Dairygold has up to €100m for acquisitions as it eyes Asian market
Chief executive Jim Woulfe to retire after 42 years with the company
Jim Woulfe, chief executive of the Dairygold Co-Operative Society. Photograph: Matt Kavanagh
Dairygold Co-operative Society says it has up to €100 million to spend on an acquisition to help kick-start its new health and nutrition division.
The farmers’ co-op, which processes more than 1.4 billion litres of milk annually for its members, established the new division last year and plans to enter higher-margin sectors such as specialist health foods and fortified milk powders.
Chief executive of Dairygold Jim Woulfe, who announced this week he will retire by the end of the year, says it is still at an “exploratory” stage but he hinted it may seek to enter the Asian market. He also suggested the group may look to develop dried milk nutritional supplements for older people.
“Organic growth is the aim but we could make acquisitions to help us. We are not in talks with anyone yet. There is probably €70 million-€75 million on the balance sheet we could release. With modest leverage, it would bring us into a range of, probably, up to €100 million that we could spend,” he said.
Dairygold announced flat sales of just over €1 billion on Wednesday and a 27 per cent fall in profits. It said its “strategic ambition is to build a business that will deliver incremental growth and higher margins” than its core milk processing business.
It said there was initially a “huge collapse in demand” for its dairy products from hospitality outlets at the outset of the pandemic last year, but this was mitigated by a surge in demand from retail outlets as customers resorted to eating and cooking at home under lockdown.
Its international business, concentrated in markets such as Germany, was also affected by the pandemic due to a focus on supplying hospitality outlets.
Dairygold said demand for milk was “surprisingly resilient” over the full year.
In Ireland it processed 1.43 billion litres of milk on behalf of the co-op’s producer members, a rise of 2.7 per cent. Sales were flat in its agribusiness division, with a strong performance in its retail outlets that sell agri-goods to farmers. Its shops are deemed an essential service under Covid restrictions and have traded throughout lockdown.
Mr Woulfe said its factories in the UK, including one in Leeds that manufactures cream cheese products for the hospitality sector, are witnessing “green shoots” as food service companies there get ready to reopen as Britain unwinds its lockdown.
He will leave his role as chief executive after 42 years with the company, including 12 years at the helm.
“It is time to pass on the baton. It is the only place I have ever worked, even when I was a student,” he said.
Reflecting upon his time, he said the biggest challenge facing the dairy industry as he departs is to engage with the climate change agenda “in a proactive way”.
“The dairy industry needs better leadership on the sustainability agenda,” he said. “The debate now reminds me of the milk quotas debate from years past. We can’t put it on the long finger.”