Dairygold posts €16m fall in profits following 'difficult year' for sector
Michael Harte, Ann Fogarty and Sean O Brien, Dairygold Annual Report 2023 Photography By Gerard McCarthy
A challenging twelve months for the dairy and tillage sector saw turnover at Dairygold drop by more than €250m as poor weather and growing costs created a "perfect storm" for the industry.
Publishing its financial results for 2023, the Cork co-op posted a turnover of €1.4bn, a decrease of more than 15% on the previous year which it said reflected the "significant fall" in market returns over the year.
The group's operating profit fell by more than €16m in the year, totalling just under €24m in 2023, with the co-op's earnings before interest, tax, depreciation and amortisation (EBITDA) falling by €13.5m, totalling €55m in the same period.
Chief executive of Dairygold, Michael Harte said the fall in profit resulted from the co-op response to rising costs, adding that it paid "strong milk and grain prices to suppliers."
The group's after-tax profit fell significantly to €3.5m from more than €23m in the previous year resulting from a drop in earnings and an increase of more than €10m in net interest payable.
Overall, Mr Harte said the society delivered a "satisfactory" performance in 2023, with all businesses delivering to expectations.
“2023 was a difficult year for the dairy and tillage sectors, as market returns declined significantly from the unprecedented highs of 2022," said Mr Harte.
"Unfavourable weather conditions, combined with continued high input and processing costs, created a perfect storm for farmers and processors alike."
The co-op's Dairy Business operated in a "very challenging environment," with the group citing significantly lower dairy market returns, reduced milk volumes and inflationary pressures in 2023.
It added that it processed 1.41 billion litres of milk last year, reflecting an annual decrease on 4.7%.
The group's Agri Business noted a "number of challenges" in 2023, including the sale of feed and fertiliser being negatively impacted by reduced on-farm margins and sustainability concerns, while retail sales, despite negative consumer sentiment, were generally in line with 2022.
“2023 saw the Society deliver a strong performance, despite the numerous challenges, including weather, high input costs, the reduction in the nitrates derogation and addressing the sustainability challenges," said Dairygold chairman, Seán O'Brien.
"These challenges were met head on and Dairygold is in a strong operational and financial position to continue to sustainably grow both the Business and Members’ enterprises."
Mr O'Brien added that the significant challenge for the dairy industry is the uncertainty surrounding Ireland's nitrates derogation, warning that the removal of the derogation would "significantly curtail milk production, impacting the viability of the entire industry."
