Dairygold Reports Strong Performance for 2007

Of the €21.5 million operating profit some €15.5 million was generated by continuing Agri- Trading and Dairy Food Ingredients operations while a further €6.1 million came from share trading.

Dairygold Co-operative Society has reported excellent financial results for 2007. During the year the Co-op recorded strong profits, significantly increased turnover and net assets, and reduced its net debt position.

Turnover increased by €82.1 million from €543.0 million in 2006 to €625.1 million in 2007 primarily reflecting higher returns for dairy commodities experienced during the year. Profits also increased significantly from €0.24 million in 2006 to €21.5 million on foot of the higher turnover and boosted by the benefit of the Co-op’s rationalisation and restructuring programmes undertaken over the last number of years.

At the same time, net assets increased by €14.0 million to €248.6 million; net debts were reduced from €42.1 million to €38.3 million while the Co-op invested a total of €30.1 million in capital expenditure during the year. The capital investment is made up of €20 million invested in the dairy business, €5 million on Agri-Trading and €5 million on group-wide operations. The dairy investment is part of an approximate €100 million spend planned over the next five years for major capital investment projects in Dairygold’s cheese and dairy ingredients plants. These projects are partly supported by the Dairy Investment Fund, announced in the early part of 2007 and administered by Enterprise Ireland.

Commenting on the results Dairygold Chairman, Vincent Buckley said, “The tremendous outcome is the result of improved international dairy commodities markets, our successful restructuring and investment programmes and share trading activity. These very strong results are all the more remarkable when it is taken into account that Dairygold paid the top milk price in the country to suppliers throughout the year for their milk. In addition, the Co-op declared an end-year premium milk bonus of 3.45 cent per gallon for the year, representing an additional payment to milk suppliers of €6.1 million.”

Of the €21.5 million operating profit some €15.5 million was generated by continuing Agri- Trading and Dairy Food Ingredients operations while a further €6.1 million came from share trading. Dairygold Chief Executive, Mr Jerry Henchy pointed out that the Co-op has a strong financial assets portfolio, with shareholding in IAWS plc, One51, FBD and Reox Holdings plc with a market value of c. €123 million as of 31st December 2007.

The €6.1 million in share profit recorded in the Profit and Loss Account arose from a rebalancing of the Co-op’s investment portfolio to achieve a better balance between capital appreciation and dividend income to the Society. The figure is not a cash profit since the capital released was itself employed in the purchase of shares to achieve the portfolio rebalancing. Therefore, while profits have improved dramatically, the €15.5 million profit benchmark is the profit level generated by Co-op operations.

Mr. Henchy added, “Overall, the very strong performance within our Dairygold Food Ingredients business was largely driven by international dairy markets as expanded demand coupled with supply constraints saw global market prices rise to record levels during the year. Our strategy to drive more of our milk supply into higher value sales has also helped to enhance the performance. Dairygold has moved to exploit market opportunities creating small but strategically significant footholds in markets such as China as a supplier of ingredients to the baby food sector and in Europe with speciality cheeses such as Jarlsberg and Manchego.”

In the Dairygold Agri-Trading business greater international demand drove cereal prices to unprecedented levels during 2007. Such price rises had a knock on effect on feed ingredients and feed prices, which boosted turnover in this activity. However, Dairygold’s Agri-Trading business remains largely a service to members. Any benefits from increased sales volumes will be reflected in more competitive pricing and returns to Members in trade related bonuses.