Carbery reports increased earnings of 33% for 2015

Carbery Group has reported a 33% increase in earnings before interest, tax, depreciation and amortisation (EBITDA) to €35.3m, up from €26.5m in 2014.

The West Cork based dairy manufacturer has reported strong results across all divisions for the year ended 31 December 2015.

The Group increased turnover to €349.5m, up from €316.6m in 2014 and operating profit, before amortisation and exceptional items, increased to €25.5m in 2015 from €18.3m in 2014.

Following the removal of milk quota restrictions in 2015 milk supplies from Carbery’s West Cork shareholder suppliers increased by 13% in the 2015 calendar year to 450m litres.

For the full year post quota to the end of March 2016 milk supplies to Carbery were up 18%.

According to Carbery, re-investment in the business remains critical to the Group’s growth plans and during 2015 group capital expenditure amounted to €20m.

Amongst other projects, it said this includes an investment in an Enterprise Resource Planning (ERP) project for Synergy, Carbery’s international flavour and natural extracts business.

The group’s net debt position at December 31, 2015 was reduced by 20% to €27.8m (2013: €34.5m).

Carbery attributes the increase in 2015 operating profit to increased earnings in Carbery’s ingredients division partly offset by lower earnings in Carbery’s dairy division.

Earnings growth in the ingredients division is due to year-on-year earnings growth in Carbery’s nutritional ingredients business as well as strong organic growth in the Synergy division.

Furthermore, it has reported that the growth in Carbery’s shareholder value during 2015 is reflected in the increase in the share price of the Carbery milk supply share scheme where shares have increased from €2.21 to €3.08.

Dan MacSweeney, Chief Executive Officer, Carbery Group said that the impressive performance for 2015 was achieved against the backdrop of weakening dairy markets particularly in the latter part of the year.

“Volatility continues to be an unwelcome feature of dairy markets and milk pricing. During 2015, Carbery offered two fixed milk price schemes, one covering a 29 month period from April 2015 to December 2017 and a second scheme covering an 18 month period from January 2016 to June 2017.

“These schemes, allied to other tools to manage milk price volatility that may be developed for the industry in the future, are important for our suppliers and as we move forward we will endeavour to continue to offer such schemes as market dynamics allow.”

Irish business activities

Carbery’s Irish business, which comprises the cheese manufacturing and nutritional ingredients operations delivered a strong performance in 2015.

The Group’s cheese division performed well in 2015 as market returns were favourable and progress was made in growing added value lines in international markets.

2015 was the first full year of operation at the expanded cheese plant in Ballineen and it delivered its target output, Carbery reported.

Volumes of Dubliner cheese grew in both the domestic market and US markets as Carbery continued to work closely with Ornua to maximise market returns.

Carbery’s dairy ingredients business also performed well, benefiting from the substantial R&D investment made in this business over the years which has delivered innovative ingredients for infant nutrition, sports nutrition and clinical nutrition applications.

International Activities

Synergy, Carbery Group’s international flavour and natural extracts division, had a very strong performance in 2015 achieving record growth and increased shareholder value during the year, according to the Group.

Synergy currently has three operating sites in North America, the main manufacturing and development facility at Wauconda, Illinois, the natural extracts plant at Hamilton, Ohio and the vanilla extraction facility at Rochester, New York State.

Synergy Europe and Asia is headquartered in the UK with operations in High Wycombe (Berkshire), Corby (Northants) and also in Thailand South East Asia.

Markets

Commenting on the market environment during 2015, MacSweeney noted that dairy markets started the year in a reasonably strong place but as the year progressed a number of issues put pressure on international dairy markets which depressed market returns.

“The significant extra milk production growth post April 1, 2015 affected market sentiment and that, allied to a slow Chinese dairy trade, the absence of Russian trade and weakening oil pricing as well as good milk production weather globally, put the market in a difficult place as the year progressed.

“As we head into 2016, markets are bouncing along the floor and are awaiting a signal that excessive milk production in Northern Europe, in particular, would start to reduce so that balance between supply and demand can be re-established.”