Ireland-The dairy board profits down.
IRELAND-THE IRISH DAIRY BOARD PROFITS.
THE sharp downturn in global dairy markets since 2007 saw 30% wiped from the operating profits of the Irish Dairy Board (IDB) in 2008. Results for the year show that profits fell from €34.7 million in 2007 to €24.3m as the group cut prices to compete in markets hit by the global recession.
Interim chief executive Dr Seán Brady described 2008 as "a year of two halves", with the second six months delivering a significant profit improvement from the consumer and ingredients divisions.
Conscious that prices at the farm gate have been slashed to 20/22 cent per litre — to levels not seen since 1983, Dr Brady warned the tough market conditions would prevail for most of this year.
"We see no sign of an improvement in the market until the last quarter of 2009", he said.
Group chairman Michael Cronin added that the uncertainties in the global economy made forecasts beyond than point "too hard to call".
"Price volatility will be a feature of dairying for the coming years and this will affect dairy farmers throughout the world," he said.
In the year under review the group generated sales of over €2 billion recording a drop of 0.7% year on year.
The dip in turnover reflects falling prices as the board was forced to sell produce at reduced prices. In the US its DPI Speciality Foods distribution subsidiary grew sales for the sixth year in a row, while profits were up 4.7% DPI is forecast to do well again in 2009.
Addressing the need for change in the dairy sector Mr Brady said the group’s "core competence" was to deliver "effective routes" to market for the produce of Irish dairy farmers.
The group has placed a number of people on the ground in key ingredients markets such as China, Russia and the Middle East (Dubai) in recent months.
Mr Cronin said he saw the IDB as an integral part of the future of the Irish dairy sector.
Financially the group’s debt/equity ratio stands at 58% with bank borrowings of €207m against €159m previously, net of cash.
Interest payments rose sharply over the 12 months jumping from €2.3m to €7.4m, reflecting increased investments by the group to boost its international distribution processes.
Strategically IDB’s Kerrygold brands were among the top three imported dairy products in 25 of the 50 countries in which the brand is sold. The IDB employs 4,100, of which 2,700 are based in the US.
