Tuesday 27 September 2016

Ornua posts turnover rise to €2.5bn in 'a challenging year' in dairy

Published 21/04/2016 | 02:30

Ornua CEO Kevin Lane
Ornua CEO Kevin Lane

THE CHIEF executive of Ireland's largest dairy exporter Ornua hopes the vote on Brexit in June will put a "floor" on the uncertainty in the marketplace.

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In the first year since quotas on the production of milk were removed, the rebranded dairy exporter formerly known as the Irish Dairy Board, recorded a 9pc rise in turnover to €2.5bn and an 18pc rise in earnings before exceptional items to €58.8m last year.

Sales of its well-known Kerrygold brand surged to €740m.

It comes despite a "challenging year" that saw a 16pc surge in supplies from Ornua farmer members to a record 286,000 million tonnes combined with a worldwide slump in the marketplace.

Ornua CEO Kevin Lane said the impact of the upcoming referendum on the UK potentially exiting the EU was resulting in uncertainty in the business sector.

"For us it is important as about a quarter our global turnover is actually with our closest trading partner the UK," said Mr Lane.

"We'd prefer the status quo was maintained we don't think it is a good thing for our business or for Irish businesses outside of dairy.

"We hope that a floor gets put under it in June."

Mr Lane said their best estimate is that 2016 will remain challenging for dairy prices with an uplift predicted in early 2017.

Ornua pinpointed three key factors impacting a recovery in dairy including a rise in demand in the Chinese market, the lifting of Russian sanctions and a need for oil prices to recover with 30pc of world dairy trade is through oil nations.

Mr Lane said they had done "everything in our power" to pay strong prices, with the suspension of the Ornua marketing levy paid by farmers expected to save them €6m by year end.

Farmers will share in a €29m bonus to be paid this week, including a €14m annual bonus and an additional payment of €15m after the sale of their majority stake in Ornua's US distribution business, DPI Specialty Foods, late last year.

Aurivo

Meanwhile, Aurivo Co-op in the north west also reported group annual revenues of €420m, down from €447m in 2014.

It pointed out the group operating profit had fallen last year to €3m from €6.7m in 2014, with milk price support of €8m or two cents a litre over the year a factor in this.

The co-op's milk pool grew 12pc to 411 million litres in the post quota period.

Aurivo's consumer foods revenues were up from €75m to over €80m, with Connacht Gold butter performing strongly. Poor prices internationally impacted the dairy ingredients revenue which fell from €135m to €99m, while the agri-business side recorded a marginal drop to €101.4m and marts revenues strengthened to €86.5m.

Aurivo's chief executive Aaron Forde said that "diversity" has always been helpful to the co-op.

"We are looking to build the business in ways that protect, insulate and strengthen the member owners whether they are dairy farmers or other farmers into the longer term as they face increasing volatility," he said.

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