Kerrygold returns suffer as global slowdown bites

THE GLOBAL slowdown has left earnings at the owner of the Kerrygold butter brand on a slippery slope.

The Irish Dairy Board (IDB) warned yesterday that returns from world markets had “declined significantly” on last year’s highs, and predicted this would seriously affect its 2008 performance.

Chief executive Noel Coakley said the board expected that the second half of the year would improve its financial performance, but added it would not be enough to avoid a fall in operating profits.

“This will affect the ability of the IDB to pay bonuses to its member co-operatives at the end of the year, but it is important at this point that all dairy industry participants are aware of the current market realities,” he said.

The country’s farmer-owned dairy co-operatives own the IDB, which itself owns and markets Kerrygold butter in Ireland and around the world.

Along with Kerrygold, the group is involved in dairy processing and sells milk products, including the liquid itself, and consumer foods and ingredients such as casein and whey, in Europe and the US.

Mr Coakley said in a statement yesterday that prices for key products such as milk and cheese were down by between 10 per cent and 45 per cent, depending on markets and the commodities.

He blamed consumer reaction to the sharp increase in prices last year, allied to tougher economic conditions, for the slowdown.

Consumers have been buying fewer premium dairy products this year, and switched away from branded goods as they feel the pinch.

“The strength of the euro versus both the dollar and sterling is also impacting on returns,” he said.

The credit squeeze increased the group’s financing costs, which was also affecting performance, Mr Coakley added.