Arrabawn achieved record revenues through a 20% increase in turnover in 2020, its annual report reveals.
The annual report was outlined at the company’s annual general meeting (AGM) held today (Thursday, April 21) in Nenagh, Co. Tipperary.
The co-op is one of Ireland’s most well-known dairy processers, with approximately 1,000 suppliers. Last year it processed approximately 500 million litres of milk, up 11% from 2020.
Revenues
After achieving peak revenues in 2020 despite a challenging year, all key metrics improved again last year, the AGM heard today.
Turnover reached €340 million (+20%), while gross profit was up by 23% to €77 million.
Earnings before interest, taxes, depreciation and amortisation (EBITDA) were up €2.2 million to €12.5 million, while operating profits, before exceptional items, were at €4.1 million, a €1.4 million increase on 2020.
The strong performance last year also saw net debt at Arrabawn reduced by €8.8 million to €33.6 million.
The business, which has been underpinned by a €61 million investment over the past five years, said it had increased milk price paid to suppliers across the year to 40.07c/L, up 5.70c/L on 2020 prices.
Arrabawn ingredients
The overall performance was significantly underpinned by growth at the co-op’s ingredients operations at Nenagh, with the facility completing its first full year of processing following a major investment programme in its casein and effluent plant.
This resulted in a €66.8 million increase in turnover, according to the company.
Agri-trading also saw a strong year, with customer spend up across hardware, agri and household sales. Feed and fertiliser sales saw increases and the year also saw continued investment at a number of stores.
Arrabawn has stated that the Irish liquid milk market continues to be difficult resulting in a challenging year for the dairies division.
Arrabawn CEO Conor Ryan said: “Last year was a strong year for Arrabawn and very much validated our €30 million investment programme at our Nenagh headquarters.
“This delivered significant additional capacity for us, with room to handle further growth in volumes in the years ahead. This has been a very prudent and timely investment that has future proofed the business and our suppliers’ activities.
“To have recorded the highest ever turnover in the history of the co-op and the highest ever EBITDA figure, underlines the success of our investment strategy over the past three years or so and, critically also, has brought about a significant reduction in our debt levels and further strengthens our balance sheet,” he added.
The CEO said that with the investment in processing and effluent treatment facilities completed, the final phase in the programme will be the development a new entrance at the site, which will begin later this year, along with the upgrade of the milk intake and milk reception area.
The development of new markets and customers was very encouraging, he said, and continued product development remains a key priority for this area of the business.
Arrabawn chairman Edward Carr said that while the pandemic continued to be a topic of concern during 2021, the co-op managed the impact very well with milk processing and agri trading able to continue with reasonable normality.
“Dairy markets continued to strengthen as the year progressed and the society ended 2020 paying an average milk price of 40.07c/L,” Carr said.
“This was very welcome at farm level as production costs were on the increase during the year but, with favourable weather conditions and good grass growth, it was a successful year for dairying.”
Carr said that the biggest challenge facing dairy farmers remains meeting environmental targets.
He stressed that since the abolition of quotas in 2015, the Irish agri-food sector has seen “phenomenal” growth, particularly in dairy.
“This has delivered a significant boost across rural Ireland from the spin-off of this expansion. As farmers and members of the dairy industry we all enjoyed being part of this evolution. However, going forward, the sustainability of our industry needs to be protected,” he stated.