Strong butter prices, along with a 12% rise in milk supplies, saw profits more than double at Lakeland Dairies in 2017.

Operating profits rose by €9.7m to €16.9m for the year ended 31 December 2017. The 2017 results for the first time also include a full year’s contribution of Fane Valley after the business was acquired in early 2016. Lakeland's 2016 results only included eight months' contribution from Fane Valley.

Revenues increased 28% to €769.8m and were boosted by the rise in dairy prices. Profit before tax was €15.9m in 2017. The co-operative with over 2,500 milk suppliers closed the year with a 15% increase in shareholders’ funds at €117.6m.

Earnings before interest, depreciation, tax and amortisation (EBIDTA) were €32.6m, increasing significantly from €18.9m in 2016. Profit margins (operating) expanded from 1.2% to 2.1%.

Supplier research undertaken in 2017 indicates that our milk producers will continue to expand output by 4% to 5% annually over the next five years

Milk volumes increased 12% during the year to over 1.2bn litres. A tangible impact of the efficiencies gained in the business is the removal of milk collection charges in 2017. This provided an overall benefit of €5m to milk suppliers.

Net debt

Net debt increased by €9m to €59.7m at year end, as a result of higher working capital and investment in the business. The co-op received a €757,000 from Enterprise Ireland for development at the Bailieboro and Killeshandra sites last year.

Michael Hanley, group chief executive, said the co-op was able to take advantage of the positive trading conditions which were helped by a reduction in global milk supplies and product availability.

Food ingredients

Sales in its largest division, food ingredients, rose 32% to €468.4m. The increase was driven by strong markets and increased demand from manufacturers. Sales in the food service business increased 23% to €239.8m during the year. Sales in the agri-trading division increased 16% to €61.7m and were driven by record sales of over 200,000t of feed and 25,000t of fertiliser.

Alo Duffy, chair of Lakeland Dairies, said: “Lakeland Dairies is growing and well positioned for future developments that will benefit our milk producers.”

''Supplier research undertaken in 2017 indicates that our milk producers will continue to expand output by 4% to 5% annually over the next five years. We also welcomed 30 new entrants to milk,'' Duffy said.