Operating profits for Lakeland Dairies –Ireland’s third largest milk processor – more than halved (down 54%) to €7.2m last year, as depressed dairy markets and supports for farmgate milk prices weakened the co-op’s performance. In total, Lakeland supported its milk price to the tune of €16.5m, or 1.5c/litre, in a year which chief executive Michael Hanley described dairy markets as being “unpredictable”. Overall, Lakeland paid an average milk price of 27.5c/litre in 2016.
The decline in operating profits saw margins in the Lakeland business narrow 140 basis points to a rather slender 1.2%, with revenues increasing 2% to just over €601m. Earnings (EBITDA) were €18.9m in 2016, while net debt reduced from €50.3m to €48.5m. This gives a net debt to earnings ratio of 2.6 times post the Fane Valley acquisition.
Foodservice
Revenues in Lakeland’s foodservice division, which accounts for 31% of the business, declined 4% to €194m last year, in what Hanley describes as an “intensely competitive market”. Although sales volumes increased, pricing dynamics in the sector were more difficult.
Due to the competitive nature of foodservice and a rising global dairy market, which was evident in the second half of 2016, it is more difficult to achieve price increases.
Ingredients
Its ingredients division, which represents 59% of the business, saw revenues increase 9% to €353.6m as demand from existing customers was able to meet the increased product supply. The market for casein also improved during the year allowing the co-op to take advantage of this growth in price. Hanley says Lakeland have customers in the infant formula and nutritional markets in 80 countries that are ready to take more powder product as Lakeland can supply it.
Agribusiness
Sales in Lakeland’s agribusiness and feed business, which represents 9% of the business, fell 14% last year to €53.3m, reflecting the decline in fertiliser and feed prices – as well as reduced spending on feed from dairy farmers due to the weather. The co-op produced over 160,000t of animal feed last year and sold 20,000t of fertiliser.
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Operating profits for Lakeland Dairies –Ireland’s third largest milk processor – more than halved (down 54%) to €7.2m last year, as depressed dairy markets and supports for farmgate milk prices weakened the co-op’s performance. In total, Lakeland supported its milk price to the tune of €16.5m, or 1.5c/litre, in a year which chief executive Michael Hanley described dairy markets as being “unpredictable”. Overall, Lakeland paid an average milk price of 27.5c/litre in 2016.
The decline in operating profits saw margins in the Lakeland business narrow 140 basis points to a rather slender 1.2%, with revenues increasing 2% to just over €601m. Earnings (EBITDA) were €18.9m in 2016, while net debt reduced from €50.3m to €48.5m. This gives a net debt to earnings ratio of 2.6 times post the Fane Valley acquisition.
Foodservice
Revenues in Lakeland’s foodservice division, which accounts for 31% of the business, declined 4% to €194m last year, in what Hanley describes as an “intensely competitive market”. Although sales volumes increased, pricing dynamics in the sector were more difficult.
Due to the competitive nature of foodservice and a rising global dairy market, which was evident in the second half of 2016, it is more difficult to achieve price increases.
Ingredients
Its ingredients division, which represents 59% of the business, saw revenues increase 9% to €353.6m as demand from existing customers was able to meet the increased product supply. The market for casein also improved during the year allowing the co-op to take advantage of this growth in price. Hanley says Lakeland have customers in the infant formula and nutritional markets in 80 countries that are ready to take more powder product as Lakeland can supply it.
Agribusiness
Sales in Lakeland’s agribusiness and feed business, which represents 9% of the business, fell 14% last year to €53.3m, reflecting the decline in fertiliser and feed prices – as well as reduced spending on feed from dairy farmers due to the weather. The co-op produced over 160,000t of animal feed last year and sold 20,000t of fertiliser.
Read more
Revenues rise 8% at Glanbia as ingredients business drives growth
Profits at Carbery rise 6% to €27m
Listen: Dairygold profits dip as it supports farmers in a more challenging year
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