Irish Dairy Board reports €2 billion turnover

The Irish Dairy Board (IDB) is considering acquisitions in the Middle East and North Africa in the next 12 months after the group reported a turnover of €2.03 billion for 2012, an increase of 2.4 per cent on the previous year.

Growth was driven by strong performances in its consumer foods and dairy trading and ingredients divisions, a report on the group's full year results for 2012 concluded.

Despite a volatile year for global dairy prices, the country's largest exporter of premium dairy products reported earnings before interest, taxes, depreciation and amortisation (EBITDA) of €42.1 million, up 10.8 per cent on 2011. Pretax profits increased by 5.8 per cent to €16.3 million.

The IDB currently employs about 3,100 people globally and exports produce to 90 countries. The group ended 2012 with a debt free balance sheet, and net assets of €405 million.

IDB chief executive Kevin Lane said the dairy industry was currently "undergoing massive change" with the abolition of EU milk quotas approaching in 2015, but "with the right structures in place, [the IDB would be] well positioned to take advantage of the exciting opportunities emerging".

He said that while the group would continue to focus on growing its core customer bases in the UK, US and Germany, "the future for the Irish dairy industry lies in getting products exported to higher growth emerging markets", which include Russia, the Middle East, China and Africa.

The group are currently considering "strong opportunities" for potential acquisitions for 2013 in Saudi Arabia and Egypt, Mr Lane confirmed.

Branded sales

The group's consumer foods division recorded branded sales growth across its core markets in the UK, Germany and the US, with total branded volumes up 7 per cent in the year.

Sales of Kerrygold butter reached record highs, with over 350 million packets sold last year. It is now the number one selling butter in Germany with 15.3 per cent of market share, and the biggest selling imported butter in the US.

The market share of Pilgrims Choice cheese in the UK increased by 50 per cent in 2012, with sales volumes growing by 31 per cent.

The year saw the introduction of more than 50 new products and ranges by the group's brands, such as reduced fat Dubliner cheese in the US, and Kerrygold Bratcreme, a butter and rapeseed oil blend for cooking, in Germany.

Mr Lane said the company plan to continue to invest in new product development in 2013, with a new butter to be introduced to market in July, and two new cheese products planned before early 2014.

The acquisition of The Cheese Warehouse in 2012 increased the group's presence in the UK foodservice and own label food manufacturing sectors, which the company claims will provide a key route to market for Irish cheese when milk quotas are abolished in April 2015.

The group divested their Belgian-based continental cheese packing business IDB Belgium NV (Yoko) last year.

Future-proofing

IDB finance director Donal Buggy said the group was taking a "long-term view".

“Within that €42 million (EBITDA) we have absorbed additional costs in relation to our growth in the future. We put €6 million into marketing and promotion, invested heavily in product development, and other in-market investments. The profit could have been much higher in 2012 but that would have been short-term. We are looking forward to 2015 and the lifting of the quotas, and getting business ready for that.”

The IDB is owned by Irish dairy processing cooperatives and dairy companies. A total of €9.5 million was paid out in bonuses to shareholders last year, a 6 per cent increase on 2011, bringing the total payout to members to €12.9 million.