After supporting farmer milk prices to the tune of €8m last year, west of Ireland dairy processor Aurivo saw its operating profits in 2015 halve (down 55%) to just over €3m. The processor supported farmgate milk prices by 2c/l last year as dairy markets started to fall steeply in the second half of last year.

Despite the large support, earnings (EBITDA) fell by a relatively smaller €2.4m (-20%) to €9.7m, indicating that earnings were bolstered by new acquisitions. Overall group operating margins fell from 1.4% in 2014 to a very thin 0.7% last year.

Revenues decreased 6% to €420m, although Aurivo did process a record 411m litres, 12% more milk, than it did in 2014. The co-op paid an average price of 30.06c/l including VAT. While creditors have increased, this is mainly driven by the deferred consideration for the My Goodness acquisition. Net assets at year-end were largely unchanged at €56.8m.

Price supports

While the business supported farmer milk prices in 2015, the tight operating margins indicate there is little wriggle room. Aurivo chief executive Aaron Forde said the co-op has a strong record of supporting milk price and will continue to do so, but it really depends on trading performance over the full year. Forde added that Aurivo also needs to invest in the long term.

He said that one of the main reasons supports are possible is through the continued focus on driving efficiencies in the business, through consolidation and investment. Forde did say he envisaged Aurivo being able to offer competitive finance to farmers that was linked to milk prices in the coming months, similar to other co-ops.