• Operating profit up 16%
  • Net sales edge up to EUR473m
Lakeland said overall prospects for the global economy remain uncertain

Lakeland said overall prospects for the global economy remain uncertain

Irish dairy co-operative Lakeland Dairies said it made further "strong progress" in a "challenging" international trading environment in 2012 with an increase in earnings and sales.

In the 12 months ended 29 December, net profit climbed 13.2% to EUR6.8m (US$8.9m) the group reported today (11 April). Operating profit rose 16% to EUR7.9m.

Chief executive Michael Hanley said the co-operative placed a "very strong" emphasis on its marketing, business development and customer service operations and enhanced its brand presence and product sales in key markets in 2012.

Sales in the period reached EUR473m from EUR472m last year. The group's food ingredients division recorded a sales drop of 9.5% to EUR255m due to overall volatility and pricing pressures in the international markets.

Hanley said: "Overall prospects for the global economy remain uncertain and weak economic conditions are likely to persist in developed economies throughout 2013. Significantly stronger growth is expected in emerging economies. Global milk supplies have reduced and import demand remains solid in key importing regions. This will create an upside potential for Irish dairy exports and prices in 2013."

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Operating Profit rises 16% to €7.9 million at Lakeland Dairies

The major cross border dairy processing co-operative Lakeland Dairies has reported a 16% increase in operating profit to €7.9 million on revenues of €473m for the year ended 31st December, 2012.

Lakeland operates across fifteen counties processing over 700 million litres of milk annually into a range of value-added dairy food ingredients and foodservice products, mainly for export markets.

Group Chief Executive Michael Hanley said:

“Lakeland Dairies has made further strong progress in a challenging international trading environment. We leveraged our organisational and processing strengths to create maximum efficiencies.  Through this competitiveness and the overall high quality of our dairy product portfolio, we achieved very positive results while also paying as high a milk price as possible relative to market conditions.  We placed a very strong emphasis on our marketing, business development and customer service operations and enhanced our brand presence and product sales in key markets.”

Foodservice Division - Revenues increased by 10% to 161.5m which is an excellent result given the fact that most of our foodservice customers are largely reliant on consumer markets. Several new customer contracts were secured during the year and Lakeland also won new business from long standing customers which is a very positive development.

Food Ingredients Division - Revenues of 255m reduced by 9.5% due specifically to overall volatility and pricing pressures in the international markets. A world surplus of dairy ingredients affected market returns and this was further accentuated by reduced consumer spending on food products requiring dairy ingredients.

Agri-Trading Division - Revenues increased by 28% to 56.5m. Supplementary feeding levels were higher than normal due to very difficult weather conditions. This reflected in elevated sales feeds. While raw material input costs increased substantially, Lakeland Dairies ensured competitive pricing to support milk producers as much as possible.

Lakeland concluded the year with a strong balance sheet and shareholders’ funds of 78.3m.

Lakeland Dairies is Ireland’s second largest dairy processing co-operative.  It has a presence in 70 countries with 170 branded products that are recognised for their market leading quality, convenience and nutritional goodness.  Lakeland is a market leader in emulsion technology and the dairy foodservice market leader in the United Kingdom and in Ireland.   Its food ingredients division has some of the most technologically advanced and automated production facilities in the world.

Outlook

Group Chief Executive Michael Hanley said:

“Overall prospects for the global economy remain uncertain and weak economic conditions are likely to persist in developed economies throughout 2013. Significantly stronger growth is expected in emerging economies. Global milk supplies have reduced and import demand remains solid in key importing regions. This will create an upside potential for Irish dairy exports and prices in 2013.

“In the years ahead, producers will have an unprecedented opportunity to expand their output. Assuming a suitable milk production profile, Lakeland will process and add value to all of the extra milk sent to us by our farmers.  We have made the correct and necessary investments to ensure the long term sustainability of dairy farming for our milk suppliers in the future.”

“Our business and every element of our entire organisation are very strictly customer focussed.  We operate to the most exacting standards of quality, efficiency and reliability in meeting their needs.  All of these are factors which will support the growth of our business in the future along with further innovation, new product developments and the targeting of new market opportunities.

“Milk production quotas will be abolished in 2015 and it is important for producers to consider the various options that they have to take advantage of this.  Increasing yields from the current herd using existing resources, land and buildings will be a first step. For others, investment in bigger herds and greater scale will be an option. Producers will need to make prudent decisions so as to ensure that they have an appropriate cost base and can maximise their returns from increased output. That will also be important as the future impacts of CAP reform become clearer in the current year.

“Dairying has proven to be a resilient business in spite of the global economic turmoil that surrounds us.  Lakeland Dairies is a strong and efficient organisation and a co-operative in the truest sense.  Our heritage of co-operative dairy farming has contributed to the wellbeing of our producers and our rural communities for over a century and more.  It will continue to do so and we may look forward to further progress in the years ahead.”

 

Original source: Lakeland Dairies