Ornua’s operating profit crosses €40 million for 2018

Irish dairy products exporter Ornua has today, Wednesday, April 3, published its operating and financial results for the year ending December 29, 2018. A total of 3.4 billion litres of milk equivalent were sold through Ornua’s 110 global markets.

Exporting to over 110 countries around the world, Ornua is the owner of the Kerrygold brand.

According to a statement from the company, Ornua delivered a “strong trading performance” in 2018 with group turnover reaching €2.1 billion.

The group’s earnings before interest, tax, depreciation and amortization (EBITDA) stood at €60.5 million – up 12.5% –  while operating profit reached €40.4 million – 14.8% year-on-year.

Commenting on the 2018 results, John Jordan, Ornua CEO, said: “Following decades of investment in the Kerrygold brand by our members and Irish farmers, our focus is on protecting this premium positioning and delivering on our strategy to extend Kerrygold from a world-class butter brand into a world-renowned dairy brand.”

2018 operational highlights:

 

  • Ornua paid a total year-end bonus of €19 million to members, up 27% year-on-year;
  • Ornua purchased a record 342,000MT of Irish product;
  • €18 million product brand premium paid to members for product sold through Kerrygold;
  • Kerrygold butter is number two in the US with 2.6 million packets of butter sold each week;
  • Construction underway of 110,000ft² state-of-the-art cheese production facility in Spain.

The late production season and Brexit planning resulted in the group carrying additional stock over the end of the year, bringing net debt to €110.1 million compared to €0.3 million net cash in the previous year.

The statement noted that 570 million litres of milk equivalent were purchased by Ornua under fixed price contracts, helping protect members against volatility.

Brand Performance

Kerrygold experienced 25% volume growth in the US, the ninth consecutive year of double-digit volume growth.

Kerrygold butter is currently the second most popular butter brand nationally, with US consumers purchasing 2.6 million packets each week.

Ingredients Performance

Ornua Ingredients Europe saw its new product pipeline grow “significantly” during the year with a new line commissioned in Ledbury, UK.

Work commenced on the construction of Ornua’s cheese facility in Spain, a state-of-the-art 110,000ft² production facility, “expanding” Ornua’s growth opportunities across continental Europe.

Market Outlook

According to Ornua, global demand in 2019 is forecast to grow between 1.0% to 1.5% – which the group says implies that volatility is likely to be supply-driven.

Subdued EU milk supply in the first quarter of 2019 and solid export demand should help support commodity prices and, outside any significant changes to the trading environment, average farm-gate milk prices are likely to remain at 0.30c/L-0.32c/L (including VAT).

Brexit

Ornua noted that for over two years it has been preparing for the potential impact of Brexit.

It remarked that planning for an event where “the outcomes are still unclear has been a significant challenge”.

The primary focus has been working closely with key UK customers and suppliers to ensure security of supply and to minimise the short-term impacts on our collective businesses, the statement continued.

Ornua described the UK as “a key strategic market” and said “any change in the status quo will create competitive challenges for Irish dairy exports”.

Concluding, the statement stressed: “Ornua has developed sales channels across a range of markets and will continue to invest to minimise the potential impacts of any Brexit deal.”

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