Lakeland reports 10% rise in profit despite dairy slump

Lakeland Dairies, which earlier this week acquired neighbouring co-op Fane Valley's dairy business, saw pretax profits rise 10 per cent last year to €12.8 million despite the downturn in global markets.

The country’s third largest co-op reported 2015 revenues of €588.5 million, down 6 per cent versus the €625 million recorded a year earlier, due to what it said was continuing pressure on returns.

Milk supply volumes increased by 13 per cent to 900 million litres per annum, which Lakeland said contributed to overall efficiencies across all dairy processing operations.

Lakeland markets 230 dairy foodservice and food ingredient products to 77 countries worldwide.

The society said its foodservice division recorded a 6 per cent rise in revenues to €201.7 million on the back of improving consumer sentiment.

Food ingredients revenues fell by 14 per cent reflecting lower market prices due to the continued oversupply of dairy products. Lakeland said the unit produced record volumes with 107,000 tonnes of milk powders exported last year, including caseins, and over 31,000 tonnes of butter.

The group said its agribusiness division revenues increased by 8 per cent to €62.4 million, based primarily on sales of 162,000 tonnes of high quality animal feeds and over 25,000 tonnes of fertilisers. Growth in feed volumes was supported by incremental new business and some increases in feed use following the abolition of milk quota.

The society concluded 2015 with shareholders’ funds of €109 million.

Earlier this week, Lakeland announced it had acquired neighbouring co-op Fane Valley’s dairy business for an undisclosed sum in a move that will allow it to process up to 1.1 billion litres of milk a year, equivalent to a fifth of the State’s entire output.

"Lakeland Dairies continues to make strong progress. As well as strategic developments, we have achieved positive business results in spite of volatile dairy market conditions. We are focused on maximum efficiency across all operations. The balance within our business has enabled us to support milk price for our producers throughout the year," said chief executive Michael Hanley.

“These are difficult times for dairy farmers. Our priority is to achieve all future growth on a long term and sustainable basis, to maximise milk price and to minimise future market volatility for all of our milk producers,” he added.

Lakeland Dairies, which earlier this week acquired neighbouring co-op Fane Valley’s dairy business, saw pretax profits rise 10 per cent last year to €12.8 million despite the downturn in global markets.

The country’s third largest co-op reported 2015 revenues of €588.5 million, down 6 per cent versus the €625 million recorded a year earlier, due to what it said was continuing pressure on returns.

Milk supply volumes increased by 13 per cent to 900 million litres per annum, which Lakeland said contributed to overall efficiencies across all dairy processing operations.

Lakeland markets 230 dairy foodservice and food ingredient products to 77 countries worldwide.

Remuneration costs

The company, which employs almost 700 people, reported a rise in staff costs to €41.6 million from €36.7 million a year earlier. It said eight senior staff shared €1.6 million in remuneration.

The society’s foodservice division recorded a 6 per cent rise in revenues to €201.7 million on the back of improving consumer sentiment.

Food ingredients revenues fell by 14 per cent reflecting lower market prices due to the continued oversupply of dairy products. Lakeland said the unit produced record volumes with 107,000 tonnes of milk powders exported last year, including caseins, and over 31,000 tonnes of butter.

The group said its agribusiness division revenues increased by 8 per cent to €62.4 million, based primarily on sales of 162,000 tonnes of high quality animal feeds and over 25,000 tonnes of fertilisers. Growth in feed volumes was supported by incremental new business and some increases in feed use following the abolition of milk quota.

“There were a lot of positives last year despite the volatility and negative background we were operating in. We purchased the Coolicious frozen yoghurt brand and opened our new global logistics centre in Newtownards, which is going very well for us and invested in a new milk dryer at Baileboro,” said chief executive Michael Hanley.

“The next 12 months look testing and the issue is still all about supply versus demand. China has slowed down and since the Russian embargo there’s about 400,000 tonnes of product they haven’t taken. Brussels has a case to answer in regard to this and needs to make a stand on behalf of farmers,” he added.

Mr Hanley also expressed concern over the impact a possible “Brexit” might have on the business, although he said the society was prepared for such an eventuality.

Earlier this week, Lakeland announced it had acquired neighbouring co-op Fane Valley’s dairy business for an undisclosed sum in a move that will allow it to process up to 1.1 billion litres of milk a year, equivalent to a fifth of the State’s entire output.

The society concluded 2015 with shareholders’ funds of €109 million.