Lakeland Dairies, the largest cross-border dairy processing co-operative on the island of Ireland, has posted significant increases in profitability and sales since it merged with the LacPatrick co-operative in April 2019.
The Group made an operating profit of €20.5 million on revenues of €1.04 billion in the year to December 28th 2019, compared to €17.53m and €0.81bn in the previous financial year – respective increases of 17% and 28%. But pre-tax profit fell to €12.74m (€13.91m) after higher interest charges and €2.4m in exceptional costs. Shareholder funds rose to €197.23m at the year end from €130m twelve months before.
The Group’s Agribusiness Division saw revenues of €72.4m, in line with budget expectations. The business made 210,000 tonnes of feed over the year period and handled 27,000 tonnes of fertilisers. Volumes of both were “moderately reduced” in the period, reflecting the better weather and grass growth after the difficult 2018 when grass and forage were short.
The largest division, Food Ingredients which processes milk into dairy products, saw revenues rise by 19% to €583.8m over the period. Lakeland Dairies collected 1.85bn litres of milk from 3,200 farm suppliers across 16 counties in Northern Ireland and the Republic. The division’s eight processing sites produce 240 different dairy products, with exports to over 80 country markets. The company says revenue growth was driven by strong demand for its functional and enriched powders, proteins and dairy fats, in addition to organic growth through the combined ingredients operations of both the former societies.
The remaining two divisions, Foodservice and Consumer Foods had revenues of €239m and €139.7m respectively.
Lakeland says it is “taking the threat of a poor Brexit deal extremely seriously”. While it has taken actions to mitigate such a scenario since the Referendum, it believes continued free trade is the best way to grow its business and underpin the prosperity of its farm suppliers.
The Group warns that the impact of COVID-19 is not reflected in the 2019 results, but the economic shutdown and reduced demand for dairy, especially from food service and catering markets, will have an impact on current year revenues.
“This positive outcome for 2019 is based on a strong and efficient performance across all operating divisions,” comments group chief executive Michael Hanley. “This has been done while leveraging from additional revenue streams and the overall synergies achieved by the merger of Lakeland Dairies and LacPatrick Dairies which created the newly constituted Lakeland Dairies Co-operative Society Ltd in April of last year.
“The success of the merger process to date has demonstrated the true potential for Lakeland Dairies to realise our strategic plans for continuing growth and development in the decades ahead. There are considerable challenges ahead, however. The ongoing market disruption caused by the COVID-19 global pandemic has put a significant drag on markets, particularly in the foodservice sector. A lack of clarity on the shape of the trading relationship between the EU and the UK post-Brexit is of concern to us too. Not to mention the ongoing global dairy supply and demand dynamic which has a huge influence on international markets.”