Dairy board profits fall by almost 30%

IRISH DAIRY Board profits fell by almost 30 per cent from €34.7 million in 2007 to €24.3 million in 2008, according to its annual figures released yesterday.

While the dairy board’s turnover was down by just 0.7 per cent to €2.09 billion last year, Dr Seán Brady, the interim chief executive, said the board performed well in very difficult circumstances.

“High-priced stock carried forward from 2007 had a negative impact on first half-year profitability but the second six months saw a significant profit improvement from both the consumers and ingredients division,” he said.

Dr Brady said this improvement had contributed considerably to the overall recovery to profitability for the group but was not enough to avoid a reduction in the full-year operation surplus to €24.3 million.

That is the figure used as a basis for calculating year-end bonuses for its member co-operatives which were paid €3.5 million in 2008 and a further €6 million in respect of redeemable loan stock during the year.

The figures showed group debt to equity ratio at 58 per cent while bank borrowings, net of cash, were €207 million compared with €159 million in 2007.

Dr Brady said a considerable amount of the debt related to the financing of stock held for consumer markets over the winter period.

It also included the financing required for the construction of the new Kerrygold company packing facility in the UK and the development cost of a butter packing plant in Germany, the largest market for Kerrygold butter where 30,000 tonnes was sold during the year.

The annual report said the Kerrygold brand had a challenging year with an overall sales volume decline of 3.5 per cent. However, despite a modest fall off in sales in Germany it retained its market leadership position.

Dairy board chairman Michael Cronin said price volatility in the dairy markets would be a feature of dairying for the coming years and the board was aware of the difficulties facing dairy farmers at this time.

“We are expecting some improvement in the world markets in the fourth quarter of this year and while things are tough now we must not forget we remain one of the world’s most efficient milk producers,” he said.

Dr Brady said international subsidiaries performed well and branded sales in the US grew by 3 per cent, which was an excellent achievement given the market conditions during the year.