Irish Dairy Board gearing up for post-quota opportunities
Led by record sales of its Kerrygold brand, the IDB last year sold €2.1bn worth of Irish dairy goods in overseas markets. Along with this 5% rise in turnover, it yesterday unveiled an operating surplus (EBIT) up 25% to €25.8m, and pre-tax profits up 87% to €22.8m.
“We are pleased that we achieved these results while also investing €7m in our brand and in new market development,” said IDB chief executive Kevin Lane. “We also returned a product price 7% higher than the European LTO equivalent.
“We have invested heavily across our key markets, and that investment is starting to bear serious fruit. We are focused on what the Kerrygold brand stands for. With €500m in sales, it is a juggernaut of a brand.”
Last year, Kerrygold sold 350 million packets worldwide; it is the number 1 butter in Germany, with a 17% market share and a 55% branded share; it is the number 1 imported butter in the US; it holds top three whole milk powder spots in Angola, DRC and Congo.
The IDB is debt free, it has net assets of €417.4m, and it has €51.9m cash in hand. It also has a five-year, €420m syndicated banking facility with AIB, Bank of America Merrill Lynch, Barclays, HSBC, Rabobank, and Ulster Bank.
This war chest will, where necessary, fund the IDB’s market growth ambitions, notably when three decades of EU quota restrictions come to an end next April.
Last year, the IDB acquired a 75% interest in Al Wazeen Trading in Saudi Arabia, and plans to develop a cheese manufacturing plant in Riyadh.
The IDB also strengthened its position as one of the leading suppliers of Irish and British cheese in Britain via IDB group member Adams Foods Ltd’s new long term strategic partnership with First Milk.
Nonetheless, Kevin Lane said the IDB remains keenly aware of the competition Irish dairy exports will face from companies like FrieslandCampina, Arla, Fonterra, Danone and Lactalis.
“Those companies are all very expansionary,” said Mr Lane. “We would be very cognisant of the growth work that they’re doing. We know we won’t have a free run at expansion.”
Back at home, the IDB delivered an €11m bonus to members, up 16% on the year prior. In May 2013, it paid €2m to a fodder crisis fund for dairy farmers. The IDB also announced details of a new €30m investment that will create 50 new jobs in Mitchelstown, Co Cork.
The IDB came in for some criticism for its decision to place that facility with Dairygold in Cork, when some industry quarters had expected Glanbia to house the plant in Kilkenny.
“It was never about Dairygold versus Glanbia,” said Mr Lane. “We sat down with the full board 18 months ago because we knew the industry needed to do this in a joined-up way, in a facility that would be expandable, giving us the highest quality product all the time.”
