The major cross border dairy processing co-operative, Lakeland Dairies turned in an excellent business performance in 2018 with record revenues and profitability, underpinned by targeted business development activity, relative stability in global dairy markets and growth in volumes shipped.
Group CEO Michael Hanley said:
Group Revenues increased by 5.3% from €769.8m to €810.5m, yielding an operating profit of €17.5m (up from €16.8m in 2017). This was driven by strong returns from our three main business divisions where we were also able to capitalise on our significant economies of scale, benefiting from the significant investments of recent years in technology, automation and lean operation across our processing footprint.
Lakeland Dairies concluded the year with a strong balance sheet and shareholders’ funds of €130m, an increase of €12.4m for the year. EBITDA (Earnings before Interest, Taxes, Depreciation & Amortisation) of €33.65m increased by €1.05m in 2018 from €32.6m in 2017, reflecting a consistently high level of operational efficiency and profitability from year to year.
The Food Ingredients Division delivered revenue growth of 4.6% to €489.9m, reflecting the quality, flexibility and reliability of our offer and general buoyancy in the end markets and food manufacturing sectors of our customers. This Division continues to meet key food industry trends with the processing scale and efficiency required to be a best in class global provider of choice across multiple food ingredient categories.
Foodservice Division revenues increased by 3% to €246.9m in 2018, maintaining the very robust platform achieved by a significant growth in sales in the prior year and processing record volumes of value-added products. This is in spite of some volatility including variable consumer sentiment and price sensitivity in key markets which we are managing effectively.
Agri-Trading Division revenues increased by 19% to €73.7m, driven by organic growth where our customers required higher volumes of feed during the year, mainly due to radically variable weather conditions ranging from blizzards to drought. Lakeland supplied feed and fertiliser at the most competitive possible prices to ensure value and performance for dairy farmers.
The merger of Lakeland Dairies and LacPatrick Dairies has recently received all necessary regulatory approvals, following resounding approval by the shareholders of both Societies in October 2018. The new Society – to be called Lakeland Dairies Co-Operative Society Limited – will be the second largest dairy processor on the island of Ireland with a cross-border milk pool of 1.8bn litres, produced by 3,200 farms across a catchment area including 16 counties. The new co-op will have a combined annual turnover in excess of €1bn, creating internationally competitive scale and the opportunity for greater efficiency to be achieved across the amalgamated organisation.
Market conditions for 2019 will be contingent on factors including the still uncertain impacts of Brexit and the overall balance of global supply and demand across our product portfolio. We will meet any potential headwinds by continuing to ensure complete efficiency and flexibility across all of our operations, while at all times paying the highest possible milk price in line with market conditions.
We will always support milk producers to the maximum possible extent. This will continue to be our commitment in the months and years ahead. Let us all re-energise behind the now enlarged enterprise of Lakeland Dairies where, based on the collective achievements of co-operation, we will look forward with confidence to the future.