003. Members' funds now stand at €305.9 million.
Worldwide, the Kerrygold brand had another successful year with a sales volume increase of 5.5% over 2002. Turnover, both inside the EU and in Third Country markets, increased despite continuing competitive pressures on international dairy markets.
IDB managing director Dr Noel Cawley said that while the mid -term review reductions in intervention prices will undoubtedly make themselves felt in the market, international demand for dairy products is expected to remain positive during the foreseeable future.
Benefits to EU suppliers will be determined by the dollar/euro exchange rates and the policy of the European Commission towards export refunds.
Dr Cawley said the EU market faces a number of challenges, not least the enlargement of the Union to 25 member countries and the first year of CAP reform for the dairy sector.
While the lower dairy product prices are unwelcome to producers, the expectation overall is that these reductions will have positive implications for EU dairy product consumption, he said.
