Farmer-owned Irish co-op Dairygold has announced an operating profit of €30.4m (£25.6m), an increase of €4.4m on the previous year.
The Munster-based co-op, which has supported thousands of shareholder farmers for more than 150 years, reported a record turnover of €1.17bn (£1bn), an increase of 15% on 2020.
It says the results, for the year ending 31 December 2021, reflect a “robust performance” across all its businesses, despite the challenges of the pandemic.
2021 EBITDA was €57.6m (£48.5m), an increase of €3.8m, reflecting the increased level of profitability in the core business. The society says it benefited from a stronger trading performance, including increased sales volumes and improved efficiencies.
Following a decade of significant capital investment, Dairygold reduced its bank debt by €11m to €108.2m (£91.1m). This has resulted in an improved net bank debt to EBITDA ratio of 1.9:1, a decrease from 1.22:1 in 2020.
CEO Conor Galvin said: “The Dairygold business is in a good financial and operational position. Following a decade of significant capital investment, the business has a strong EBITDA, manageable debt and a successful model for member funding.
“Our focus has shifted from milk expansion to creating more value per litre of milk. We are currently conducting a businesswide strategy review which is expected to be completed by the end of April. This strategy will provide an updated roadmap for the business for the next five to ten years, as we seek to continue to maximise returns for our members, through higher margin activities while also clearly focusing on meeting our crucial greenhouse gas reduction targets.”
Dairy markets remained buoyant throughout 2021, says the co-op, halped by low global milk supply growth in the main exporting regions and strong international demand, in particular from China.
But it warns of disruption for the rest of this year, with the Ukraine crisis hitting supplies of inputs including fertiliser, energy, packaging and raw materials. “The resulting inflation, which is already being felt at farm and factory level, will create challenges for profitability in the entire value chain,” the report adds.
Meanwhile the strategic focus of the dairy business has shifted from capacity management and infrastructure investment to higher margin processing and adding value to the litre of milk, in as sustainable a way as possible.
Dairygold’s Health and Nutrition Business was established to focus on the delivery of growth and higher margin for the society, through the development of “new health and nutrition propositions with strong market appeal”, either through organic investment or acquisition.
During the year the co-op focused on its two foodservice businesses in the UK and Germany, working to mitigate the impact of the pandemic through streamlining production, reducing overheads and improving commercial agreements with customers.
It added: “Dairygold continues to support its overseas’ businesses with the capital investment required to further develop and grow and as the UK is a net importer of food, the UK business remains well placed to continue to grow market share.”
Dairygold’s Agri Business also grew its turnover, keeping its network of 26 Co-op stores open during lockdown and working to improve its customer experience and invest in stores restrictions. This year the society is investing in the upgrading of its point-of-sale system to enhance the customer experience.
The society is also working on sustainability, with its Food Vision Dairy Group submitting recommendations to the government on how the agriculture industry can meet its emissions targets.
In the meantime, says Dairygold, it continues to build on its established emissions reduction, nutrient planning and watercourse protection programmes while also launching new programmes such as the Signpost Farms Programme in 2021. It says it is working with stakeholders to meet its target, maintain profitability “and preserve Ireland’s reputation as a world leader in grass fed-dairy production”.