Brexit: Aurivo co-op hopeful of tariff-free access to UK

Dairy co-op Aurivo, formerly Connacht Gold, said it is hopeful that tariff-free access to Britain's food market would be maintained after Brexit.

Chief executive Aaron Forde said Britain was heavily reliant on food imports from Ireland and mainland Europe, and the imposition of tariffs would result in significant inflation, which authorities there were keen to avoid.

He was speaking as the co-op published full-year results for 2016, which showed operating profit had risen by 25 per cent to €3.5 million despite the significant challenges posed by global milk prices and Brexit.

“Maintaining a barrier-free border with the UK was an imperative for the dairy industry here,” Mr Forde said.

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However, he said he was hopeful the economic arguments would win out over any sense of retribution when it came to the negotiations.

Aurivo sources about 60 million litres of its 400 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.

The group’s latest results show revenue for 2016 declined by nearly 7 per cent to €391 million against a backdrop of volatility in global milk markets.

The bright point was the co-op’s consumer foods division, which enjoyed a 10 per cent increase in turnover to €88.4 million.

Retail partnerships

The “strong performance” came on foot of a 21 per cent increase in liquid milk volume driven by new retail partnerships, most notably with

Tesco

, and through year-on-year growth for Connacht Gold brand.

This was also aided by strong growth in its sports nutrition business, with volume sales and turnover in its For Goodness Shakes brand up significantly on the previous year. The co-op acquired the UK-based sports nutrition company in 2015 for a reported price of €28 million.

Mr Forde said the group had a €30 million war chest, comprising loan facilities and its own reserves, for further acquisitions in the sport nutrition sector.

Turnover in the group’s ingredients division rose to €102.1 million in tandem with the recovery in milk prices in the latter half of 2016. However, Mr Forde said while the rebound in prices had benefitted the group, the outlook the second half of 2017 remained “uncertain”.

The group’s agribusiness division was said to have performed well given the current market weaknesses, with turnover marginally down at €97 million, while its marts business saw year-on-year turnover fall to €76 million.

Robust performance

The group’s net debt position at the end of 2016 stood at €16.6 million, up from €8.6 million in 2015.

“In what was a challenging and volatile year, we are pleased to announce a robust performance by Aurivo across all facets of its business in 2016,” Mr Forde said.

“The year was a difficult one for the dairy farmer and farming in general as the collapse in milk price continued well into the year before stabilising in July,” he said.

“ With this and general all round economic uncertainty as a backdrop, our focus was twofold – to support our suppliers while at the same time focusing on delivering efficiencies across the business to safeguard its continued financial and operational success.”