Record investment but profits back for Arrabawn in 2019

Arrabawn announced its financial results for 2019, revealing a record capital spend of almost €20 million last year – mainly in the cooperative’s new casein and effluent plant.

However, profit was down considerably – operating profit in 2019 was at €1.04 million, while earnings before interest, taxes, depreciation and amortisation (EBITDA) was €7.5 million.

This is compared to operating profit before exceptionals of €2.38 million in 2018, and EBITDA of €8.2 million.

On the production side, the co-op’s 2019 accounts show that the amount of milk processed through its two processing plants – Nenagh, Co. Tipperary, and Kilconnell, Co. Galway – reached an all-time high of over 422 million litres, an 8% increase on 2018.

Looking ahead, with the record €50 million programme of investment over the past three years by and large completed in 2019, Arrabawn “is now well set for future growth ahead”, CEO Conor Ryan stated.

The annual accounts show that capital expenditure was at its highest in the history of the organisation at a record €19.6 million as the co-op committed the vast bulk of spend on its new casein and effluent plant during 2019.

It is expected that the organisation will return to more normalised capital expenditure levels on completion of the casein and effluent plants this year, the co-op says.

The investment, Ryan said, is a “vote of confidence” in the future of the organisation and also resulted in 12 new hires being recruited.

Turnover for the year was at €265.5 million in 2019, down 2% on the record turnover achieved in 2018. The marginal turnover reduction was brought about in the main by reduced sales of feeds, which hit record levels in 2018 due to the exceptional weather conditions.

Commenting, Ryan said: “2019 was a very important year for the organisation and will be seen as such in the years ahead when the work we did last year will have facilitated a significant increase in our milk processing capabilities.

“This significant capital investment programme was achieved on time and on budget,” he said.

“This investment substantially changes our business model from a manufacturing ingredients business as we now have the ability to process more of our milk into higher value-added products, which will deliver a better return for the organisation and its members and suppliers.”

The CEO added that the new facility “will future-proof our operations and has already resulted in a lot of interest all over the globe in our range of products”.

Arrabawn chairman Edward Carr also commented, adding: “The record investment over the past year illustrates Arrabawn’s ambition on behalf of members.

“The investment is good news for our suppliers as it will allow them to continue to expand over the coming years.”