The annual report for Arrabawn Co-op has revealed a record year in terms of operating profit and revenues.
Arrabawn said that notwithstanding the remarkable year for dairy markets, it remained a volatile year, with significant challenges around energy prices, sourcing raw material for feed, fertiliser availability and general price inflation.
However, bolstered by the return on its capital programme over the past five years, Arrabawn, which has over 1,000 suppliers across Munster, Leinster and Connacht, delivered a strong performance in 2022.
Increase in operating profit and revenue
The report reveals that all key financial metrics were up, including turnover, which reached the €500 million mark for the first time in the history of the organisation.
EBITDA (Earnings Before Interest, Taxes, Depreciation, and Amortisation) was up by €5.6 million to €18.1 million, while operating profit increased by €5.5 million to €9.59 million.
The strong performance also enabled Arrabawn to reduce its net debt to €24.1 million, according to the report.
From a supplier perspective, Arrabawn said that it achieved a record average milk price in 2022.
The performance was achieved despite a 29% increase in costs, with the biggest hike in fuel and power, which incurred an 86% rise.
It was also another year of significant investment, which included the installation of an additional line at Dan O’Connor’s Feeds.
Commenting on the performance, CEO Conor Ryan said: “2022 was a remarkable year for Arrabawn, aided by an exceptional year for dairy markets.
“But a huge amount can be attributed to our record investment programme since 2018.
“This has seen the modernisation of processing to world-class standards and is now delivering a better return to our members, as reflected in a really strong base-price rise in the second half of the year.
“2022 was, however, a challenging year in many respects, with costs up significantly, not least fuel and power, and there were also some challenges around availability of fertiliser due to the Ukraine-Russia situation, but thankfully we were able to ensure that supplies were available to all our customers,” Ryan added.
Liquid milk
The year also saw Arrabawn sell its liquid milk sales book and van sales fleet, which it said was a necessary step because further consolidation in the retail sector, demise of small family owned retailers and a very competitive foodservice business made trading extremely difficult.
Significant effort was also put into enhancing sustainability at farm level through involvement with Sustainability Ireland, Teagasc and Agricultural Sustainability Support and Advisory Programmes (ASSAP).
Chair, Edward Carr added: “As we look back on 2022, the earlier part of the year was very uncertain with soaring inflation and the impact of the war in Ukraine driving feed, fertiliser, and energy costs upwards.
“But thankfully as the year progressed, product prices went on to reach record highs and this allowed Arrabawn to pay a leading milk price, which averaged 60.57c/L for the year.
“Our environmental targets are the biggest challenge the industry is facing. The Irish Government has set targets to reduce agriculture’s greenhouse gas emissions by 25% by 2030 and strive for carbon neutrality by 2050.
“Arrabawn is assisting its suppliers in this through its involvement in a range of programmes. These are important for the implementation of technologies that are already available and new ones that become available, without reducing the competitiveness of the Irish agri-food sector.”