Lakeland continues good trend with 25% profit rise

LAKELAND Dairies, the sixth largest Irish dairy group, has continued the trend of bumper results from the sector, with a 25 per cent increase in its 1995 profits to just over £4 million. And further growth is expected in the current year, stated Lakeland chief executive Mr Dan Buckley.

Mr Buckley said it was growing the business through expanding the milk pool and introducing new products. In addition, Lake land was on the lookout for acquisitions. With no debt and with strong cash flow, Lakeland is in a good position to make acquisitions. However, Mr Buckley said the co op would move cautiously.

"We could spend up to £15 million to £25 million comfortably as long as we see a return on the investment," he said. "It's more likely that we would go for a smaller one before doing something bigger." Outside Ireland the group would be most likely to make acquisitions on Continental. Europe.

Lakeland benefited last year from the strengthening market for dairy products and sales were up 15 per cent to £135.4 million. Turnover from dairy operations was 19 per cent higher while sales from the trading division were 3 per cent higher at £33.6 million. The rise in sales and continued cost control meant that operating margins increased from 2.7 per cent to 2.9 per cent. Staff costs as a proportion of sales fell from 5.6 per cent to 5 per cent.

While dividends paid to Lake and's 5,000 shareholders totalled just £100,000, the shareholders have been rewarded with a £4.1 million bonus share issue equivalent to two bonus shares for each existing share. Lakeland has 3,000 producer shareholders, with the remainder classified as "dry" shareholders.

Lakeland's milk supplies increased by five million gallons to 64 million gallons, due to the expansion of operations into Northern Ireland. Lakeland sources five million gallons of milk from about 110 milk producers in the North. Due to the difficulty of expanding the milk pool in the Republic, Mr Buckley hoped to double the volume coming from the North by 2000.

Last year, Lakeland had improved demand for its products, including UHT, caseinate and butter milk powder. Lakeland became Ireland's biggest producer of full cream milk powder which is sold mainly to South America, China the Middle East, Ivory Coast and European markets.

Despite a weakening in butter and skim milk powder prices in the first quarter of the year, Lakeland is expecting another good year.