Operating profits up 41% at Connacht Gold owner Aurivo

Operating profits at Irish dairy co-operative Aurivo jumped more than 41 per cent in 2022 to €17.8 million despite the impact of rampant price inflation across its cost base and higher milk prices.

The Connacht Gold and Donegal Creameries owner paid an average of 61.4c per litre of milk last year, a 50.9 per cent increase from 2021 and a record high, the co-op said in a statement on Wednesday.

Last year was “an exceptionally challenging one”, said Aurivo chief executive Donal Tierney, characterised by “significant inflationary pressure and volatility” against the backdrop of the surge in energy prices that followed Russia’s invasion of Ukraine in early 2022.

While turnover at the group climbed by a third to €764 million, its cost of sales – including wages and energy costs – also jumped by 27 per cent to €638.3 million.

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“This was achieved in 2022 in tandem with the delivery of an all-time high milk price to our suppliers while continuing to invest in our operations and our people, both of which are critical to the continued growth of Aurivo,” said Mr Tierney. Aurivo also invested €19.9 million in its operations in 2022, bringing total expenditure under its investment programme to €65.6 million since 2018.

Looking ahead, Mr Tierney said that the business is facing “further headwinds” in 2023. “Whilst inflation is showing signs of moderating, it is likely that input costs for both farmer and processor will continue to be higher than historical averages. Dairy commodity prices suffered a sharp decline during the fourth quarter of 2022, and we have experienced further decreases in the first and early second quarter of 2023. While there has been a noticeable reduction in farmgate milk price, we expect the milk price to settle above the historical average milk price.”

John Jordan, chief executive of Kerrygold maker Ornua – of which Aurivo is a member co-op – said last week that while milk prices have softened somewhat in early 2023, “it will take some time” for consumers to see the benefit. “But, I would say it’s probably fair to say we’re past the peak of some price increases and we should see some softening at consumer shelf level later in the year.”