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At the announcement of the financial results were: Michael Harte (chief financial officer Dairygold), Jim Woulfe (chief executive, Dairygold) and Bertie O’Leary (chairman). Photo: Colm Mahady/Fennell Photography

Dairygold Co-Operative Society Limited has recorded an operating profit of €27.3 million on its core activities for 2013. This record operating profit, representing a 33% increase (€6.7 million) on 2012, was generated after paying a leading milk price and paying €7.5 million in year-end bonuses to milk suppliers and trading customers. The overall operating profit, including share trading, was €27.9 million, an increase of €7.0 million on 2012.

Turnover increased in 2013 by €116m to €847m. Dairygold’s earnings before interest, taxation, depreciation and amortisation (EBITDA) of €45.4m on core activities were up 19% on 2012. These strong financial results in 2013 increased the Net Asset Value of the business by €23m to €274m.

Dairygold’s strong financial performance was delivered by optimising its product and customer mix and by the processing and operating efficiencies achieved following the investment in the business and continuous improvement over the last number of years. Dairygold’s individual businesses all contributed to the improved financial performance. In addition, strong returns from international dairy markets helped Dairygold deliver a leading milk price to milk suppliers.

The 2013 performance continues the strong recent trend which has seen the operating profit on core activities grow by 131% from €11.8m in 2009 to €27.3m in 2013. Dairygold has during this period, invested €113 million in the business, while reducing its net debt from €77.9 million to €60.9 million.

In 2013, Dairygold recorded its highest ever annual milk intake from its milk suppliers of 959 million litres. This increased volume is seen as a good indicator of Dairygold milk suppliers’ desire for expansion, which is projected to increase by approximately 55% to 60%, based on milk suppliers’ individual forecasts.

POST QUOTA STRATEGY

2013 represented a key milestone for Dairygold’s Post Quota Strategy. At the SGM in April 2013, the Strategy was endorsed by the members who voted overwhelmingly in favour of the Society’s Post Quota Plan, with its central objectives to maximise members’ returns, ensure sustainable business growth and minimise risk.

The Strategy sees Dairygold building its business on a core cheese and IMF ingredients product portfolio, growing incrementally through an appropriately financed modular investment plan which will support both volume and margin growth.
A key focus of the plan is the continued development of the enhanced routes to market, including building strategic customer relationships, both independently and in conjunction with the Irish Dairy Board, for the additional dairy products that the incremental milk volumes will produce.

January 2013 saw work begin on Phase I of Dairygold’s expansion programme with a €33m investment to develop and expand its Castlefarm facilities. Phase II, involving the development of our existing site in Mallow, is also underway. This will see the development of new state-of-the-art milk drying facilities, capable of producing the full range of milk powders, up to and including infant milk formula. The Mallow development continues the Society’s modular approach, which aligns expansion with forecasted milk volume growth and separates the proposed investment into a number of phases.

“READY FOR GROWTH”

Commenting on the results and future plans, Dairygold Chief Executive Mr Jim Woulfe said: “The excellent financial results achieved in 2013 represent the continuation of the positive trend of the past number of years. Our strong financial position, combined with a thought out expansion strategy, ensures that the Dairygold business is ready for growth. This will be achieved, both organically in a post quota environment and with strategic acquisitions as appropriate. This will be delivered to facilitate our members’ ambitions for expansion, maximise their income, whilst growing the value of the business”.

The Dairygold chairman, Mr Bertie O’Leary commented: “2013 was both a busy and successful year for Dairygold and its farming members. Dairygold had its post quota strategy overwhelmingly endorsed by its members, it took the lead role in responding to the fodder crisis and its members produced a record volume of milk and delivered an excellent grain tonnage. The excellent financial performance ensures Dairygold and its members remain firmly on course with their plans for sustainable profitable expansion”.

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