IDB 2013 FULL YEAR RESULTS
April 16, 2014
IDB REPORTS STRONG PERFORMANCE WITH EBIT UP 25%
The Irish Dairy Board (“IDB”) today, Wednesday, 16 April 2014 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.
Key Performance Indicator
Operating Surplus (EBIT)
Profit Before Tax
Members’ Bonus Declared
Cash on Hand
- Turnover up 5% to €2.1 billion
- Operating Surplus up 25% to €25.8 million
- Strong Balance Sheet, with net assets of €417 million
- Debt free at year end, with €51.9 million Cash
- Business Transformation Strategy leaves IDB well positioned for expansion post milk quotas
- New sales and marketing teams in Russia, China, Saudi Arabia and South Africa
- Record sales for Kerrygold:
- 350 million packets sold worldwide
- 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
- M&A and Route to Market
- Acquisition of a 75% interest in Al Wazeen Trading (in Saudi Arabia) and the planned development of a cheese manufacturing plant in Riyadh
- Adams Foods Limited’s long term strategic partnership with First Milk, strengthening its position as one of the leading suppliers of Irish and British cheese in the UK
Commenting, Kevin Lane, IDB CEO, said: “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. 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.” Mr Lane added.
The Group reported Turnover of over €2.1 billion in 2013, up 5% year-on-year and a very strong Operating Surplus of €25.8 million, up 25% on prior year. This strong operating performance enabled an €11 million bonus to be declared to members, an increase of 16% on the year prior. The Group closed the year with a very strong Balance Sheet, with net assets of €417 million, debt free and with Cash of €51.9 million, a strong financial base from which to support its business growth strategy.
In addition, in May 2013, the Group made an exceptional payment of €2 million to an emergency fund for Irish dairy farmers in response to the unprecedented fodder crisis.
2013 Global Dairy Markets – a dramatic year
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.
The Group’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.
Dairy Trading & Ingredients
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.
DPI Specialty Foods
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.
Business Transformation Strategy Progress
Over the past four years IDB has been preparing the business for the removal of milk quotas. The Business Transformation Strategy outlined in 2010 has been successfully implemented across the Group and is delivering real, measureable results.
Key operational highlights from 2013 were:
- 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
- AdPure dairy ingredients range - cost effective functional food solutions
- Meadow Milk campaign launched across Kerrygold markets
- New sales and marketing offices in Russia, China, Saudi Arabia and Africa
- Investment in strengthening in-market partnerships in Algeria, DRC and Angola
- Investment in a new production, packing and storage facility in Germany
- Completion of a state-of-the art Dairy Innovation and Cheese Additives Centre at Adams Foods in the UK
- Long term strategic partnership between Adams Foods and First Milk, strengthening Adams Foods position as one of the leading suppliers of Irish and British cheese in the UK
- Acquisition of a 75% shareholding in Al Wazeen Trading LLC (in Saudi Arabia) and the development of plans to build a cheese manufacturing facility
Looking to the Future
The marketing and selling of Irish dairy products across global markets has never been more important. With the recent announcement of the extension of the Group’s 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 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.
16 April 2014
For information please contact:
01 661 9599 / 087 122 3669
Head of Corporate Communications
Irish Dairy Board
View the full report at http://www.idb.annualreport13.com.
Note to the Editor
About the Irish Dairy Board
The Irish Dairy Board (“IDB”) is an agri-food commercial co-operative which markets and sells dairy products on behalf of its members, Ireland’s dairy processors and the Irish dairy farmer.
The IDB has annualised sales in the region of €2 billion. Headquartered in Dublin, the business employs some 3,100 people globally. It is responsible for exporting circa 60% of Ireland’s dairy products to over 100 countries.
The IDB’s core purpose is to bring quality Irish dairy products to markets around the world. It does this by sharing the story of Irish farming and explaining how Irish dairy products are produced from the milk of grass-fed cows, the most sustainable dairy farming system in the world. By building markets for dairy products, it aims to increase the value of Irish milk and to deliver strong returns for Irish farmers.
The IDB are the proud owners of the Kerrygold brand which is found in shops and in homes all around the world. Its brand portfolio also includes Pilgrims Choice, Dubliner cheese, and BEO, a popular milk powder sold in Africa.
With pre-packing and blending facilities located in Germany, the UK, the USA and the Middle East and extensive R&D experience, the Group is constantly exploring new formulation possibilities to enhance its ingredients range. It develops bespoke food ingredient solutions for many of the world’s major food manufacturers.
The business structure is based on three core platforms; Consumer Foods, Dairy Trading and Ingredients and DPI, a specialty food distribution company in the US. Group subsidiaries in the UK, Germany and the USA pack, distribute and market a wide selection of branded products, dairy ingredients, specialty grocery, delicatessen and gourmet food items of both Irish and non-Irish origin.