Tuesday 22 May 2018

Dairygold lays 'Brexit-proof' plans as profits jump

Dairygold chairman John O’Gorman, chief executive Jim Woulfe and CFO Michael Harte as the dairy giant, which is Ireland’s largest farmer-owned dairy co-operative, announced its annual results in Dublin. Photo: Chris Bellew /Fennell Photography
Dairygold chairman John O’Gorman, chief executive Jim Woulfe and CFO Michael Harte as the dairy giant, which is Ireland’s largest farmer-owned dairy co-operative, announced its annual results in Dublin. Photo: Chris Bellew /Fennell Photography

Ellie Donnelly and Louise Hogan

Dairygold is pressing ahead on its "Brexit-proofing strategy", with a decision expected on planning permission for a new Jarlsberg cheese plant within weeks.

Ireland's largest farmer-owned dairy co-operative yesterday announced operating profits of €32.4m for 2017, a significant increase on the €17.5m figure reported in 2016.

With 300 million litres of its 1.3 billion litre milk pool destined for the UK's cheddar cheese market, the co-op pointed out it was diversifying its product portfolio and focusing on developing alternative routes to market.

However, Dairygold CEO Jim Woulfe stressed that the UK may still prove to be the most valuable market for Irish dairy produce after Brexit. It said a decision is imminent from An Bord Pleanála on its €77m investment with Tine at Mogeely, Co Cork which will see manufacturing of Jarlsberg cheese transferred from Norway to Ireland.

Dairygold CFO Michael Harte said they would hope to be in production by October 2019 which would allow them to transfer part of their growing milk pool into the mild Jarlsberg cheese. "It's a significant step as well at protecting us from Brexit and the challenges there as this milk won't be for the UK market, it will be predominantly for the EU or the US," said Mr Harte.

Mr Woulfe said it was a "Brexit-proofing strategy" as Jarlsberg is a global cheese brand as distinct from a British product. Mr Harte pointed out they were looking at product diversification to give them the "flexibility to maybe switch milk if there is a hard Brexit from cheddar into other product manufacturing opportunities".

It also pointed out significant investment will be made in its Nutritionals Campus at Mallow over the next two years to produce a range of value-added dairy products with the popularity of infant and adult nutrition.

During the year, the co-op's milk production volumes rose to 1.3bn litres, an increase of 8.3pc on the previous year.

The increase represents a cumulative volume increase of 55pc since 2009, ahead of the targets in the Government's Food Harvest 2020 growth targets. Dairygold said supply from members would continue to grow but maybe not at the same levels with an annual rise of around 3-3.5pc expected in the future.

Turnover was €965.5m, a 28pc increase on the prior year, according to the co-op's annual results for the year ended 31 December 2017.

Dairygold said the turnover was positively impacted by continued milk production expansion on milk suppliers' farms, as well as "strong" global dairy markets during the year, despite a slowdown in the last quarter of 2017.

The society delivered an average milk price to farmers of 37.6 cent a litre last year, an increase of 10.6c/l on 2016 prices. Already in 2018 Dairygold has reduced its milk price, blaming the cut in milk prices on a reduction in global market prices for milk, which it said had continued into the first quarter of 2018.

In particular, Dairygold cited the "rapid" deflation of the butter bubble, which went from a high point of €7,000 per tonne in August to less than €4,000 per tonne by year end.

Indo Business

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