Dairy Board profits fall despite sales growth
THE Irish Dairy Board (IDB) yesterday reported a small increase in turnover but a substantial drop in profits in 2010 during what the board described as a "transitional year".
The IDB, which owns the Kerrygold butter brand, said earnings before interest, tax and amortisation (EBITA) fell by a third to €26.9m despite increasing turnover by 6pc to €1.9bn.
A payout of €11.7m will be shared among the member co-ops, including a €4m year-end cash bonus. Net assets increased by nearly €20m, while the pension deficit was cut to only €6.9m.
The board blamed reduced margins and a "challenging" year in the US speciality business DPI for the fall in earnings but added the company had also invested heavily in personnel during the year.
The board began a repositioning of the business with the aim of "rightsizing" the company for the future, the board said.
The company's consumer foods division, which includes Kerrygold and Pilgrims' Choice cheese in the UK, delivered a "strong performance", said the board, with sales increasing by 38pc to €747.3m.
Its commercial and ingredients sector saw sales increase by 7.7pc to €468m, while the DPI speciality foods business in the US had sales of €710m but was severely hit by tighter margins.
Chief executive Kevin Lane said he was largely content with the board's performance last year.
"Overall the business reported a satisfactory performance in 2010, with the exception of our DPI, where margins, in common with the broader market, contracted sharply.
"Last year was a transitional one for the business and one which saw the IDB develop its strategic growth plans to re-position the business for the future.
"Against the background of a weak global economy our brands business achieved a record performance.
"In 2010 we have taken major steps on our journey to transform the business and are committed to having a world class business that will deliver excellent results," he said.
Overseas growth was driven by the German market, where sales rose by 15pc to record levels, mainly on the back of a new Kerrygold product.
Volume sales in the UK were down 2pc on last year in what were described as "challenging market conditions".
Despite DPI's struggles in the UK, the board's company in the US, IDB Inc, had a strong year, with Kerrygold sales up by 16pc in value terms.