Aurivo sees merger with Border co-op LacPatrick as Brexit bulwark
North-west based Aurivo Co-op believes a potential link-up with LacPatrick Dairies would deliver a strong Brexit buffer for both businesses.
The dairy and agri-business has seen turnover increase 9pc to €426m in 2017, while operating profits were up 10pc at €3.9m.
Aaron Forde, CEO of Aurivo, said it was well-positioned with a €48m five-year business investment plan in place that would see it expand its milk-drying facilities at Ballaghaderreen, Co Roscommon, expand their liquid milk facilities in Killygordon, Co Donegal and also invest in the feed milling side of the agri-business.
It is among the four businesses - including Glanbia, Lakeland Dairies and Northern-Ireland based Dale Farms - that has expressed an interest in LacPatrick Dairies after the Border region co-op recently signalled it was looking at "strategic options" to consolidate.
Mr Forde pointed out they have an intermingled supply base in Northern Ireland, complementary milk pools and product portfolios. "A key strength is they are also very active in African markets. They have well-invested assets north of the Border with a new drier at Artigarvan and they have some good assets on the butter side," he said. "We have our own Brexit plan but a joined Aurivo and LacPatrick would be in a strong position from a Brexit point of view."
Mr Forde stressed they have a strong "track record" in delivering for their member farmers and "see ourselves in a strong position to do the same for a combined base". He said they have not yet seen the balance sheet of LacPatrick but were approaching it with "confidence" but also "cognisant" of the risks.
A spokesman for LacPatrick said it is a "profitable" co-op and is in a position of "strategic strength" after a €40m investment in a state-of-the-art dairy technology centre in Artigarvan, Co Tyrone last year.
It is understood a couple of dozen suppliers in the North served contract termination notices following the recent milk price cut by LacPatrick.
Aurivo pointed out in its financial results for 2017 that it was a record year as its milk pool increased to 420 million litres, which helped drive sales in its dairy ingredients business up 41pc to €143.5m. Its net debt in the period reduced from €16.6m to €5.7m last year.
There has been strong demand in the Middle East and Africa for its enriched milk powders, with a new brand - Forto - launched in Nigeria.