North Cork co-op has reported a fivefold increase in operating profits for its 2016 financial year to €290,000.

Operating margins remain tight at just 0.4% but, with zero bank debt to repay, the co-op remains in a comfortable position. It made a loss before tax of €502,000, which was mainly related to a paper loss of €826,000 on share revaluations. The biggest part of these share revaluations was down to a €600,000 decline in the value of shares in Aryzta held by North Cork.

Revenues for the year increased 12% to close to €68m, which was predominantly driven by increased product volumes. Sales were also boosted by healthy returns for butter and casein throughout 2016. Chris Caulfield, chief financial officer with North Cork, said the co-op’s two biggest customers are Ornua and Musgraves. Ornua accounted for about 35% of its sales in 2016 and Caulfield said he expects this to increase significantly in 2017, with the co-op now able to sell whey powders through Ornua.

On Brexit, Caulfield said North Cork remains vigilant but given that the UK market represents less than 5% of the co-op’s turnover, it’s not as great a threat as it might be for other processors in Ireland. The group has continued to invest in the business, completing €3m in capital projects last year.

Milk price supported

North Cork paid an average milk price of 28.6c/l throughout 2016, which was supplemented by a 1c/l bonus paid on all milk. This price support hit the co-op’s bottom line to the tune of €447,000.

In total, the co-op processed 111m litres of milk in 2016, with about 43m litres coming directly from its 140 farmer suppliers. The balance is brought in from other processors including, Dairygold, Glanbia, Carbery, Tipperary, Fealsbridge, Newtownsands and the Limerick Liquid Milk Producers Group. Almost a fifth (19%) of North Cork’s milk volumes from direct suppliers is tied up in fixed milk prices schemes.

For the remainder of the year, Caulfield said North Cork is hopful of maintaining its base milk price of 32c/l. He said butter prices are trading strongly so far this year. Casein markets have fallen back in the first quarter of 2017 but are now starting to show signs of recovery, he added.