Tipperary Co-operative said that a “turbulent and challenging year” in 2023 saw its value of sales decrease by over €100 million, from €420 million to €304 million, a drop of around 25%.
Releasing its annual report for 2023, the co-op said that 2023 was a difficult year for dairying nationally due to falling market returns and high input prices, which was compounded, in Tipperary Co-op’s case, by exceptional operating challenges in its milk processing business during the year.
The business also reported an operating loss of €6.8 million for 2023, compared to a trading profit of €6.9 million for the previous year.
However, the annual report noted that the co-op’s French-based cheese business Tippagral had a strong year.
Despite the generally negative report for 2023, the co-op’s interim CEO John Hunter said that it expects to return to profit in 2025.
He said that operational challenges arose in the business’ processing facilities, which produce butter, cheese, milk powders and concentrates.
Unforeseen delays pushed the installation and commissioning of a filter at the Tipperary town plant into the 2023 processing period, resulting in significant unplanned downtime in the dryer plant, lower productivity, higher energy costs, and lower yields.
Hunter said: “This has been a turbulent and challenging time for Tipperary but we have responded by putting in place some difficult measures in quarter three of this year that are beginning to show results.
“These measures include a reduction in staff levels and labour rates in conjunction with the unions. We’ve also lowered overheads and external supply chain costs, and we’ve improved integration across milk procurement and production planning.
“We’re already seeing the positive impact of this consolidation on our overall operational performance and production fundamentals, but it has not been easy for anyone,” Hunter added.
He said the “commitment and buy-in” of the co-op’s remaining team at the plant in Tipperary and its suppliers has “reaffirmed” the strength of the co-op movement.
“Ultimately, our focus has been on implementing a programme that underpins the future for suppliers, customers and our team. That programme, I’m fully confident, will enable us turn the corner and return Tipperary to profit as early as next year,” the co-op CEO commented.
Some of the more positive aspects of 2023, according to the co-op’s annual report, include its supplier base exceeding 190 million litres in 2023, despite a rapid fall-off in milk production due to difficult weather conditions and reduced milk prices.
As well as that, the planned output of the Tippagral cheese brand continued to rise to fill additional capacity, and the brand delivered “excellent” return on investment.
Commenting on the future of the co-op, Hunter said: “Our investment in creating a state-of-the-art plant brought unexpected challenges. But as we turn the corner we can look forward to reaping the benefits of this transformed plant going forward.”