Tough year for North Cork co-op

By Eric Donald

The 2002 financial results for North Cork reflect the full extent of the difficulties in dairy markets last year. The co-op`s pre tax profit has fallen from €1.22 million down to just €123,000.

Chairman Seamus Walsh told the co-op`s shareholders that the co-op faced some of the most difficult trading conditions experienced by the dairy industry in recent years. He said that as an independent co-op, they are deeply committed to providing appropriate support for its members, and they moved swiftly to cushion the worst effects, by supporting the milk price throughout the year.

North Cork`s turnover dropped by €2.48 million, or 11% to €20.05 million.

This drop in sales was caused almost entirely by a downturn in casein markets, which led to lower prices. The EU was slow to respond last year and increase casein aid. However, the co-op is confident that the casein market will recover in the longer term, and the upgrading of the casein plant went ahead as planned. The Kanturk based co-op has continuously invested in upgrading their facilities over recent years. The volume of milk processed last year was down slightly.

Financial Controller Gerry Meehan said that given 2001 was an exceptional year with an operating margin of over 5%, it was decided to support farmers as much as possible last year.

The co-op also manufactures butter and sells liquid milk and held its market share in both sectors.

The co-op has kept tight control of its costs. Total overhead expenses increased by just €138,000, or less than 4%, to a total of €3.62 million. Within this figure, wage costs increased by just 1%. Insurance costs were up by around €75,000.

North Cork also operated a number of schemes to assists their farmers during the difficult period of weather last summer. Animal feed prices were subsidised, deductions from milk cheques were deferred and fertiliser prices were reduced. Against this background, the co-op`s general manager Sean McAuliffe described the performance of the stores division as satisfactory.

In recent years, the co-op has rewarded members who trade with the co-op by issuing bonus shares. This practice was continued with bonus shares worth €20,000 issued to those individuals who purchased feed and fertiliser from the co-op. This was approved again for the current year at the recent AGM. Existing shareholders were paid dividends worth a total of €20,000.

The issuing of bonus shares will give the active shareholders a greater say in the direction of the co-op in the future. There are around 200 active members out of the total shareholder base of 600.

North cork`s balance sheet shows shareholder`s funds increased from €7.97 million at the start of the year to €8.06 million. The interest bill reduced from €21,000 down to €12,000, as the bank borrowings of €433,000 was eliminated during the year.

The co-op has a number of quoted and unquoted investments which are just included in the balance sheet at cost. In terms of quoted investments, the co-op holds shares in IAWS plc, Glanbia plc and Kerry plc. The market value of these quoted shares was estimated to be €2.34 million at the end of last December. They received additional IAWS shares in the middle of last year and these have been retained.