Carbery profits climb as strong dairy market drives growth

The supplies of milk to Carbery’s processing facility in Ballineen increased by 8.2% to 509 million litres in 2017, and are up 28% since the removal of quotas.

At the year end, Carbery’s board declared a 1c per litre bonus for 2017 milk.

At the end of 2017, the company put €10m into its stability fund to support future milk prices in times of price volatility. Suppliers will receive the same price for March milk as they did in February, with Carbery delivering 2c per litre from the stability fund to offset the market-related 2cpl cut it recently announced.

Carbery launched its fourth fixed milk price scheme for its milk suppliers in December 2017. Its four West Cork co-ops consistently paid suppliers a market leading price in 2017.

“As a result of very strong dairy markets and a good business performance, Carbery was able to continue to pay a leading milk price to its supplier shareholders during 2017,” said Jason Hawkins, Carbery’s newly appointed CEO, following the retirement of Dan McSweeney.

“The global milk price looks set to come down in the next six months. The Ornua PP Index indicates a likely 29c milk price on the horizon. I think farmers can plan for a price in the 28c to 29.5c per litre price range.

“Even after our implied price reduction for March milk, we’re ensuring our suppliers are paid a good price. We still see ourselves as a leader in the price we pay our suppliers.”

Carbery’s nutrition business is growing across the infant, sports and clinical nutrition sectors. Its Synergy taste business is also seeking opportunities to grow both through organic and acquisition activities.

Since the UK’s Brexit vote of June 2016, Carbery has been developing new products and diversifying in other markets. The remains poised for any opportunistic acquisitions.

Carbery sells a lot of cheddar into the UK market, supported by its partnership with Ornua. Carbery produces the Dubliner brand, cheddar, reduced fat cheeses, and Red Leicester.

Ballineen is the largest single cheese-producing facility in Ireland, producing almost 25% of Ireland’s annual cheese output.

While noting that Brexit could yet pose Carbery with some significant practical challenges, the company is remaining optimistic.

Mr Hawkins said: “We are prepared for the worst and hoping for the best. We have a Brexit working team evaluating and preparing for all scenarios under either a soft or hard Brexit.

“We are also working closely with Irish governmental and industry bodies to ensure the potential implications of Brexit are understood and that we, and the dairy industry, are supported.”

Headquartered in Ballineen, Co Cork, Carbery is owned by Bandon, Barryroe, Drinagh, and Lisavaird co-ops. The company employs over 600 people. Carbery operates from eight locations including Ireland, the UK, the US, Brazil and Thailand.

Mr Hawkins formally took up the CEO role in January. Originally from Tralee, Co Kerry, he joined Carbery from Dairy Farmers of America, the world’s largest dairy co-op, where he was chief operating officer.

Prior to joining DFA, he worked in various roles with Kerry Group, having joined its graduate programme in 1999 as an accountant. He spent the bulk of his Kerry career in the US, notably as president of beverages, brands and taste for North America.

“The business once again delivered strong results in 2017, continuing to create value for Carbery shareholders,” Mr Hawkins said.

“Dan McSweeney deserves a lot of credit for leading Carbery’s excellent team to have this kind of success. Dan will be missed. The transition has been well managed. I have been very impressed by the team here in Ireland and throughout Carbery’s global operations.”