Dairygold delivers another strong performance in 2021

13th April 2022

Dairygold Co-Operative Society Limited has announced its financial results for 2021. The Co-Operative delivered a record turnover of €1.17 billion, an increase of 15% or circa €152.0 million on the 2020 figure with an operating profit of €30.4 million, an increase of €4.4 million. These results reflect a robust performance across all the Society’s businesses, despite the ongoing challenges of the COVID-19 pandemic.

2021 EBITDA was €57.6 million, an increase of €3.8 million, reflecting the increased level of profitability in the core business, benefitting from a stronger trading performance, including increased sales volumes and improved efficiencies.

Following a decade of significant capital investment, Dairygold reduced its bank debt by €11.0 million to €108.2 million. This has resulted in an improved net bank debt to EBITDA ratio of 1.9:1, a decrease from 1.22:1 in 2020. At the end of 2021, the net asset value of the Society stood at €422.2 million, an increase of €34.5 million on 2020.

Commenting on the results, Dairygold Chief Executive Conor Galvin said: “The Dairygold business is in a good financial and operational position. Following a decade of significant capital investment, the business has a strong EBITDA, manageable debt and a successful model for Member Funding. Our focus has shifted from milk expansion to creating more value per litre of milk. We are currently conducting a business wide strategy review which is expected to be completed by the end of April. This strategy will provide an updated roadmap for the business for the next five to ten years, as we seek to continue to maximise returns for our Members, through higher margin activities while also clearly focusing on meeting our crucial greenhouse gas reduction targets.

2021 Financial Year – Key Figures

Dairy Markets

Dairy markets remained buoyant throughout 2021. A combination of low global milk supply growth in the main exporting regions and strong international demand, in particular from China, created the market dynamic for the very positive dairy markets. Several factors are expected to impact demand for dairy products for the remainder of 2022. The ongoing Ukraine invasion and the resulting disruption, including to supply chains, will significantly affect both the availability and the cost of a large range of inputs including fertiliser, energy, packaging and raw materials. The resulting inflation, which is already being felt at farm and factory level, will create challenges for profitability in the entire value chain.

Dairy Business

The Dairy Business turnover increased by €112.0 million to €871.6 million driven by increased sales volumes and strong dairy market returns. Dairygold collected and processed 1.49 billion litres of milk in 2021, a 4.2% increase on 2020.

The strategic focus of the Dairy Business has shifted from capacity management and infrastructure investment to higher margin processing and adding value to the litre of milk, in as sustainable a way as possible.

Dairygold’s Health and Nutrition Business was established to focus on the delivery of growth and higher margin for the Society, through the development of new health and nutrition propositions with strong market appeal, either through organic investment or through acquisition.

The focus throughout the year on our two foodservice businesses in the UK and Germany was to continue to mitigate the impact of the pandemic through streamlining production, reducing overheads and improving commercial agreements with customers. Dairygold continues to support its overseas’ businesses with the capital investment required to further develop and grow and as the UK is a net importer of food, the UK business remains well placed to continue to grow market share.

Agri Business

Dairygold’s Agri Business delivered a very strong performance across all activities in 2021 with turnover increasing by €32.3 million to 276.2 million. As an essential retailer, Dairygold’s network of 26 Co-Op Stores remained open during COVID-19 restrictions. The overall strong performance reflected the improved Customer experience across Dairygold’s store network, supported by the Store Investment Programme. In 2022 the Society is investing in the upgrading of its point-of-sale system to enhance the customer experience.

Sustainability

The Food Vision Dairy Group is tasked with submitting recommendations to Government on how the agriculture industry can meet its emissions targets. These recommendations should serve as a solid pathway for action, allowing processors to work together with Milk Suppliers to identify actions that can be taken in the long and short term.

In the meantime, Dairygold continues to build on the already established emissions reduction, nutrient planning and watercourse protection programmes while also launching new programmes such as the Signpost Farms Programme in 2021. Dairygold is committed to working with all stakeholders to meet its target, maintain profitability and preserve Ireland’s reputation as a world leader in grass fed dairy production.

Dairygold Chairman John O’Gorman said; The performance of the business during the Pandemic is testament to the resilience of the business and the capability and support of Dairygold’s Members, Customers and Employees. Unfortunately, as we emerge from COVID-19 we now see the fragile geopolitical situation in Europe as a result of Russia’s invasion of Ukraine. Dairygold’s thoughts and prayers are with the people of Ukraine. Dairygold has made a corporate donation of €30,000 to the Irish Red Cross in an effort to support the humanitarian efforts. The ongoing invasion is presenting supply chain issues and directly impacting input costs for our Members. We will continue to identify mitigation measures that will be effective in addressing such issues for our Members.”

Read the full report here