May 10, 2017
KERRYGOLD REPORTS RECORD GLOBAL RETAIL SALES OF €900 MILLION
Ornua, Ireland’s largest exporter of primary Irish dairy products, today published a review of its 2016 operational and financial performance. Ornua delivered a strong trading performance in 2016, with Group EBITDA* up 18%. Turnover* rose by 9%, on a like for like basis, to €1.75 billion. This performance was achieved in a year of volatile milk prices and political uncertainty in a number of key markets.
2016 FINANCIAL HIGHLIGHTS
|Key Performance Indicators|| 2016
|Cash / (Net Debt)||€57.2||(17.3)||+431%|
*Excluding DPI which was disposed in 2015
2016 OPERATIONAL HIGHLIGHTS
- Record Kerrygold global retail sales of €900 million with the US reporting 20% volume growth
- Successful launch of Kerrygold Yogurts in Germany – over 10 million pots sold in first six months
- Opening of Kerrygold Park, a 50,000 MT butter production and packing plant in Co. Cork
- Commissioning and opening of Al Wazeen – Ornua Saudi Arabia’s cheese plant in Riyadh
- Successful integration of Shanghai-based dairy manufacturer, Ambrosia Dairy, into Ornua Asia
- Acquisition and integration of US powder ingredients business, CoreFX Ingredients
Commenting on Ornua’s 2016 operational and financial results, Kevin Lane, CEO of Ornua said:
“We are very pleased to report a strong 2016 performance. Excellent performances in established markets such as Germany and the US were accompanied by continued expansion in our developing markets of Africa, China and the Middle East. These results were achieved against a backdrop of significant market volatility and political uncertainty. We have built a diverse global business by investing in our brands, technology, in-market presence and our people. Ornua now exports to over 110 countries around the world. This strategy is ensuring our ability to continue to deliver for our members and for the Irish dairy industry, even in more uncertain market conditions.”
2016 saw revenue growth in the business. Excluding DPI Specialty Foods, which was sold at the end of 2015, Group Turnover rose by 9.1% to €1.75 billion and Group EBITDA increased by 18.4% to €43.1 million. This result includes investment in new and existing facilities, a €6 million increase in brand and market development bringing total Group investment to €51 million in 2016 and delivery of strong product prices returns to members.
The Group closed the year with net cash of €57.2 million compared to net debt of €17.3 million in 2015 and a very strong Balance Sheet with net assets in excess of €500 million. This provides the Group with significant flexibility to fund future growth and support the working capital requirements of its members.
Irish product purchases rose by 7%, year-on-year, outstripping the rise in Irish milk supply of 4%. Over the last four years, Irish purchases have grown by 33%. This growth demonstrates Ornua’s strong product price returns.
Reflecting 2016’s strong performance, a Members’ Bonus of €14.5 million was declared, including a final bonus from the gain on disposal of DPI Specialty Foods of €5 million (in addition to the DPI related bonus of €15 million already paid in 2016). In May 2016, Ornua suspended the monthly Ornua milk levy in recognition of the on-farm challenges experienced by Irish dairy farmers, due to the global dairy market downturn.
Ornua’s brand portfolio had an excellent year with growth across all core markets. Kerrygold reported record annual global retail sales of €900 million. Ornua’s ambition is to move Kerrygold from being a world-class butter brand to an instantly recognisable €1 billion global dairy brand in the coming years. 2016 saw the successful launch of Kerrygold Yogurts in Germany, Kerrygold Spreadable in the UK and the continued roll-out of Kerrygold Irish Cream Liqueur across Europe and the US.
Ornua trades in over 110 countries around the world. 2016 saw significant progress in terms of continued in-market expansion with the opening of a new Ornua facility in Saudi Arabia, upgrade works to the existing production facility at Neukirchen-Vluyn in Germany and the development of a purpose-built production line for yogurt brand, EasiYo, at Ornua Nutrition Ingredients UK. In addition to organic expansion, Ornua acquired US powder ingredients business, CoreFX Ingredients. 2016 also saw investment in Ireland with the opening of Kerrygold Park, the new global home for the Kerrygold brand. The €38m butter production and packaging plant, with a production capacity of 50,000 tonnes, enables Ornua to deliver new product formats to its consumers around the world.
2017 AND BEYOND
In early 2017, Ornua acquired F.J. Need (Foods) Limited, a UK-based cheese ingredients company. This acquisition significantly strengthens Ornua’s presence in the UK ingredients sector. F.J. Need’s strong competencies will also strengthen our UK business capabilities in the post-Brexit environment. 2016 saw the completion of a business transformation strategy which has underpinned Ornua’s growth for the last number of years. The goal of this strategy was to prepare Ornua for the post-EU milk quota environment. Ornua 2021 is the new strategy which will guide the Group’s growth for the next five years. Ornua 2021 details the Group’s ambitious, yet achievable target – to build sustainable and value-added routes to market for Irish dairy products, generating revenues of €3 billion and a sustainable EBITA margin of 3% by 2021, whilst ensuring strong product price returns for our members.