Last year was the first full year in operation for LacPatrick, which was formed through the merger of Town of Monaghan and Ballyrashane co-ops last August. The combined entity sees over 1,050 milk suppliers deliver 600m litres of milk. There are no comparatives as the merged business was only in operation for four months in 2015.The co-op recorded a turnover of €234.5m for the full year 2016. It had an operating profit of €2.9m, delivering an operating margin of 1.2%. This is a relatively low operating margin, but the co-op said it stuck to its policy of maximising milk price to members.
Last year was the first full year in operation for LacPatrick, which was formed through the merger of Town of Monaghan and Ballyrashane co-ops last August. The combined entity sees over 1,050 milk suppliers deliver 600m litres of milk. There are no comparatives as the merged business was only in operation for four months in 2015.
The co-op recorded a turnover of €234.5m for the full year 2016. It had an operating profit of €2.9m, delivering an operating margin of 1.2%. This is a relatively low operating margin, but the co-op said it stuck to its policy of maximising milk price to members.
The co-op said that as it is a cross-border business, it is exposed to movements in the exchange rate. It recorded an exceptional charge of €3.7m relating mainly to currency exchange differences. It recorded an after-tax profit of €298,487.
The dramatic fall in sterling resulted in the euro value of its Northern balance sheet falling by €5.9m. Shareholders funds were €74.8m at year end. During the year the business generated €12.9m in cash from its operations.
With some 500m litres of its milk sourced in Northern Ireland, and 100m litres in the Republic of Ireland, LacPatrick made the decision to invest in processing capacity in Northern Ireland. The new drier at Artigarvan is a €42m investment where €24m was invested in 2016. This factory enables LacPatrick to develop new products, explore new markets and have the capacity to not only process all its own milk pool but also become a net buyer of third party milk for processing. This investment also gives Northern Ireland the ability to process all its milk for the first time.
Loans and overdrafts increased €12.6m but the co-op has €16.8m in cash and liquid investments at the end of the period.
On milk price, the co-op said that 2016 was an extremely difficult year but that the second half of the year saw steady recovery with a 48% increase in base prices from the trough.
It said that milk prices today are 55% higher than this time last year. The co-op also ran its first fixed milk price scheme in 2017 to help to manage the risk of volatile milk prices.
On Brexit
The co-op said that while there was a lot of uncertainty around Brexit, LacPatrick has certainty of sufficient processing capacity in each jurisdiciton to service the milk pools in either jurisdiction. This would place it in a strong position in a post hard-Brexit scenario.
The co-op also said it was well placed across its consumer foods and ingredients business to serve customers in any post-Brexit scenario. It said it was very well placed to deal with Brexit issues and to take advantage of the opportunities.
During the year more than 370 new members came into the co-op. Key management remuneration amounted to €1.3m during the year.
This is a subscriber-only article
SHARING OPTIONS: