Profits at Lakeland Dairies treble on global demand

PRE-TAX PROFITS at Lakeland Dairies more than trebled last year to €4.5 million, boosted by growing global demand for dairy products.

Turnover at the Co Cavan co-operative increased by 23 per cent to €401 million, while the company made an operating profit of €5.3 million – double the €2.65 million posted in 2009.

Chief executive Michael Hanley described 2010 as a “very positive” year for the company following an extremely challenging 2009 for the dairy industry.

While improving milk and dairy prices and reduced intervention stocks contributed to the improved performance, a growth in consumer demand across Lakeland’s main export markets was the primary driver of growth.

“Although Ireland remained challenging, internationally there was a return to growth in our key markets as the global recession slowed,” Mr Hanley said.

Approximately 98 per cent of the company’s output is exported, with Africa, Britain, Europe and China its key export markets.

Some 85 per cent of the milk supplied to Lakeland is used for its food ingredients division, which produces powdered milk for export. The remaining 15 per cent goes into the production of branded products such as coffee creamers and mini-pack butters for the fast-food restaurant, airline and hotel sectors.

However, this food service division is the more “value-added” part of the business, according to Mr Hanley, accounting for 32 per cent of total revenues.

More than 2,000 farmer-shareholders supply milk to the co-op, which has operations in Co Cavan and Newtownards, Co Down.

Last year the company processed 700 million litres of milk.

Lakeland opened a €20 million drying facility in Co Cavan last October, which was funded in part by the Government’s dairy industry investment scheme.

The opening of the facility followed a period of consolidation for the co-op which saw Lakeland shutting down its milk-drying plant at Lough Egish.

More than 550 people are now employed by the company.

Mr Hanley said he was “very optimistic” about the prospects for the dairy industry in 2011 and in the long term, estimating that milk prices would remain at the historically high seen in 2010 over the next five to 10 years.

He also said the company’s processing facility in Cavan was more than adequate to deal with the 35 to 45 per cent increase in milk production envisaged by the Government when milk quotas are abolished in 2014/15.