BSE stance puts results back in the spotlight

THE announcement yesterday afternoon by the British agriculture minister, Mr Douglas Hogg, that there are no plans for an immediate mass cull of the British dairy herd came as very welcome news for Waterford Foods.

Earlier the group may have feared it was a bad day to announce that it had become the largest dairy processor in Britain and Ireland. However, the news from Westminster shifted the focus back onto the solid set of results published by the group yesterday and away from the consequences for Waterford of the upheaval of the British dairy industry threatened by the BS scare.

Ireland was undoubtedly the star performer last year. The company does not break down its profit figures, but Mr Liam Igoe, of Goodbody Stockbrokers, estimate that Ireland contributed £26.5 million of last year's £39.7 million operating profits. Britain contributed" around £13.3 million and the troubled US operation just £200,000.

Ireland accounts for around £300 million of the group's present turnover of almost £1 billion, while Britain now accounts for nearly £500 million. The US contributes £80 million, with the rest of the world accounting for £150 million.

Waterford's position as the largest milk processor in Ireland put it in a good position to enjoy the buoyancy in prices for dairy products last year, explained Mr Joe Gill, of Riada Stockbrokers. Conversely, its exposure to the intensely competitive market for liquid milk in the Manchester region of England depressed British profits.

With prices for milk product under pressure in Ireland this year, Waterford will be doing well to repeat last year's performance in the home market. Mr Walsh said yesterday that Waterford will be looking for a price reduction from its farmer suppliers in Ireland, although this may be a tough battle.

The Cheese Company, bought for £125 million last September only started contributing marginally to earnings in the last quarter, after interest costs and depreciation. But it now puts Waterford in a strong position to capitalise on the rising British cheese market.

The cheese Company is a major step in shifting Waterford's focus from commodity type markets to the more predictable consumer and retail markets.