IRELAND’S SECOND largest dairy processing co-op, Lakeland Dairies, has reported a sharply reduced profit for 2008 amid difficult conditions in the global dairy market.
The co-op made an operating profit of €1.37 million on turnover of €435 million last year, compared to a profit of €5.5 million and turnover of €455 million the year before.
Lakeland Dairies chief executive Michael Hanley said the reduced profit reflected the extent to which the co-op had “continuously supported milk price payments to dairy farmers throughout the year in spite of real market returns”.
Last year saw the dramatic unwinding of a spike in global dairy prices. Lakeland pays farmers 23½ cent per litre of milk, which is higher than other co-ops, but still falls below the per litre cost of producing the milk.
The co-op said new products in its food service business, which accounts for 28 per cent of its turnover and trades under the Prichitts name, were performing well, with turnover rising 9 per cent in this division.
High-margin products such as coffee creamers and mini-pack butters were “increasingly important as a competitive advantage”, Mr Hanley said. Lakeland’s new milk drying facility at Bailieboro, Co Cavan, will come online in the spring of next year. Almost €9 million of the €20 million new development is funded by the Government’s dairy industry investment scheme.
The new facility will result in the previously announced closure of its milk drying plant at Lough Egish, with the loss of 50 jobs.
Mr Hanley said Lakeland Dairies was partially protected from the currency difficulties that are hitting food exporters hard because it buys a significant portion of its milk supply from Northern Ireland.
“Having said that, sterling has affected the business,” he said.
The unavailability of export credit insurance has meant the company has had to review many of its credit arrangements with longstanding customers.
“If you haven’t a safety net of insurance, then it stops the wheel from turning, or the wheel turns very slowly,” Mr Hanley said.
