Arrabawn Co-Operative reported a profit after tax of €10.3m for 2023, up from €6.7m in 2022 in what CEO Conor Ryan described as one of the most successful years in the history of the co-op.

This was achieved despite a drop in revenue by 20%, from €504m in 2022 to €402m in 2023. Milk processed was down to 509m litres from 530m litres. Arrabawn’s own milk pool was 9m litres lower at 477m litres.

There was a significant lift to the financial outrun for the year from the sale of the liquid milk business to Aurivo, which netted Arrabawn €4.3m after expenses were paid.

On a continuing operations basis, the profit after tax was €6.4m.

On the cost side, Arrabawn saw a significant drop in its fuel and power bill for the year, down from €30.1m to €17m. Interest costs increased by just over €1m to €3m.

Staffing

Staff numbers decreased by 20, driven by the sale of the liquid milk business and the closure of the Kilconnell facility, which led to a €600,000 reduction in staff costs to €18.3m.

Co-op Chair Edward Carr said that Arrabawn’s new casein plant produced high value quality products, which “combined brilliantly” with the butter plant where product sold under the Kerrygold brand is manufactured.

The agri business division saw the completion of the extension to the feed mill at Dan O’Connor Feeds in Limerick, which increased the overall capacity of the operation. Arrabawn do not break down performance figures for its divisions.

Net assets

Overall, Arrabawn’s net assets on its balance sheet expanded to €77m, up from €66m last year and a long-term average of €50m going back as far as 2016. Bank loans and overdrafts outstanding at the end of the year dropped by almost €12m to €24.3m.

When the Irish Farmers Journal sat down with Conor Ryan to discuss the results, the first question was why the co-op didn’t pay suppliers more for their milk during the year.

“We have to be responsible. We still have some debt we’d like to reduce and we have plans for the business to go on to the next stage.

“There’s a lot going on around sustainability. The challenge for us is to how to add value to the milk. With the bones of 500m litres of milk, the objective for us is to put it into where we can get the best return.”

Speaking of milk, he added that supplies are down so far this year due to the weather, that milk protein is “terrible” and that they haven’t seen milk solids at these poor levels in the past.

Looking at milk supply, Ryan said that Arrabawn is “comfortable” with 400m-500m litres of milk. He said that the derogation cut to 220 didn’t have a big impact, but that most of their suppliers would be close to that level, so a further cut would lead to a “complete re-evaluation” of operations.

He expressed a hope that “common sense would prevail” on the issue.

On the industry as a whole, he said that if everyone could have seen where things would end up on milk supply, there would have been fewer dryers built in the country over the last five to six years.