Irish Dairy Board maintains turnover despite market downturn

March 11, 2009

The IDB is well positioned to grow existing markets and to develop new routes to market.

Irish Dairy Board (IDB) turnover in 2008 was €2.09 billion, down 0.7% on the previous year. High priced stock, carried forward from 2007, had a negative impact on first half-year profitability but the second six months saw a significant profit improvement from both the consumer and ingredients divisions. "This improvement has contributed considerably to the overall recovery to profitability for the Group but it has not been enough to avoid a reduction in the full-year operating surplus to €24.3 million, which is the basis for calculating year-end bonuses to our member co-operatives", said Dr. Brady, Interim CEO.

IDB Chairman, Michael Cronin, commented "Price volatility will be a feature of dairying for the coming years and this will affect dairy farmers throughout the world. We must not however lose sight of the fact that Ireland remains one of the world’s most efficient milk producers, is part of a protected EU market of 500 million consumers and employs a grass-based output model that is appreciated by discerning and environmentally aware customers around the globe".

Group debt to equity ratio stood at 58% while bank borrowings, net of cash, were €207 million (€159 million in 2007). A considerable amount of that period-end debt related to the financing of stock held for consumer markets over the winter period. However, this debt also includes the financing required for the construction of the new Kerrygold Company packing facility in Leek, Staffordshire, and the development cost of a world class butter packing plant in Neukirchen-Vluyn in Germany serving this, the largest market for Kerrygold butter, and other markets to the east.

The net assets of the Board at the end of 2008 were €359m, down €37m on the previous year due mainly to the translation of foreign assets and pension revaluation. Nevertheless, the strength of its balance sheet demonstrates that the IDB is well positioned to grow existing markets and to develop new routes to market despite the current challenging environment.

The IDB paid out €7.6 million with respect to redeemable loan stock during the year. In addition, it declared a cash bonus to its member suppliers of €3.5 million, bringing the total payments to €11.1 million. €4.5 million has been allocated to the annual bonus fund in 2008.

Dr. Brady pointed out that 2008 had shown just how important a contribution was made by the diversified product portfolio, strong customer base and the Board's subsidiary network, which services the key market channels, to the overall success of the IDB Group during the year.