Irish Dairy Board Reports €2 Billion Turnover With Growth in All Core Markets

10 Apr 2013 --- The Irish Dairy Board (IDB) has reported that turnover increased 2.4% to €2.03 billion in 2012, with EBITDA up 10.8% to €42.1 million. Turnover exceeded €2 billion with EBITDA up 10.8% to over €42 million.

There was a strong performance by Consumer Foods and Dairy Trading & Ingredients divisions with growth in all core markets. Branded volumes were up 7% with record highs for Kerrygold.

Commenting, Kevin Lane, Chief Executive, IDB said: “2012 was a strong year for the IDB with the implementation of our business transformation strategy now clearly starting to bear fruit. The Group achieved solid earnings growth, despite challenging conditions in the first half of the year. Building on the success of our iconic brand, Kerrygold, we continue to invest in in novation and product development, with over 50 new products launched in 2012 delivering a broader offering to consumer s in both existing and new markets. “The IDB continues to build sustainable new routes to market ahead of the abolition of milk quotas in 2015. With the right structures in place, we are well positioned to take advantage of the exciting opportunities emerging in our industry,” Mr Lane said.

The Group reported a strong performance in 2012 driven by its dairy businesses. Group turnover exceeded €2 billion, up 2% year-on-year. This solid performance reflects an excellent second half of the year which saw the Group deliver strong underlying earnings growth , with EBITDA for the year up 10.8% to €42.1 million. As a basis for future growth, the Group increased its investment in its brands, facilities, in-market resources, innovation and routes to market. The Group is firmly on track to take advantage of post quota 2015 opportunities by building and enhancing sustainable routes to market for the Irish dairy sector.

The Group ended 2012 with a strong, debt free, balance sheet and with net assets of €405 million, leaving it well positioned to avail of growth opportunities in the coming years. Global Dairy Markets Global dairy markets experienced a volatile year in 2012. Low opening stocks kept prices firm in the first quarter of the year. A combination of excellent weather conditions in both the Northern and Southern Hemispheres in the first half of the year drove milk output higher and product prices dramatically lower. From June the weather conditions on both sides of the Atlantic deteriorated dramatically. Cold and wet conditions prevailed in Europe while the US Mid-West suffered from very hot and dry conditions. Consequently, milk supplies declined in the second half of the year and product prices firmed to close the year at similar levels to the first quarter.

The Group’s Consumer Foods division recorded branded sales growth in all of its core markets - the UK, Germany, and the US - with total branded volumes up 7 % in the year. This success was underpinned by increased investment in marketing and product innovation. The international roll-out of the reinvigorated Kerrygold branding was completed, supported by increased in-market investment.

Kerrygold is the market leading butter in Germany where it delivered a record market share of 15.3% in the year. The UK business increased the market share of Pilgrims Choice by 50% and delivered double-digit volume growth. It also strengthened its position in own label and food service, opening up additional routes to market for Irish dairy products. In the US, Kerrygold is the number one imported butter brand and delivered double-digit year-on-year sales growth.

The International Markets’ business continued to perform strongly, particularly in the Middle East and North Africa, demonstrating the benefits of a diversified international sales strategy. The Dairy Trading & Ingredients division delivered a strong performance in the year, driven by strong contributions from the Group’s Irish and international added-value cheese ingredients and trading operations. The strong return reflects the first full year contribution from Thiel Cheese & Ingredients and a half year contribution from The Cheese Warehouse. The acquisition of The Cheese Warehouse in 2012 increases the Group’s presence in UK foodservice and food manufacturing sectors. It also provides a key route to market for Irish cheese when milk quotas are abolished in April 2015. Businesses acquired were successfully integrated and are performing to plan. The division continues to improve efficiencies through lean manufacturing and develop its value added food solutions capabilities, with a number of innovative dairy ingredients commercialised in the year.

US Distribution Division Trading conditions for the US Distribution division, DPI, remained challenging in 2012. The retail landscape and distribution sector remain very competitive despite the gradual recovery of the US economy. The business underwent a fundamental restructuring, which included the development of a new strategic plan, increased focus on operational efficiency, a revised structure and the appointment of a new leadership team. This restructuring produced encouraging results towards the end of 2012 and the business is better positioned for 2013.

DPI continues to build on its excellent partnerships with key retail and foodservice customers. Business Transformation Progress Implementation of the Group’s Business Transformation Strategy is delivering results across the business.

Good progress was made in NPD with the launch of over 50 new products. This included, building on consumer health trends, launch of Pilgrims Choice Lighter Extra Mature in UK and Reduced Fat Dubliner in the US Launch of Kerrygold Bratcreme in Germany, a liquid butter and rapeseed oil blend for cooking Extension of the MU cheese brand range in the UK with launch of MU Patz and M U Sticks.

There was continued momentum in the M&A programme with the acquisition of The Cheese Warehouse in the UK , a new route to market for Irish cheese, and the disposal of the Group’s Belgian-based continental cheese packing business, IDB Belgium N.V. (Yoko).

The Board has made significant investment over the past three years to strengthen the business. The business strategy is clearly delivering results across the Group and the outlook is strong for 2013. “We will continue to invest in our people, develop new products and build and enhance sustainable new routes to market ensuring IDB’s role in driving the growth potential of the Irish dairy sector. We are ready to take advantage of the opportunities that will exist in a post quota environment in 2015,” the company reported.