Lakeland Dairies reports €26m operating profit for 2020

‘We have achieved the economies of scale to enable us to be flexible and to successfully steer our course through often choppy waters’

Ireland’s largest cross-border dairy processing co-operative, Lakeland Dairies, reported group revenues of €1.09bn (£0.95bn) for 2020, a 5.7% increase from the previous year.

The co-op’s annual report for the year ended 26 December 2020 revealed an operating profit of €26m (£22.56m), up by €5.6m (+27%) and EBITDA (Earnings before Interest, Tax, Depreciation and Amortisation) of €50.5m, a €7.6m increase from the previous year.

The business reported a food ingredient revenues increase of 18% to €691.0m, which it attributed to “consistently strong demand for the co-operative’s functional and enriched powders, proteins and dairy fats throughout the year”.

Foodservice Division revenues retracting by 24% on the prior year to €181.7m, due to what the co-op described as “exceptionally difficult market conditions” experienced by the sector as a result of Covid-19.

Meanwhile, the Consumer Foods Division reported revenues of €145.9m and the AgriBusiness Division saw its revenues increase by 4.7% to €75.8m for the year.

Lakeland Dairies, which collects 1.9bn litres of milk from 3,200 farm families across 16 counties in Northern Ireland and the Republic of Ireland, has a portfolio of 240 different dairy products made on eight processing sites.

Lakeland Dairies Group chief executive Michael Hanley said: “Notwithstanding the major operational, logistical and commercial constraints of the pandemic, both domestically and globally, we continued to make strong progress across all of our operations and this has yielded excellent results. We paid a competitive milk price throughout the year in line with market conditions.

“Aligned to our business achievements, we further consolidated the benefits of the Lakeland LacPatrick merger of 2019, achieving ongoing organisational, operational and administrative efficiencies and contributing to overall economies of scale, value creation and long term sustainability for our 3,200 milk producers, north and south.

“This robust performance enabled us to pay a competitive milk price in spite of serious market uncertainties that existed throughout the year. Market returns depend on the dynamic of milk supply and demand that exists between countries, geographies and continents, also including seasonality and ‘force majeure’ issues such as the pandemic.

“We expect relatively stable dairy market conditions through 2021 albeit there are still significant challenges in our operating environment as we await the anticipated beneficial effect of worldwide vaccine initiatives. All of our initiatives are focused on serving the long term sustainability of our farm families while working in partnership with our customers throughout the world.

“We have excellent facilities using advanced systems and technologies. We continue to invest in our innovation capacity, new products and new ways to market. We have long term, loyal and deeply valued customers and we have the scale we require to continue to compete successfully on a global basis.

Chair Niall Matthews added: “The global nature of world trade continues to require scale and efficiency in meeting market demands. On one hand, we are always influenced by global socioeconomic considerations; on the other, we have achieved the economies of scale to enable us to be flexible and to successfully steer our course through often choppy waters.

“The 1.9bn litres of milk produced by our dairy farmers is manufactured into the highest quality, natural and wholesome dairy products, creating long-term value for our overall co-operative enterprise. Our annual report demonstrates resilience and adaptability, which is reassuring for our 3,200 farm families, as primary producers, in terms of the sustainability that we require to underpin the current and future success of our dairy farming.”