Connacht Gold reports 16% increase in turnover to €345m

Connacht Gold has reported a 16% increase in turnover in 2011. Turnover reached €345m compared to €296m in 2010. Operating profit for the dairy, consumer foods and agri-business co-operative was €3.29m, compared to €3.24 in 2010.

Connacht Gold has reported a 16% increase in turnover in 2011. Turnover reached €345m compared to €296m in 2010. Operating profit for the dairy, consumer foods and agri-business co-operative was €3.29m, compared to €3.24 in 2010.

The increased turnover was driven primarily by a substantial increase in the value of dairy ingredients sales and a record year for sales in its livestock marts business.

Dairy Ingredients turnover rose almost 40%, from €60m in 2010 to €83.5m while sales at the co-op’s four livestock marts increased by 30% to €90m.

The co-op’s net debt was down from €18m to €7.8m. The main drivers were an improved working capital position, continued focus on operating costs and proceeds of a share disposal. Capital expenditure in 2011 amounted to €7.2m.

Connacht Gold chief executive Aaron Forde said the figures represent a steady performance.

“Our operating profit was modest, but is reflective of our commitment to maximising returns to our members and the strong investment programme pursued in 2011.

“We continued to invest heavily in the company across all business units. The acquisition of the milk and retail stores businesses from Donegal Creameries at the end of the year will grow the business significantly and consolidate our position in consumer foods, dairy ingredients and retail stores. The emphasis in 2012 will be on consolidating the enlarged business and ensuring our customers, members and suppliers benefit,” he said.

Highlights

The following are the highlights for the main business units in 2011:

Agribusiness: Agribusiness sales were maintained at €88m, in spite of a national drop in feed and fertiliser sales. The investment in stores continued during the year with a new multi-purpose store opening in Swinford, Co Mayo. Major investment was also undertaken in a new store in Westport and in relocating the Longford store to cope with increased sales.

The acquisition of the Donegal Creameries businesses has increased the number of Connacht Gold stores from 30 to 41 in the five counties of Connacht as well as Longford, Westmeath, Donegal, Fermanagh and Tyrone.

Livestock Marts: The co-op’s four livestock marts, at Balla, Ballinrobe, Ballymote and Mohill, achieved record sales of over €90m, up from €69.6m in 2010. Average prices for cattle and sheep increased by 23% and 14%, respectively, in 2011. The marts also grew their share of business in the region, with throughput of sheep up 17% and cattle throughput up almost 5%.

Consumer Foods: Consumer foods sales climbed almost 10% to €45.7m in 2011, with increased volumes being recorded, particularly in the butter and yellow fats area. The launch of ‘Connacht Gold Spreadable’ and ‘Connacht Gold Spreadable Light’ contributed to this success against a value-driven market backdrop. The Donegal acquisition creates a strong market position for the future.

Dairy Ingredients: Volumes of milk processed at the co-op’s dairy ingredients business increased by 20% in 2011 and this, combined with stronger product prices, led to an almost 40% increase in sales to €83.5m. Connacht Gold expanded its markets for dairy products during the year. Fat-filled milk powder is now being exported to the Middle and Far East, Africa, Pakistan and there are growth opportunities in Central America.

The average price received by Connacht Gold milk suppliers surpassed the previous peak achieved in 2007.

Joint Venture: The Connacht Gold joint venture timber processing company, ECC Timber, reported a strong export performance in 2011 which helped to counteract the continuing poor domestic demand. The raw material price did not reflect market reality for much of 2011. Based in Corr na Mona, Co. Galway, ECC Timber accounts for almost 20% of timber processing in Ireland. Investment in a finishing line was completed during 2011.

Connacht Gold Chairman Padraig Gibbons said; “Connacht Gold is entering a pivotal period and the increased scale of the business will be vital to ensuring efficiencies and customer relevance as we seek to strengthen our brands and play a vital role during a positive outlook for agriculture in Ireland.

“With the ending of quotas in 2015 now only three years away the co-op is engaged in planning for the changes that will bring. As the planning phase progresses, we will maintain communications with the shareholder base.”