The Irish Dairy Board (IDB) has published a review of its 2013 performance. Turnover increased 5% to over €2.1 billion, with EBIT up 25% to €25.8 million.
The IDB also announced details of a new €30 million investment that will create 50 new jobs in Mitchelstown, Co. Cork. The 50,000 tonne capacity, fully integrated butter production and packing facility will also serve as an innovation centre for Kerrygold which has ambitious expansion plans post the abolition of milk quotas in 2015.
Among the highlights of the year noted by IDB were its business transformation strategy, leaving it well positioned for expansion post milk quotas; new sales and marketing teams in Russia, China, Saudi Arabia and South Africa; record sales of 350m packets of Kerrygold; no. 1 butter in Germany (17% market share and 55% branded share); no. 1 imported butter in the US; top three whole milk powder position in Angola, DRC and Congo; and the acquisition of a 75% interest in Al Wazeen Trading (in Saudi Arabia) and the planned development of a cheese manufacturing plant in Riyadh.
“I am pleased to report a very strong business performance in 2013, combining solid earnings growth across all divisions and enhanced product returns to our members,” said Kevin Lane, IDB CEO. “Our continuing investment in brand growth, New Product Development and in-market expansion is designed to ensure that our members and suppliers can expand on the basis of sustainable market demand.”
“The abolition of milk quotas in 2015 will present the Irish dairy industry with its first opportunity for meaningful expansion in the past 30 years. Our strategy is to ensure that IDB members and dairy farmers are optimally positioned to participate in this expansion opportunity through enhanced routes to market and sustainable, market led products.”
IDB noted that the Q1 drought in New Zealand and a prolonged winter in Europe led to a reduction in milk output levels in the first half of the year compared to 2012. This relative milk scarcity occurred in the face of tight stocks and very strong emerging market demand, particularly in China. It took the full year before the EU and New Zealand managed to climb above the previous year’s levels. Milk scarcity in the face of strong demand caused prices to rise quickly in early Q2, with Whole Milk Powder prices rising more than 60% between January and April 2013 on the GDT. EU prices were up more than 25% on average over 2012 levels for Butter, Skim Milk Powder and Whole Milk Powder, with returns for commodity cheeses up c.10%. These very high prices, combined with benign input costs, stimulated a supply response.
IDB’s Consumer Foods division reported a strong result for 2013 against a back-drop of high input prices. Turnover for the division rose by 6%. Record volume and market share were achieved in Germany and the US and the Pilgrims Choice and Kerrygold brands were further enhanced in the UK. 2013 also saw the continuation of the Group’s investment in its brands through increased advertising and promotions, research and New Product Development. In addition, investment in in-market presence increased significantly, with new offices in Africa, Russia and China, complementing the Group’s growing presence in the Middle East. With these additional investments, the Consumer Foods business is positioned for optimum growth.
The Dairy Trading & Ingredients division reported a solid trading performance for 2013, with strong growth in volume, Turnover and Operating Surplus. Turnover for the division rose by 4%. The Republic of Ireland and US businesses performed particularly well, but the UK businesses, while up year-on-year, did find local market conditions more challenging in 2013. The businesses acquired in recent years (Meadow Ingredients USA LLC, Thiel Cheese & Ingredients LLC and The Cheese Warehouse Limited) have been successfully integrated and are performing ahead of plan. The division is focussed on investing in the future and enhancing product returns for the members and is well positioned to take full advantage in adding value to the increased dairy volumes post 2015.
The restructuring of the US speciality food distribution division, DPI, is completed and this division reported year-on-year growth in both Turnover and Operating Surplus. Despite the continuing competitive market, Turnover growth has been achieved from both existing and new customers, with a pipeline of significant new business already secured for 2014. With a strong management team now in place, with a clear understanding of the customer needs, this division is well positioned for growth in 2014 and beyond.
Over the past four years IDB has been preparing the business for the removal of milk quotas, it said. The business transformation strategy outlined in 2010 has been successfully implemented across the Group and is delivering real, measureable results, according to IDB.
Key operational highlights from 2013 were said to be increased investment in brand development and NPD. Products launched include specialty butters in ‘upside down’ tubs for the German market; Butterkӓse, a mild creamy cheese developed for the German palate; Kerrygold spreadable and Pilgrims Choice Sticks in the UK; and the AdPure dairy ingredients range.
IDB said that the marketing and selling of Irish dairy products across global markets has never been more important. With the recent announcement of the extension of its financing facility to 2019, and plans now in place to build a fully integrated, state-of-the-art Kerrygold butter production and packing facility in Cork, the IDB said that it continues to prepare the business for the exceptional opportunities the post quota environment will bring. Its key focus is to invest in the future so it can continue to deliver strong returns to its members and Irish dairy farmers.
