West Cork co-op sees profits fall on investment revaluation

A west Cork dairy and agribusiness co-operative recorded a fall in pre-tax profit of over 50 per cent to €6.12 million last year, but its operating profits rose as a result of strength in its core business.

Drinagh co-op's profit dropped to €6.1 million due to an almost €6 million hit to its investment income as a result of a fair value adjustment under new accounting rules.

However, operating profit improved by €800,000 to €2.6 million helped by growth across all of its divisions. Creamery volume increased by 6.1 per cent, mill output rose 30.8 per cent, and sales in its retail operations improved by 10.2 per cent to €45 million.

The group, which controls assets including pharmacies and retail outlets, has a 35 per cent stake in Dubliner cheese owner Carbery along with other co-operative societies.

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It also has stakes in Cuisine De France owner Aryzta and plastics company IPL. A €7.27 million unrealised loss as a result of stock market movement in 2018 had to be recorded in respect of those two investments. However, it is offset by a €1.08 million positive movement for renewables company Mainstream.

The most significant aspect of the adjustment of the valuation of its investment was a €5.58 million fall in the market value of Aryzta. The market value of IPL, of which Drinigh owns less than 1 per cent, dropped by €1.69 million in the year.

“2018 will go down in history as one of the most difficult years for farmers in the area due to adverse weather conditions,” said chairman TJ Sullivan. “Overcoming these [difficulties] and indeed to be in a position to report successes makes this an exceptional year.”

Turnover at Drinagh rose almost 10 per cent in the year to €148.5 million, while costs were relatively steady. The co-op, which employed 260 people during the year, derived the majority of turnover from its creamery business.

In July it opened a €3.75 million extension to its feed mill in response to the increased need for animal fodder in light of the adverse weather conditions during the year.

Founded in 1923, Drinagh is owned by its 2,000 shareholders.