RECORD prices for dairy products and a 16 per cent increase in sales helped to produce a 13 per cent increase in profit at Tipperary Co op. Pre tax profits rose from £1.3 million to just under £1.5 million, with sales in 1995 up from £64 million to £74.6 million.

Co op chairman Mr Michael O'Brien said that the higher sales were due to the dramatic increase in dairy prices last year and a 4 per cent increase in the amount of milk processed. Tipperary processed 36.2 million gallons of milk last year, up from 34.9 million gallons the previous year, and the group's suppliers received an all time milk price of 113p per gallon.

But Mr O'Brien warned that dairy product prices have tumbled in recent months and May saw the first sales into intervention in two years. "There is no indication that the market buoyancy of 1995 is likely to return in the short term," he stated.

But with negligible hank borrowings and cash flow of £2.2 million, the co op is in a very sound financial position, although Mr O'Brien said that the cash flow will be required for a substantial capital investment programme. Tipperary has begun a major investment in its Tippagral subsidiary in France with the aim of increasing throughput of Emmenthal cheese.

Last year, milk powder production increased by 8 per cent to 15.7 million tons, while butter production was 9 per cent higher at 6.5 million tons. Although cheese markets produced relatively poor returns for the co op, the general manager Mr Noel Horgan said Tipperary decided to maintain its market share, "as building market share is a slow and expensive process and throwing even part of this away for short term gain would not serve our shareholder milk suppliers well". But the chairman, Mr O'Brien, sounded a warning to the co op's 782 milk suppliers about over production of milk. "Over production has caused major difficulties for many of our milk suppliers and, at the time of writing, it appears that we are again facing a similar, if not greater, problem in the current year.