Continued milk production expansion key to 28% jump in Dairygold’s turnover

Continued milk production expansion was one of the key drivers which saw Dairygold’s turnover jump by 28% in 2017.

This information was revealed as Dairygold – which claims to be Ireland’s largest farmer-owned, dairy co-operative – published its annual results for the year which ended on December 31, 2017.

The results confirmed that the co-op recorded an operating profit of €32.4 million last year (2016: €17.5 million), which was generated from a turnover of €965.5 million.

It also delivered earnings before interest, taxes, depreciation and amortization (EBITDA) of €52.8 million in 2017.

At year end, the net asset value of the business was €335.5 million, up €28 million on the previous year. As well as this, the net bank debt was reduced by 10% to €79.6 million.

Continuing its capital programme during the year, Dairygold invested a further €13.4 million in the business – bringing the total investments over the past five years to €162.1 million.

Commenting on the 2017 results, Dairygold’s CEO Jim Woulfe said: “I am pleased to report that Dairygold delivered very strong financial results in 2017, buoyed by a robust performance across all its businesses.

“A solid foundation of dairy investment has delivered increased milk processing capabilities and is enabling sustained business development.”

Milk production volumes up 8.3%

Dairygold claimed that its turnover was positively impacted by continued milk production expansion on milk suppliers’ farms and strong global dairy markets during the year, despite a slowdown in the last quarter.

The co-op’s milk volumes rose to 1.3 billion litres in 2017 – an increase of 8.3% on the previous year; it also represents a cumulative volume increase of 55% since 2009, it added.

As global dairy market returns last year were significantly stronger than the previous year, Dairygold’s average milk price was 37.6c/L in 2017 – an increase of 10.6c/L year-on-year. This jump in price was primarily driven by butter returns, the co-op explained.

Continuing, the statement from Dairygold said: “However, from early Q4 2017, the global market was returning significantly less than the milk price paid to producers – a situation that has continued in Q1 2018.

The main factor was the rapid deflation of the butter bubble, which went from a high point of €7,000/t in August to less than €4,000/t by year end.

“Despite market fluctuations and weakening returns towards the end of 2017, Dairygold held its milk price to ensure that milk prices did not drop at any time over 2017 – a welcome position particularly after the challenging market conditions that prevailed in 2015 and 2016.”

‘A milestone year’

Dairygold chairman John O’Gorman explained that he was pleased to see the co-op’s members continue to “fulfil their on-farm ambition, encouraged by improved dairy market returns, while the society continued to evolve and strengthen its position”.

He also noted that 2017 was a milestone year for Dairygold, with a record volume of milk supplies.

We achieved a key goal to ensure all milk supplied this year is from SDAS (Sustainable Dairy Assurance Scheme) farms and we also celebrated the official opening of our Nutritionals Campus in Mallow.

Agri Business

Increased farmer demand for feed and fertiliser to support expanding production on-farm was the key driver of an increase in turnover year-on-year in Dairygold’s agri business.

But, last year proved to be very challenging for cereal and grain growers. In line with its co-operative ethos, Dairygold added that it paid its suppliers leading prices for their grain during the 2017 harvest.

Meanwhile, the co-op’s retail business reportedly delivered another solid performance – with increased turnover driven by product categories such as builders’ and farm hardware.

Future

Over the next two years, Dairygold has confirmed that significant investment will be made primarily in its Nutritionals Campus in Mallow, Co. Cork, to enable the production of a range of value-added dairy nutritional products.

Concluding, Dairygold CEO Jim Woulfe said: “The organisation continues to focus on its ambitious value-added and growth agenda.

“Business agility and strategies focused for long-term opportunities will be key drivers for the continued growth and success for Dairygold.”