Operating profit at Ornua decreased by more than 17% in 2022, according to the company’s latest financial report.
This is despite group turnover at Ireland’s largest exporter of dairy products increasing by almost 37% to €3.4 billion.
The financial report also indicates that Kerrygold marked 60 years, with over 11 million packets of butter and cheese sold globally each week.
Ornua financial performance
The financial results state that group turnover at Ornua was up 36.7% to a record €3.4 billion, a robust and resilient performance in a complex and challenging global trading environment, according to the exporter.
Group Earnings Before Interest, Taxes, Depreciation, and Amortisation (EBITDA) and operating profit, pre-Ornua Value Payment, were €157 million and €127.2 million respectively, as Ornua sought to balance high product prices, which were paid to its member cooperatives, while also maintaining and growing market share.
As a cooperative whose purpose is to create value for its members and the 14,000 Irish farming families they represent, Ornua said it prioritised strong returns throughout the year, reflected in an Ornua Value Payment of €72.5 million which is made up of monthly and year-end cash bonuses and the premium paid on purchases from members.
Key performace indicators 2022 € million 2021 € million Year-on-year change Turnover 3422.4 2,504.1 +36.7% Group EBITDA* 157 177.4 -11.5% Operating profit* 127.2 153.7 -17.2% Net assets 728.1 671.2 +8.5%
This is in addition to the strong product prices paid over 387,000MT of premium Irish dairy product purchased in the year, valued at €2.3 billion.
Ornua business performance
The Kerrygold brand reached a significant milestone in 2022, celebrating six decades since the brand’s launch in 1962.
In its 60th year, Kerrygold maintained volume sales growth globally, with over 11 million packets of butter and cheese sold globally each week, according to Ornua.
The brand’s impact was strengthened by the launch of 16 new Kerrygold products and product extensions in key markets such as Germany, the US, and the Middle East, the co-op explained.
Kerrygold continues to be Germany’s most popular dairy brand with almost two thirds of German households purchasing Kerrygold products in the year; while in the US, Kerrygold butter experienced continued volume sales growth.
Key to the brand’s future is the expansion of the global home of Kerrygold – Kerrygold Park – which will be completed later this year, according to Ornua and see the Mitchelstown facility double its production capacity to match growing global demand.
The Ornua Ingredients global business continued its strong growth in the year, according to the financial report.
The successful integration of Whitehall Specialties Inc. within the Ornua Ingredients North America business, following the 2021 acquisition, has been further supported through investment in the facilities.
This investment has reportedly resulted in significantly increasing the business’s cheese production capabilities, offering customers increased service throughout the six-site network.
Dairy markets
According to Ornua, the year proved to be an extraordinary one for Irish dairy farmers, with the annualised milk price growing 40% year-on-year.
However, input costs also rose rapidly, including fuel, feed, and fertiliser, impacting at farm level.
Global milk supply fell by -0.4% in 2022. While remaining resilient, global demand fell by about -1% compared to a strong 2021.
Looking at the year ahead, Ornua has said that it is expected that Irish dairy supply will be modestly ahead of 2022.
Milk supplies are currently ahead of demand, but markets are likely to stabilise in the coming months.
Volatility looks set to continue in the areas of energy and input prices however, and an uncertain global economic forecast, and its potential impact on consumer spending, will also present challenges, the financial report indicates.
Sustainability
In 2021, the Ornua Group set a target of achieving a 25% reduction in Scope 1 and 2 emissions by 2025.
Last year, in line with this target, Ornua achieved a 4% reduction in Scope 1 and 2 emissions, with a further 6% reduction expected this year, following the implementation of renewable energy at sites across the group network.
In line with a new five-year strategic growth plan, Ornua has committed to the adoption of science-based targets through the SBTi (Science Based Targets initiative).
Ornua said that it has also continued to invest in key initiatives that maintain its high responsible sourcing standards.
John Jordan, CEO, Ornua said: “Ornua continued to build on its strong and consistent growth trajectory, delivering a robust performance in what was a uniquely challenging year with factors such as rising inflation impacting the entire supply chain.
“Ornua responded to these shifting market dynamics by remaining focused on our strategy and committed in our efforts to deliver for customers, consumers and our member cooperatives.
“This is reflected in the exceptional sales performance, underpinned by the hard work and commitment of our 3,000-strong global team.”
Jordan added that Kerrygold’s success is “testament to the generations of Irish dairy farming families who produce the best quality milk” and Ornua’s member cooperatives, which operate “well-invested, world-class manufacturing facilities, and the teams, spanning 60 years, who proudly bring the taste of Kerrygold to the world”.
“We are very optimistic for the future of our brands and our business, supported by a newly remodelled five-year strategy, focused on addressing emerging challenges and opportunities to drive sustainable growth in key markets, ensuring we continue to deliver value for our member cooperatives and the 14,000 Irish dairy farming families we represent,” Jordan concluded.