Killeshandra’s Lakeland Dairies sees its profits soar once again

Seamus Enright

Lakeland Dairies, one of the country’s largest dairy manufacturers, has announced operating profits to €7.9 million on revenues of €473m for 2012, a rise of 16% on the previous year.

Headquartered in Killeshandra, and with facilities on both sides of the Border, Lakeland concluded yet another successful year with a strong balance sheet and shareholders’ funds of €78.3m.

The company, which was named The Anglo-Celt/Cavan Chamber’s Business of the Year for 2012, processes over 700 million litres of milk annually, 90% of which is exported to some 70 different countries worldwide. Lakeland saw revenues rise last year in two of its primary operating sectors, Food Services and Agri-Trading, but retract in Food Ingredients amid volatility in international markets.

In the consumer reliant Food Services market, revenues increased 10% to €161.5m with several new customer contracts secured by the company during the year, while revenues increased by 28% to €56.5m in Agri-Trading, with supplementary feeding levels higher than normal due to difficult weather conditions.

A world surplus of dairy ingredients affected market returns in Food Ingredients where revenues dropped by 9.5% to €255m.

This, Lakeland have said in their annual statement, was further accentuated by reduced consumer spending on food products requiring dairy ingredients.

Speaking to The Anglo-Celt, Group Chief Executive, Michael Hanley welcomed the positive financial return overall, which showed the company had once again made strong progress in a challenging international trading environment.

As a result of profitability in recent years he said Lakeland had been able to leverage both organisational and processing strengths to create new efficiencies to maximum effect.

One such development he told The Anglo-Celt was the recommissioning of a drying unit at their Tullynahinera plant near Lough Egish, which closed in April 2010, done so as to compliment the processing, which already takes place at the company’s drying plant in neighbouring Baileborough.

'Dairying by nature reflects relatively low margins but as a co-op you are trying to generate enough profit from the business to be able to reinvest in the business, while paying as much as possible for the raw material to the farmers,' Mr Hanley told The Celt. 'The constant tension is to try and ensure a good milk price while retaining some money for the growth of the business.

'We placed a very strong emphasis on our marketing, business development and customer service operations and enhanced our brand presence and product sales in key markets,' he said.

Though stronger growth is once again expected in emerging economies, the likes of Africa, India, the Middle East and Russia in 2013, Mr Hanley says any outlook depends on a number of factors.

'The CAP is a big piece of the puzzle,' he said. 'The single farm payment is critical for all our farmers.

The supports in dairy have been taken away and that now emerges as part of the single farm payment. There is a lot of ground hurling left in that but it’s important that Ireland retains as big a cheque as possible for its farmers.'

He added: 'In the years ahead, producers will have an unprecedented opportunity to expand their output. Assuming a suitable milk production profile, Lakeland will process and add value to all of the extra milk sent to us by our farmers.

We have made the correct and necessary investments to ensure the long-term sustainability of dairy farming for our milk suppliers in the future.'