Ornua reports profits up 23% in 2014, positive outlook for 2015

Ornua (formerly the Irish Dairy Board) has announced a review of its 2014 operational and financial performance, including and increase in turnover of 10% and a jump in profits of 23% (before tax).

In what it calls a very strong performance, characterised by excellent revenue growth and investment in the development of new routes to market for Irish dairy products, Ornua also says that ìts operating surplus was €30.3m.

Kevin Lane, Ornua CEO said that 2014 was a year in which we significantly increased the capacity of our business through brand growth, innovation and in-market investment.

We enter into this new era for Irish dairying in an excellent position, with a strongly performing organisation, geared for growth.

In 2014, Ornua reports that turnover rose by 10% to €2.34 billion, helping to drive a Group Operating Surplus of €30.3m.

This was achieved alongside investment across the business including a €36m spend in brand development and market support. In addition, purchases from members were up 41,000t on 2013, an increase of 16%.

Profit Before Tax rose to €28.1m, up 23% year-on-year. On the back of this, a €12m bonus was declared to members, including a cash bonus of €7.5m, up 15% on 2013.

A substantial increase in investment in M&A and Capital Expenditure activity in 2014, in preparation for the increased Irish dairy volumes post quota, saw Ornua end the year with €99.3m of debt, it reports.

The Group Balance Sheet has net assets of €436m. It also is predicting that 2015 will be a year of record growth, despite the challenging market condition.

Market Comment

Despite the pronounced weakening of dairy markets from early in 2014, the Ornua Purchase Price Index, a monthly indicator of market returns, returned an average value of 118 for the year.

This was five points ahead of the three-year average for the period 2011-13.

Key operational highlights from 2014 include
  • Increased in-market presence with 35 new people placed in-market in the past 18 months
  • Significant in-market investments in Africa, Germany, Spain, the US and the UK including:
    Opening of a new facility at Hilbert, Wisconsin marked the completion of a $80 million expansion programme in Ornua Ingredients North America
    Acquisition of assets and business of FoodTec, a UK specialist ingredients business
    Acquisition of a Spanish cheese business
    €14 million investment in packing and New Product Development facilities in Neukirchen-Vluyn, to meet the increased demand for Kerrygold products in Germany
    Completion of a long-term, strategic cheese supply partnership between Ornua’s UK subsidiary, Adams Foods Limited, and First Milk, the UK dairy co-operative.
  • Approval for the construction of a €36 million Centre of Excellence for Kerrygold Production & Butter Packing in Co. Cork. This new development will ensure a world-class supply chain to support the growth and development of the iconic Kerrygold brand.