Operating profit up at Dairygold on the back of 'strong' global dairy markets
Dairygold's average milk price of 37.6c/L was up 10.6c/L on 2016
Dairygold has announced operating profit of €32.4m for 2017, a significant increase on the €17.5m in operating profit reported in 2016.
Turnover for the year at Ireland’s largest farmer owned dairy co-operative 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.
According to Dairygold, 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.
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 National Strategic Plan (Harvest 2020) targets.
"I am pleased to report that Dairygold delivered very strong financial results in 2017, buoyed by a robust performance across all its businesses," Jim Woulfe, CEO of Dairygold, said.
“A solid foundation of dairy investment has delivered increased milk processing capabilities and is enabling sustained business development.”
Despite global dairy market returns in 2017 being described as "significantly stronger" than in 2016, reflected in the society’s average milk price of 37.6c/L, an increase of 10.6c/L on 2016 prices, already in 2018 Dairygold has reduced its milk price (for February milk) by 2cpl to 34 cpl inclusive of 0.5c/L quality bonus and VAT.
The co-op blamed the reduction 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.
"For Dairygold, the dairy market volatility in 2017 highlighted the importance of pursing our value-added strategy which is aligned to long-term opportunities in global dairy demand," Mr Woulfe said.
During the year the Jarlsberg cheese producer invested €13.4m in the business, bringing the total investments over the past five years to €162.m.
On the matter of Brexit, which poses a disproportionality negative affect on the agri-food sector in Ireland, the co-op described the continued uncertainty as a "key concern" and said that it was focusing on developing alternative routes to market, as well as on product diversifications as part of its risk mitigation and value-added strategies.
"Dairygold is working with all industry stakeholders and Government at the highest level to ensure the challenges for the Irish dairy industry are understood and addressed as part of the negotiations."