Operating profits at Bandon Co-op increased by 23.7% last year to €2m, mainly due to rising dairy commodity sales and strong sales within its agri trading division.

Profits from associates also rose significantly during the year from €874,000 in 2011 to €2.4m in 2012, reflecting the positive reversal of fortunes experienced by Clona Dairies and the ongoing surge in Carbery’s global business.

Bandon Co-op processed some 88.6 million litres last year – a modest drop on the previous year (89.9m litres).

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Divisions

Carbery Creameries: Sales to Carbery fell by 6% during the year to €31.9m, reflecting reduced milk supplies and reduced dairy commodity prices last year.

Carbery’s business recorded a strong performance in 2012, with turnover increasing by 11% to reach €285m, while profits before tax jumped 22.4% to €10.57m.

Agri Trading: Performed strongly during the year, with sales of animal feeds rising significantly due to the extremely difficult weather conditions and high feed costs which faced Bandon’s suppliers.

Bandon Vale Cheese: Acquired for €2m in 2009, Bandon co-op chairman, Cyril Draper, remarked at the results meeting: “Bandon Vale had a positive performance. It operates in a very competitive market and a capital investment programme is in place to improve line capabilities and maintain efficiency levels.”

Clona Dairies: Made a welcome return to profits last year but this year looks set to be another challenging one for this division and the liquid milk sector overall.

Retail Stores: Bandon’s retail business – three retail/hardware outlets in Bandon, Kinsale and Enniskeane – maintained turnover last year.

The co-op completed the planned refurbishment of its Kinsale outlet during the year and, while revenues were maintained, margins were negatively impacted due to regular promotions. However, they remain in a “very challenging” environment.

Henry Good

As reported in the Irish Farmers Journal recently, Bandon Co-op has recently acquired the milling and grain storage assets associated with Henry Good Ltd, the Kinsale-based animal feed company which went into receivership in February of this year. Bandon co-op acquired the assets as opposed to the limited company. Bandon Co-op chief executive, Gus O’Brien, said: “It is intended to resume grain intake and storage operations in the coming weeks in time for the harvest.

“Traditionally, this is an important part of the agricultural infrastructure in the Cork and Munster region and we are pleased to be facilitating the resumption of operations on site.

“It represents an extension of the core business of the co-op and an expansion of our services to farmers.”

Comment

Bandon co-op and its suppliers and stakeholders face the future with confidence given the company’s robust balance sheet. Its manufacturing and marketing arm (Carbery Group) continues to seek out new markets for dairy and other higher margin food/drink opportunities across the globe.

Key Points

Turnover rises 5% to €98m.

Operating profits up 23.7% to €2.017m.

Operating margin up to 17% to 2.06%.

Shareholder funds up 3.7% to €57.7m.

Profits from associates up 178% to €2.4m.

Pension deficit of €1.8m (2011: €842,138) recorded.

Financials

Bandon Co-op carried debt levels of €3.2m last December – a fall of 4.4% on the previous year. Its operating margin improved last year to 2.06%. Return on capital rose from 4.5% in 2011 to 7.6% last year. The co-op employs 180 staff – up 6.5% on the previous year. The average wage is €31,753 – up almost 10% on 2011 wage.