Irish Dairy Board turnover increased 5% to €2bn last year

TURNOVER AT the Irish Dairy Board, the main exporting arm of the Irish dairy industry, increased 5 per cent to €2 billion last year, as the sector continued to benefit from strong dairy markets.

Results for 2011, published yesterday, show that pre-tax profit increased by 29 per cent to just over €21 million. The Irish Dairy Board’s flagship Kerrygold brand, which sells into 50 markets internationally, experienced a 17 per cent jump in revenue in value terms, and a 3 per cent growth in volume.

Close to 40 per cent of the Irish Dairy Board’s revenues comes from its consumer foods division, which includes the Kerrygold brand. About 28 per cent comes from its dairy trading and ingredients business, with the remainder derived from its US food distribution business.

The company said its US logistics business, which distributes food products across the US, had a “challenging” year in 2011 due to weak consumer spending and increased competition.

The Irish Dairy Board’s finance director, Cathal Fitzgerald, said the drop in turnover was attributed to foreign exchange rates, as well as the loss of a contract during the year. The business has been restructured and the group declined to comment on any further plans for the division.

The dairy board made significant inroads into new markets – particularly in Africa and Asia – during 2011 as part of the group’s stated strategy to “broaden our footprint in international markets”, according to Mr Fitzgerald.

Last year Kerrygold experienced 30 per cent volume growth in the Middle East, as well as a 13 per cent increase in the volume of milk powder sold in sub-Saharan Africa, an area seen as a key growth area for dairy products.

The Irish Dairy Board exports about 60 per cent of the output of its co-operative members – which include producers such as Carbery, Lakeland Dairies and Connacht Gold.

The remainder is exported by producers and companies themselves or via multinationals such as Danone and Wyeth, which produce baby infant formula in Ireland.

A significant proportion of the butter, cheese and other milk products produced by Irish farmers and exported by the Irish Dairy Board is sold through the Kerrygold brand.

In addition, the Irish Dairy Board owns a number of ingredients businesses in Britain, including Meadow Cheese and Adams Food, which sells Irish dairy ingredient products directly into the British market.

Mr Fitzgerald said the Irish Dairy Board’s recent refinancing exercise, through which it secured a €350 million three-year bank debt facility, would help to position it for future growth.