Operating profits fell 11% (€3.5 m) to €28.9m last year at Dairygold as a direct result of supporting the milk and grain price to the tune of €15m last year.

Turnover increased 2.8% (€27.4m) to €992.9m. This was as a result of a reduction in protein product prices and lower cheese and butter returns.

As a result, operating margins fell from 3.4% to 2.9%. Profit after tax more than halved and was down €12m to €9.2m.

Jim Woulfe, CEO of Dairygold, said: “The society delivered a satisfactory financial performance while supporting members against a backdrop of adverse weather conditions and committed €130m to phase two post-quota primary processing expansion. The society is focused on its value-added strategy, the sustainability agenda, which is critical to the dairy industry growth ambition, and the challenges of Brexit.”

Co-op chair John O’ Gorman added that the extreme weather conditions in 2018 caused significant challenges and the co-op introduced a range of support initiatives in order to support members.

Its food ingredients business had sales of €569m last year. Its overseas business, which includes a cheese formatting business in the UK and Germany, recorded sales of €156m.

The agribusiness recorded sales of €262m, up €40m on the prior year. Retail sales increased 6% while feed sales increased 40%. Grain harvest volumes were down circa 40%. However, the grain price paid to farmers was around 40% higher than the 2017 harvest.

The co-op generated €48.6m in cash (EBITDA) last year - down €4.2m on the prior year as a result of the lower returns. Bank debt at year end increased €31.8m to €111.4m, driven by investment in the business of €58.7m during the year. Although net debt to earnings has increased from 1.5 times in 2017 to 2.28 times today, the co-op maintains this is satisfactory.

Despite generating almost €49m in cash, the net asset value of the business (shareholders' equity) only increased by €2.4m to €338m. This was mainly as a result of a paper loss of almost €15m relating to the fall in value of its shareholding in Aryzta and IPL Plastics (One51).

Overall, the portfolio lost 40% of its value during the year as it progressed through a planned divestment strategy of its Aryzta and IPL shareholdings.

Over the last 10 years, Dairygold has disposed of around 70% of its holding in Aryzta and at year end it held a total of €20m in quoted stocks. In the last two years, the co-op has sold €15m worth of its Aryzta and IPL shares and has reinvested this money through a managed fund into a more diversified portfolio of shares.

The co-op also has a commercial property portfolio valued at around €51m which it inherited from its Reox spin-off. Earlier this year, it sold its Trinity quarter property for €17m to UCC.

The co-op’s strategy around these non-core assets is to maximise value and divest over time and use these funds to invest in higher margin value-added businesses.