Lakelands profits rise despite fall in turnover

Lakeland Dairies has reported a 43 per cent rise in 1997 pre-tax profits to £2.3 million before a once-off cost of £650,000 relating to a voluntary redundancy programme.

The Cavan-based co-op increased profits although it maintained a policy of paying the highest possible milk price to producers and despite a three per cent drop in turnover to £123.8 million.

Chief executive Mr Dan Buckley said its policy of switching into products which give the best return, a policy of adding value to its products and cost control helped boost profitability. The dairy division, which processed 65 million gallons of milk in 1997, reported a 2.6 per cent drop in turnover to £92.3 million.

Mr Buckley said exports of full cream powder to South America and Europe accounted for some £36 million of sales in its dairy division while casein exports to North America were worth around £13 million.

Butter exports to Europe were worth some £35 million and included £6 million of sales of lactic butter to Germany. Meanwhile, Lakeland's agri-trading division reported a four per cent drop in sales to £31.5 million amid continued volatility in the animal feeds industry. Looking forward, Mr Buckley said the butter market was substantially over intervention level but whether this continued depends on extremely tense Asian and Japanese markets and also on the level of purchases by Eastern bloc countries. Lakeland expects caseins, full cream milk powders and skim milk powders to sell at similar levels to 1997 this year.

Lakeland plans to build up its business by adding value to its products, expanding its Northern Irish milk pool and by seeking acquisitions.

By 2000 Lakeland expects to be purchasing up to 12 million gallons of milk annually in Northern Ireland compared with 8 million at present.

The co-op remains in a strong financial position with some £2.3 million in cash at the end of 1997.