Lakeland’s revenues top €1bn as Lacpatrick merger beds in

Sales at co-op Lakeland Dairies breached €1 billion for the first time last year as the co-op took over rival Lacpatrick.

Lakeland bought troubled Lacpatrick in April 2019 to form Ireland’s second biggest co-op, with a franchise stretching across 16 counties, north and south.

The move pushed revenues at the newly enlarged business to €1.03 billion, a record for the co-op, and a doubling of its turnover from five years previously.

Lakeland’s operating profit grew by almost €3 million to €20.5 million, while earnings before interest, tax, depreciation and amortisation, a measure of the cash a business generates, rose €9.3 million to €42.9 million.

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Chief executive Michael Hanley confirmed that Lacpatrick's operations were contributing to the overall business following a shake-up that involved the loss of 67 jobs.

Lakeland closed Lacpatrick’s yogurt manufacturing business and a butter plant in Co Monaghan, whose capacity was shared among other factories.

Speaking as the co-op published its annual report on Wednesday, Mr Hanley noted that Covid-19 had hit its food-service business in the second quarter of the year.

The division’s customers include a large number of airlines, which were grounded from March to the beginning of July as governments attempted to contain the spread of coronavirus.

Food service recovered 50-60 per cent of the airline business in the third quarter as lockdowns lifted and air travel restarted. “We expect that that will grow to 80 per cent by the year end,” Mr Hanley said.

Brexit challenge

The UK’s final exit from the EU at the end of the year remains a challenge for Lakeland, whose supply lines criss-cross the Border.

"Brexit is still very real," Mr Hanley stressed. He explained that the co-op was in constant talks with government departments and agencies in the Republic, Northern Ireland and Britain to ensure there would be as few barriers as possible once the UK diverges from the bloc's rules.

“What we need is unfettered access for that mixed-origin product into Britain,” he said.

Lakeland’s milk suppliers are also its shareholders. Mr Hanley confirmed that it maintained competitive prices to its 3,200 farmers during the year. Shareholders’ funds stood at €197.2 million at the end of 2019.

The co-op processes 1.85 billion litres of milk a year into a wide range of foods and ingredients, which it sells to more than 80 countries around the world.

Revenues at its ingredients division last year were €583.8 million, food service sales were €239 million, consumer foods turnover was €139.7 million while the agri-business unit generated €72.4 million.

In a statement Mr Hanley said he was happy with the 2019 performance. “The success of the merger process to date has demonstrated the true potential for Lakeland Dairies to realise our strategic plans for continuing growth and development in the decades ahead,” he added.

Lakeland Dairies chairman Alo Duffy, described 2019 as a "truly historic year" for the co-op.