Looking to the future are Michael Harte (chief financial officer), James Lynch (chairman) and Jim Woulfe (chief executive). (Fennell Photography)

Dairygold, Ireland’s largest farmer owned dairy co-operative, has reported a solid financial performance in 2015, which sees the Co-Op well placed for continuing sustainable growth, over the next few years, says Dairygold CEO Jim Woulfe.

In 2015, Dairygold delivered an operating profit of €19.2 million (2014: €28.6 million) having paid in excess of €20 million in milk price support to the society’s 3,000 milk suppliers.

Reflecting lower market returns, Dairygold recorded a turnover of €784.9 million for the year, down from €848.4 million in 2014, generating an EBITDA of €41.2 million (2014: €47.1million). Over the year Dairygold increased the net asset value of the business by €19.4 million to €315.5 million (2014: €296.2 million).

Year-end net bank debt rose to €96.2 million (2014: €71.6 million), reflecting the level of investment in the business and the reduced profitability, but well within banking covenants.

Strong Performance

“In 2015, the society delivered a strong operational and solid financial performance, despite a very testing year for the dairy sector internationally and the need to support its members.” said Mr Woulfe.

“Ireland accounts for c.8% of globally traded dairy volumes and given the over-supply which overhangs global dairy markets, price returns on dairy commodities have fallen significantly.”

“International dairy prices fell by c.50% between February 2014 and December 2015. The outlook for 2016 is even more challenging and with milk production continuing to outpace demand, a rebalancing of global markets now looks more likely to extend into 2017.”

Post Quota Operations

In 2015, Dairygold managed a seamless transition to post quota milk production by receiving and processing an extra 182 million litres of milk, which represented an 18.7% increase in milk volumes for the year. Overall in 2015, the society received a record annual volume of 1,157 million litres of milk from its milk supplier members.

Capital Investment

In 2015, Dairygold invested €50.9 million (2014: €50.7 million) in its post quota capital investment programme, the largest in the Society’s history and has invested over €200 million in the business over the last seven years.

The Dairy expansion investment in Mitchelstown was fully operational in 2015 and was essential in enabling the Society to process the increased 2015 milk volumes. The first phase of the regeneration of the Dairy Processing Complex in Mallow is currently being commissioned and completing its first production runs. This new state-of-the-art Dairy Nutrition and Ingredients Facility creates a platform that enables Dairygold to produce a range of high end value added products thereby supporting the development of relationships with the most discerning international customers and partners.

Meanwhile, 2015 saw Dairygold collaborate with Ornua in the development of its new Kerrygold Butter Production Centre of Excellence on Dairygold’s Castlefarm Dairy Campus in Mitchelstown which creates significant opportunities and efficiencies for both parties. Dairygold will be a key supplier of cream, the primary ingredient, for the new facility.

Commenting on the Society’s future strategy Dairygold CEO Jim Woulfe said value added enhancement across our dairy product range will be the driving focus for the Society for the coming years.

“Dairygold, with its strong balance sheet and new best in class processing facilities, is in a strong position to deliver on that ambition and to pursue strategic acquisitions where appropriate.”

Milk Price

As a Co-Operative, Dairygold is committed to maximising its Member Suppliers’ income from farming. Despite the depressed international dairy markets, Dairygold, over the course of the year, managed a planned reduction in its profit margin to provide in excess of €20 million in milk price top-up support to its 3,000 milk supplying members.