Dairygold co-op's profits increase 60% to €18.9m

IRELAND’S LARGEST farmer-owned business, Dairygold Co-op, saw core operating profit jump 60 per cent to €18.9 million last year on the back of a dramatic uplift in returns from international dairy markets.

Strong demand for dairy ingredients, particularly from emerging markets such as China, boosted the Cork-based co-op’s turnover by €138.4 million to €693.6 million in 2010.

It booked an extra non-core profit of €7.3 million last year when it sold off a tranche of Aryzta shares. However, this money is earmarked to part-finance the acquisition of properties from Reox Holdings, in which the co-op has a 26 per cent stake.

Chief executive Jim Woulfe said “good buoyancy” in international dairy markets continued into the first quarter of 2011.

The improved returns were passed on to Dairygold’s 3,000 milk suppliers, who now receive 33 cent per litre, up from an average of 29.4 cent last year.

The co-op’s dairy food ingredients operation – which represents 70 per cent of its business activity – received a boost last year when Danone decided to expand its infant milk facility in Macroom, Co Cork, and to retain Dairygold as a key raw materials supplier.

The rest of its business is agri-related and benefited from higher grain prices and increased demand for farm inputs to support greater milk production.

Mr Woulfe confirmed yesterday that Ireland escaped an EU “super levy” fine “by the skin of its teeth” after almost exceeding the national milk quota threshold in the year to March 31st last.

He said Ireland would go over its quota in 2011/2012 if milk production rates continue. “We’re communicating with our farmers in that regard,” he said. “We are cautioning people.”

In the year ahead, the co-op plans to buy 17 properties from Reox for €43 million. This will be funded by a combination of cash and a debt offset.