Sligo-based Aurivo, formerly Connacht Gold, has become the latest potential suitor for Lacpatrick, which is seeking a strategic partner to secure the future of the business.
Aurivo chief executive Aaron Forde said Lacpatrick was a neighbouring co-op with complementary milk pools and complementary product lines and represented a natural fit for the co-op.
Monaghan-based Lacpatrick, one of the biggest dairy groups in the Border region, said last week it was interested in a possible merger to consolidate the business and insulate it against future dairy market volatility.
“We’ve made it clear to them we’re interested in participating in that discussion wherever it goes,” Mr Forde said, noting Aurivo had a strong record in consolidating neighbouring businesses. Aurivo is understood to be one of several parties in talks with Lacpatrick.
Mr Forde was speaking as Aurivo published full-year results for 2017, which showed the co-op generated an operating profit of €3.9 million, up 10 per cent on the previous year. Turnover for the year was €426 million, an increase of 9 per cent on 2016.
Mr Forde said the co-op’s financial performance was driven by stronger dairy prices and volumes. However, he noted the jump in butter prices last year was partially offset by weaker milk prices.
More than two thirds of Aurivo’s milk pool, which totalled 420 million litres last year, is exported to 50 countries in partnership with Ornua, principally under the Kerrygold brand.
Mr Forde said demand for its product was tied into oil prices, which are key to two of its largest export markets - Nigeria and Saudi Arabia. "Oil prices are currently in the $60 (€49) range and I'd say ideally we'd like a seven in front of it, but it's probably supportive of reasonable dairy prices at the moment," he said.
Aurivo’s consumer foods division had a strong year with sales across its milk, butter and sports nutrition brands, which include its For Goodness Shakes product line, rising 12 per cent to €99 million.
Its dairy ingredients division also had a record year with sales growing 41 per cent to €143.5 million driven by a pick-up in dairy demand globally.
The company successfully launched a new brand of enriched milk powder for the Nigerian market called Forto with the powder produced in Ballaghaderreen, Co Roscommon.
On Brexit, Mr Forde said the business was engaged in scenario planning. It sources about 16 per cent of its 420 million litre milk pool from farmers in the North, but is less exposed to the UK market than many of its peers as most of its products are exported to mainland Europe.