Operating profits at Aurivo co-op fell by 22.5% to €3m last year. This is despite turnover increasing by 4.1% to €443.8m in 2018.

The main reason for the fall in profits was a more challenging year for its mart business, along with more challenging dairy market dynamics.

It was another record year for milk processing with Aurivo processing 7.8% more milk, bringing total milk processed to 439m litres.

Most of this growth was from existing suppliers expanding. There were 11 new entrants and five suppliers started second enterprises, according to Aurivo CEO Aaron Forde.

The uncertainties and implications of Brexit pose significant challenges to the sector

Commenting on the financial performance in 2018, Forde said on-farm milk prices were supported during the year and that Aurivo delivered a satisfactory out-turn for 2018 in the context of challenging global dairy markets.

Volatility

He added that in a year marked by ongoing volatility in global dairy markets, financial performance was robust and in line with expectations. He added that the uncertainties and implications of Brexit pose significant challenges to the sector.

Pat Duffy, chair of Aurivo, said: “2019 will see us further expanding our business as we continue to be one of the strongest member-owned organisations in the country.”

Its dairy ingredients division, which accounts for 35% of the overall business, saw sales rise 7% to €153m. The co-op processed 112m litres of liquid milk last year. Turnover remained steady for the consumer business at €98.8m. The co-op's For Goodness Shakes brand reported a strong year of growth with sales up 20%. The co-op said its milk brands, Connacht Gold and Donegal Creameries, performed well.

Agribusiness

Its agribusiness division recorded an 18% rise in sales to €120.7m. This was mainly driven by an increase in feed and fertiliser volumes. Homeland store sales were up 15% on the previous year while fertiliser volumes increased by 16%.

Aurivo's agribusiness division recorded an 18% rise in sales to €120.7m

It was an extremely challenging year for Aurivo’s Livestock Marts. Turnover fell by 13% to €71m as fewer animals were put through its marts as a result of mart closures during storm Emma, along with an incident in Mohill, which resulted in a substantial investment to facilitate enhanced safety at all its marts.

Overall earnings (EBITDA) fell 12.3% to €7.9m. Net debt increased €9m to €14.6m. The business had a net debt of 1.8 times' its earnings at year-end.

During the year, the business made capital investments of €22m which was part of a new five-year, €48m capital investment programme. The majority of this (€26m) is earmarked for a new dryer in Ballaghaderreen.

The business is also investing €6m at Killygordon to improve processing efficiency, along with a €1.5m investment in its mill.

Aurivo suffered a paper loss of €8m on the value of its quoted investments (mainly Aryzta shares). This paper loss on its quoted shares saw the business record a pre-tax net loss of €5.8m.

Overall shareholders' equity on the balance sheet fell by €1.7m to €62m at year-end compared with the previous year.