Dairygold’s annual turnover for 2018 increased by €27.4 million; however its operating profit reduced by €3.5 million, according to its annual financial results.
The co-op noted that the extreme weather conditions in 2018 had a “severe impact” at farm level. Dairygold outlined that it responded by supporting farm-gate milk prices by over €15 million above market returns, while delivering an operating profit of €28.9 million. This is a reduction of €3.5 million on the 2017 performance.
Despite the challenging weather conditions, Dairygold’s 2,850 milk suppliers expanded milk production by 2.7% during 2018 to deliver a record 1.34 billion litres of milk to the society over the year.
In line with its commitment to process all its members’ milk, the co-op continued its capital programme and in 2018 committed a further €130 million as part of the Phase II Post Quota Primary Processing Investment Programme.
At year end, the net asset value of the business was €337.9 million (2017: €335.5 million) and net bank debt stood at €111.4 million, a modest level given the scale of the organisation and level of profitability.
Commenting on the 2018 results, Jim Woulfe, CEO of Dairygold, said: “The society delivered a satisfactory financial performance, while supporting members against a backdrop of adverse weather conditions.”
Since 2009, Dairygold has seen its milk volumes grow by circa 500 million litres, a 60% increase, with milk solids (protein and butter fat content) increasing by 70% over the same period.
Dairygold milk suppliers are projected to increase their annual milk production volume to circa 1.65 billion litres by 2023.
Investment
The co-op has invested in three projects in Co. Cork.
- A new cheese manufacturing facility in Mogeely;
- Increasing the demineralised whey ingredients capacity at the Castlefarm Dairy Complex in Mitchelstown; and
- The installation of another evaporation and drying system at the Nutritionals Campus in Mallow.
All three projects are scheduled to be operational by 2020.
Looking to milk price for 2019, the prospects, as usual, are heavily dependent on the balance between supply and demand.
It noted that Brexit uncertainty is overshadowing the market, especially cheese, creating negative sentiment in international dairy markets.
According to the co-op, the future markets for dairy ingredients suggest that there is relative stability expected by buyers and sellers for the balance of the calendar year.