Ornua has reported a 1.3% increase in operating profit – from €151.8 million in 2020 to €153.7 million in 2021 – in its operating and financial results, which it published today (Wednesday, June 1).
Ireland’s largest exporter of Irish dairy products, Ornua, marks 60 years in business with strong 2021 performances from Kerrygold and Ornua Ingredients, helping it to increase turnover by 6.9%.
This figure increased from €2.3 billion in 2020 to €2.5 billion in 2021 as consumption patterns started to recover from the impact of the Covid-19 pandemic, according to Ornua.
Highlights of 2021:
- Group EBITDA (earnings before interest, taxes, depreciation, and amortisation) was up .07%;
- Kerrygold volume growth was up 12%, with over 11 million packets of butter and cheese sold globally each week;
- Strong returns for Irish dairy farmers with 389,000MT of Irish product purchased, delivering an additional €78 million Ornua Value Payment to member suppliers, up 13.5% year-on-year;
- Ornua Ingredients doubled its footprint in the US market with the acquisition of Whitehall Specialties Inc., unlocking significant growth and innovation capacity;
- Approval granted for a €40 million expansion of Kerrygold Park to meet the growing global demand for Kerrygold;
- Bank facilities totalling €580 million successfully refinanced until 2026, supporting Irish dairy industry growth;
- Launched an ambitious five-year corporate social responsibility and sustainability strategy incorporating environmental, animal welfare, and community targets;
Financial performance
According to Ornua, it “successfully captured and returned significant value to its members in 2021, declaring a record Ornua Value Payment – premiums and bonuses – of €78 million, up 13.5% year-on-year.
It purchased €1.2 billion (389,000MT) of “premium Irish dairy products, paying strong prices as reflected in the Ornua Purchase Price Index” it stated today.
“This provided a critical global route to market for Ireland’s milk suppliers during a continued period of unprecedented challenges for the global dairy industry,” the company stated.
Dairy markets
While the Covid-19 pandemic continued to affect all aspects of the global dairy industry, its impact on global milk supply was not as significant as its impact on demand, the company said.
“Global milk supply was positive with flows up 0.8% year-on-year, while global demand was resilient against the backdrop of the pandemic,” the company said.
“Demand in the retail sector was strong, with lockdowns encouraging consumers to eat at home.
“While global retail sales of dairy products eased compared to 2020, volumes were above 2019 levels. Overall foodservice demand was below average, particularly in Europe, but recovered strongly in the US and countries with fewer public restrictions. Chinese export demand was exceptional, but high pricing stifled demand in other regions.”
However, global export growth was not as strong as in previous years, as trade was affected by weaker output and supply-chain issues.
Growing greener
In 2021, Ornua set a target of a 25% reduction in Scope 1 and 2 emissions by 2025.
Last year, energy and water audits were completed across manufacturing facilities to identify opportunities for improvement.
This enabled the business to develop a group-wide carbon reduction roadmap that clearly outlines a path to reducing its carbon footprint.
Scope 1 – greenhouse gas emissions that companies create directly.
Scope 2 – greenhouse gas emissions that companies create indirectly.
Scope 3 – emissions that are related to a company’s activities, through what it buys from suppliers, and from its products when customers use them.
The group also set a target of 20% intensity reduction in Scope 3 emissions by 2025 and is collaborating with all stakeholders in the supply chain to examine ways of further reducing its greenhouse gas emissions, meeting demands of both customers and consumers.
It stated that it is committed to “100% fully circular packaging by 2030 and last year began examining all packaging formats in an important step along this journey”.
The business has already successfully moved a number of products in its UK private-label cheese portfolio to fully recyclable packaging.
Looking ahead
The expansion of Kerrygold Park in Mitchelstown has commenced and this facility will play an essential role in enabling the long-term growth of the brand “for the benefit of Irish farming families and the wider Irish economy” the company stated.
However, it has acknowledged that there are significant challenges ahead for Ornua and the wider dairy sector.
“The impact of inflation on raw materials, packaging, fuel, energy, and salaries will put significant competitive pressure on many businesses this year.
“Geopolitical instability, global trade barriers, supply chain challenges, and market volatility will also continue to have a significant impact and will need to be monitored and managed closely.”
It added that the Climate Action Plan and national targets will require enormous effort and close collaboration from all stakeholders.
Commenting on the positive performance delivered in 2021, CEO, Ornua, John Jordan said: “This performance delivers on our commitment to maximise returns to our member co-operatives and the 14,000 farmers who supply them, with a 13.5% increase in our Ornua Value Payment in the year.
He said Kerrygold continues to be the fastest-selling brand on supermarket shelves in Germany and is the number-two butter brand in the US – a market serving 330 million consumers.
“Our Ingredients business also performed strongly as we completed the acquisition of US cheese ingredients business Whitehall Specialities Inc.
“Our 60 years in business has stood to us in our capacity to respond to change and to continue to deliver for our customers, colleagues, and shareholders. While challenges persist in 2022, we are commercially and strategically well-placed to manage their impact on our business and continue to return value to our member co-ops and the Irish farming families that they represent.
“We have been devastated by the tragic events that have unfolded in Ukraine these past months and recognise the plight of the Ukrainian people at this very difficult time.
“As a longstanding organisation with a global footprint, we acknowledge the impact of world events on our customers and the communities we serve and will continue to support all our stakeholders in navigating the knock-on effects of this terrible situation.”