The Irish Dairy Board (IDB) saw its operating profit drop by nearly a third during 2010, despite recording an increase in sales for the year.

The IDB, which manufactures the Kerrygold brand and Pilgrim’s Choice cheeses, yesterday (7 April) said that operating profit was down to EUR26.9m (US$38.7m) against EUR40.2m.

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A spokesperson for the group told just-food that the reasons for the drop were down to margin compression in its US distribution business and increased raw materials prices in consumer foods. The spokesperson also pointed to increased marketing spend in some markets to support growth and investment in growth, talent and reorganisation.

For the year, the IDB recorded a 6% rise in sales to reach EUR1.9bn. It said that it saw “record” sales of Kerrygold, with branded sales up by 18% in value and 7% in volume.

CEO Kevin Lane said that 2010 was a “transitional year for the business” where it developed its strategic growth plans to reposition the business for the future.

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The company said it has made “significant process” in “right sizing” the business and driving operational efficiencies. It said it has reorganised its US division DPI Specialty Foods, consolidated its British consumer foods businesses under Adams Foods and commenced its lean manufacturing programme across its European operations.

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“Against the background of a weak global economy our brands business achieved a record performance. Overall the business reported a satisfactory performance in 2010, with the exception of our US speciality distribution business, DPI, where margins, in common with the broader market, contracted sharply,” added Lane.