Cork-based Carbery reports 6% hike in profits despite challenges

Food and ingredients group blames modest increase in production on lower milk prices

 

Food and ingredients group Carbery saw profits rise 6 per cent to €27.1 million last year despite what it described as a challenging dairy market.

The West Cork-based co-op recorded only a modest 4.4 per cent increase in milk production to 470 million litres, however.

“This was less than might have been expected, in the second year of the post-quota era, due to poor spring weather conditions and lower milk prices during the year,” it said.

The group, which develops flavour and ingredient products for the sports nutritional and food industries, said turnover was down nearly 3 per cent to €340 million. This was blamed on weaker milk prices and unfavourable currency changes.

Chief executive Dan MacSweeney said the results were achieved against a market backdrop of weak global dairy prices.

“During the year, we prioritised the need to support milk prices for our dairy farmers and, once again, Carbery paid industry leading milk prices,” he said.

The co-op’s dairy division, which accounts for nearly half of the business, reported turnover of €156 million, marginally up on the previous year. Carbery’s Ballineen plant is the largest single producer of cheese in the State.

“The cheese division was affected by weaker pricing in 2016 and, as always, cheese price recovery was slower than other dairy categories,” it said.

Synergy, Carbery’s international flavour and natural extracts division, meanwhile, reported strong growth in its key customer markets of the US, South America, the UK, Europe and South East Asia.

Commenting on the market environment during 2016, Mr MacSweeney noted that, while dairy markets were difficult in the early part of the year as milk flows in Northern Europe grew strongly, the reduced milk flows late in the year had a positive impact with prices increasing.

“This trend continued into 2017, however, market pricing for the second half of this year is still a challenge due to the current weakness in dairy markets in the last month or so,” he said.

“In the medium term, Brexit presents a significant challenge to many businesses in the food industry in Ireland, and Carbery is not immune to this challenge. We are currently evaluating all potential scenarios with a view to limiting the impact of the Brexit process on our shareholders and milk suppliers,” he said.

During the year, the group invested a further €15.4 million in its dairy and ingredients divisions, bringing investment in the business over the past five years to €78.2 million.

At the same time, its net debt position as of the end of last year was reduced to €26.2 million.