Farm Ireland

Thursday 19 April 2018

Dairygold profits fall on back of dairy commodities downturn

Michael Harte, CFO, James Lynch, Chairman, Jim Woulfe CEO of Dairygold
Michael Harte, CFO, James Lynch, Chairman, Jim Woulfe CEO of Dairygold
Dairygold chief Jim Woulfe
Darragh McCullough

Darragh McCullough

Dairygold profits dropped by 34pc last year on the back of the global downturn in dairy commodities.

Operating profit at one of the country’s largest dairy processors fell by €9.4m to €19.2m as revenues fell by €63m.

The co-op, which is wholly owned by over 3,000 farmers, also subsidised milk price to the tune of over €20m in an effort to keep the price that farmers were paid above the break-even level of 26.5c/l.

However, management at the Mitchellstown-based processor maintained that the “solid financial performance” left the company well placed for further growth over the coming years.

The EBITDA earnings on a turnover of €785m was €41m, but the business’s asset value increased by €19.4m to €315.5m.

Bank debt increased by €25m to €96m, as Dairygold continue to invest heavily in adding extra capacity to their site at Mallow in Cork.

Over €50m was spent last year, bring total capital investment over the last seven years to €215m.

“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 the co-op’s CEO, Jim Woulfe.

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“Ireland accounts for 8pc 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 50pc 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,” said Mr Woulfe.

In 2015 Dairygold handled an extra 182m litres of milk, which represented an 18.7pc increase in volumes for the year. It brought the total milk pool to a new record level of 1.2bn litres.

Online Editors