Dairy nutrition business Volac has reported a trading loss on lower sales from its latest full year, which it attributes to low global dairy commodity prices and rising manufacturing costs.
The company has posted a £2.5 million post-tax loss on revenues of £241m in the year ended December 31st 2018, compared to a positive £18.3m profit on sales of £269m in the previous financial year.
The company has seven production facilities – five in the UK, one in The Netherlands and one in Malaysia – making high-performance whey proteins for the lifestyle and sports nutrition markets; farm animal nutrition products and feeding systems; and lactose-rich dairy ingredients for food, beverage and animal feed uses. Staff numbers grew to 445 from 409 a year earlier.
Earlier this year, Volac and its partner the DMK Group announced the end of their DV Nutrition joint venture whey processing operation in the Netherlands.
“2018 was a very challenging year for the business which experienced a combination of low prices in dairy markets and increased raw material costs,” states Volac chief executive James Neville. “Whilst our outlook has improved in 2019 with improved market dynamics, our priority is to ensure continuity of supply to our customers in the UK, EU and rest of the world markets, while the threat of disruption from Brexit remains firmly in place.”
Mr Neville adds that 2018 saw heavy investment for the future, with £20.2m spent on capital projects. These include a new purpose-built milk replacer blending and packing facility near Kells in Ireland; a new feed fats factory in Gresik, Indonesia through the Volac Wilmar joint venture; and the initial stage of investment in new capability at the dairy processing factory at Felinfach in West Wales.
“The business intends to invest a similar amount in 2019 including the further redevelopment of our whey assets to better align to our future strategy,” says Mr Neville. “Volac remains confident in the medium-term future of its business and the dairy industry, as demonstrated by its significant long-term investment programme. However, recent difficulties in the dairy industry and the prospect of Brexit have introduced significant uncertainty to the environment for the near term.”