Dairygold reports €20.6m profit from core activities

Dairygold Co-Operative Society has reported an operating profit of €20.6 million from core activities last year.

The profit was recorded after the declaration of a €4.3 million year-end bonus to the society’s milk suppliers and customers.

The bonus comprised a 0.35 cent per litre top-up payment on all milk supplied during the year and a milk production refund of €5 per tonne on all compound feeds bought from the society during the year.

The society’s earnings before interest, taxation, depreciation and amortisation (Ebitda) of € 38.1 million are largely in line with 2011.

The results were achieved against a backdrop of lower returns across international dairy markets during 2012 which saw Dairygold’s turnover reduced by 3.5 per cent to €731.2 million.

Dairygold chief executive Jim Woulfe said 2012 marks a fourth consecutive year of solid financial results for Dairygold as it prepares for expansion arising from the removal of EU dairy quotas in 2015.

The ending of milk quotas in two years’ time brings an end of more than 30 years of restrictions and penalties on excess milk production. In keeping with its co-operative ethos, Dairygold has committed to accepting all the milk its members will produce.

“The majority of our milk suppliers wish to expand milk production to avail of the potential for increased farm income offered by the post-quota era,” Mr Woulfe said.

Following nearly two years of planning and consultation, the society devised an expansion plan which will provide the processing capacity required.

The €200 million additional investment required by the society to fund its expansion plan will be funded through a mix of bank and member funding and a new Milk Supply Agreement being entered into with supplier members.

Last year Dairygold achieved a significant reduction in its net debt position, down €10.4 million from €67.2 million in 2011 to €56.8 million, and the net asset value increased by €7.0 million to €251.3 million.

Dairygold continued with its on-going programme of capital expenditure, with the society investing a total of €22.5 million during the year. The projects include further processing plant expansion at sites in Mogeely and Mitchelstown, Cork.

Global milk production continued to rise in 2012 but demand did not match this increase and created a softening in returns across all commodity markets in quarters two and three.

Dairygold chairman Bertie O’Leary said the financial performance was achieved “against a backdrop of Dairygold maximising returns to members by supporting milk price over and above available market returns during the peak months as well as paying a year-end top-up bonus of O.35c per litre plus a feed rebate”.