Annual Results 2017
Lakeland Dairies has reported strong financial results for the year ended 31st December 2017, with group annual revenues increasing by 28% to €769.8m, up from €601 million in 2016. This yielded an operating profit of €16.8m, compared to €7.2m in 2016.
Profit before tax was €15.9m in 2017 and the co-operative 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.
Milk volumes processed in 2017 increased to over 1.2 bn litres, reflecting ongoing expansion among Lakeland Dairies’ 2,500 milk producers and a full year of milk supply from Fane Valley Dairies, which was acquired in May 2016. The efficiencies being achieved through all operations enabled the removal of milk collection charges (cartage), with an overall reduction of costs of €5 million to milk suppliers annually.
Farmer owned Lakeland Dairies operates across 15 counties on a cross border basis, processing milk into a wide range of value-added dairy foodservice products and food ingredients. Lakeland has a portfolio of 240 different dairy products which it exports to 80 countries worldwide.
Commentary - By Division
FOOD INGREDIENTS €468.4M - Lakeland Dairies’ Food Ingredients revenues increased by 32% to €468.4m in 2017, up from €353.6m in 2016.
This performance was driven by strong business development activity and a resurgent demand from food manufacturers for high quality, functional dairy ingredients combined with favourable market conditions. The Bailieboro Dryer No. 3 development was officially opened in 2017 with additional upgrades to R&D, milk intake, storage and separation facilities at the site. Overall, the Bailieboro site produced record volumes of over 200,000 tonnes of milk powders and butter products for worldwide export during the year.
FOODSERVICE €239.8M - Revenues at the Lakeland Foodservice Division increased by 23% to €239.8m in 2017, up from €194.1m in the previous year.
The major Lakeland processing centres at Killeshandra and Newtownards continue to increase output year on year, producing record volumes of butter products, ice cream, cream and cream blends. The long standing reputation of Lakeland Dairies’ products for quality, taste, functionality and reliability underpinned the confidence being demonstrated by customers in key markets such as the UK, Middle-East, Europe, Asia and China. These markets performed well against a backdrop of volatile commodity input costs, the need to increase selling costs and intense competition.
AGRIBUSINESS €61.7M - Agribusiness revenues increased by 16% to €61.7m in 2017, up from €53.3m in 2016.
This increase was driven by record sales of over 200,000 tonnes of high quality feed and 25,000 tonnes of fertiliser. Reflecting an overall improvement in dairy market conditions, and unfavourable weather, many farmers provided supplementary feeding in addition to grazing to boost milk output by their herds. During 2017, Lakeland Dairies launched a number of initiatives to support Agri producers and customers, including the Lakeland Agri Loyalty Programme and the Lakeland Deferred Fertiliser Payment Scheme. 2017 also saw the commencement of an upgrade programme at the Lough Egish Mill, which will include new technology and an expansion in manufacturing capacity to meet future operational and performance needs.
Michael Hanley, Group Chief Executive, said:
“In 2017, Lakeland Dairies achieved performance improvements across all divisions of the business. Trading conditions were helped by a reduction in global milk supplies and product availability. We were able to take advantage of these conditions through our efficient processing capabilities and worldwide market presence, achieving satisfactory results.
“Our global growth has been driven by our strategy, investments, product range and the high quality output of our milk producers. While there are challenges in the global market, it is our intention to continue to drive competitiveness and overall growth, targeting opportunities across infant formulas, dairy proteins and health-related nutritional products.
“With the investments we have made, we are now in a position to process more milk than ever before. Our five year strategic plan envisages Lakeland Dairies achieving sustainable, profitable annual revenues of over €1bn by 2021. This will require a specific focus on business performance improvements through continuous innovation, organisational development and further enhancements in operational efficiency.”
Alo Duffy, Chairman 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 4-5% annually over the next five years. We also welcomed 30 new entrants to milk production during 2017 (totalling 200 new entrants since 2013). This continued growth has been driven by strategically guided programmes and initiatives that have yielded efficiencies across our operations, increased volumes and enhanced the overall quality of our offering. Our strategic priority will always be to achieve sustainable profitable dairy farming and we believe that we are well positioned to remain resilient and to achieve future success in the long-term.”