Rising expenses eat into profits at Tipperary Co-op

Tipperary Co-Operative Creamery has recorded a 19 per cent drop in pre-tax profit from £769,000 (pre-redundancy costs) in 1997 to £621,000 in 1998 due to higher operating expenses. This contraction arose despite a rise in sales from £67.1 million to £75.1 million. While the level of operating profit is described as low, it is considered satisfactory considering the difficulties in dairy export markets.

Chairman, Mr Michael O'Brien, described the results as "admirable with all aspects of the business developing along planned lines". Sales grew despite the problems in the dairy export markets.

The growth in sales was aided by a strong performance from its French subsidiary, Tippegral, and a full year's sales from its supermarket, Co-op Super Valu, which was purchased in July 1997.

The dairy markets were affected by the financial turmoil in south east Asia and Russia "which lowered demand for dairy products and consequently led to downward pressure on world prices", said Mr O'Brien. Cheese production increased by 18 per cent to more than 4,000 tonnes. The emphasis, said Tipperary, was again on Emmental, which accounted for 94 per cent of production. The collapse of the Russian economy led to unwanted stocks and the markets did not recover. Market share was retained in all markets with "exceptional growth" being experienced in the UK and the domestic markets. Some 60 per cent of its cheese goes to the French market.

The joint mushroom venture with Monaghan Mushrooms, announced last year "is well under way and showing all the signs of achieving our objective to develop alternative enterprises". The first mushrooms were picked in July and work is underway on the construction of a packhouse and central farm at Knockanrawley, Tipperary. The project is expected to create up to 400 jobs. Tipperary controls 55 per cent of the venture which is a little higher than the 51 per cent originally envisaged.

The trend in cutting the number of milk suppliers continues with 38 suppliers leaving in 1998, followed by another 40 earlier this year. This has led to a 5 per cent increase to 33,000 in the average gallons per supplier.