Following a “satisfactory” performance in 2018, which saw the co-op generate revenue of €993 million and earnings of €48.6 million, Dairygold is optimistic for the future.
Dairygold CEO Jim Woulfe, chief financial officer Michael Harte and chairman John O’ Gorman released the cooperative’s financial results for 2018 in Dublin yesterday, Wednesday, April 10.
Speaking to AgriLand about the performance of the co-op, Harte said that earnings before interest, tax, depreciation and amortisation (EBITDA) amounted to €48.6 million.
This was described as satisfactory, following “very strong business performance” faced with difficult times for farmers.
Because of the pressures with regards to the adverse weather conditions, and reduction in markets, we didn’t pass on the full reduction in fall of markets to our members.
“The board, taking a conscious decision in setting the milk price, didn’t reflect the full reductions in dairy market returns in 2018 because of the extreme pressures that members were under in that period – especially in H1 2018,” Harte explained.
Commenting on the significant challenges faced by member farmers, the CFO said that supports to the tune of €15 million were put in in 2018, to help farmers through difficult conditions in the spring and summer.
“As a business we levied and used our financial strength and position to be able to support our members.”
Noting the record volume of 1.34 billion litres, up 2.7% on 2017, Harte quantified the supply increase since 2009.
“We’ve seen a decade where our volumes have increased by 500 million – 60%; [and] 70% in milk solids.
What we’re faced with is a further increase of members; their ambition is to continue to grow. And they want to increase by another 300 million litres in the next five years to 1.65 billion litres by 2023. So, as you can see, the dairy industry is going through a renaissance.
Describing the lifting of quotas as “shackles thrown off”, the officer noted that farmers are now able to maximise their production on farms.
“That’s their ambition; and, to respond to that ambition, Dairygold has to put the primary processing in place to be able to meet that demand.
€300 million investment
“We’ve now committed in 2018 to another €130 million which is, we refer to as Phase II of post-quota primary processing investment.
“We’ve already put in previously €170 million, so over a period of eight, nine years, we’re going to invest €300 million in our business in relation to primary processing.”
The company is currently working on three primary processing projects as part of its investment programme.
Noting the Mogeely investment in particular, which is a joint cheese manufacturing facility investment with Norwegian firm Tine, Harte said:
“We’re investing €40 million in the infrastructure and the site in relation to all the activities in relation to milk intake, provision of energy, all the support services, including effluent, environment, etc.”
The project will see Tine provide €80 million on its part of the venture.
Tine is moving its cheese manufacturing production out of Norway and it’s moving it to Ireland because of its own challenges around WTO tariffs and the agreements reached.
Dairygold CEO Jim Woulfe added that the plant will use Munster milk.
“It’ll be a total regeneration of that site.”