Operating profit at the Arrow Group fell in 2021 to €20.2m compared with €27.1m in the 2020 financial year on turnover which increased to €617m compared with €585m in 2020.

The Arrow Group, owned by the Queally family, is the holding company for a range of businesses including Dawn Farms, the specialist supplier of pre-cooked meat, plant protein, fermented and dried sausage ingredients to pizza, sandwich manufacturers and the snack food market.

Other well-known businesses that are part of the group include QK cold stores, QK Meats, Irish Dog Foods, Queally Pig Slaughtering, which trades as Dawn Pork and Bacon and Dawn International, the meat trading company.

Numbers analysis

The drop in profits is despite increased turnover and the directors noted that 2021 was a positive year despite ongoing COVID-19 challenges in the food service sector but there was a negative effect from “varied protein, transport and energy prices on world markets”.

Despite increasing turnover by 5.5% to €617m, operating profit fell by 26% to €20.2m. Net profit after taxation was just over €20m in 2021 compared with almost €21m the previous year. With a substantial cold storage business as part of the portfolio which is a high user of energy, no doubt this higher cost had a negative impact on profits.

Other operating income was a major contributor to revenue in the 2020 accounts bringing in €8.2m but this halved in 2021 to just over €4m.

Both management charges and rental income remained similar to the previous year but the big drop was in the Government wage subsidy, which fell from €6.6m in 2020 to €2.5m in 2021.

Staff costs also increased significantly in 2021, rising from €81.3m in 2020 to €86.6m in 2021, a 6.5% increase.

Total employees increased slightly to 1,986 people. Dividends of €5.48m were paid during the year.

Assets and stocks

The Arrow Group also recorded significant profits on the sale of assets in the 2021 financial year. Disposal of its investment in subsidiaries Braintree Meats and Glenpatrick Natural Mineral Watercoolers brought in revenue of €4.7m, of which €3.4m was profit.

The divestment in Aquadirect was also completed during 2021, which released a €995,368 profit to the Arrow Group.

The value of stocks carried by the Arrow Group at the year end also increased significantly in 2022, rising from €63.4m in 2020 to €78m in 2021, a 23% increase.

No doubt this is influenced by increased product cost but it could also suggest that production was disrupted more in 2020 or that product was slower to sell later in the 2021 financial year.

The business

Dawn Farms is one of the cornerstone businesses in the Arrow Group. Under the leadership of Larry Murrin, CEO, the company which is headquartered in Naas, Co Kildare, employs over 1,400 people and supplies over 55,000 retail and food service outlets across the UK, Europe, Middle East, Asia and Africa.

As well as two production sites in Ireland, the company also has sites in England and Germany.

Dawn Farm’s business is built on supplying what it describes as the world’s leading food manufacturing brands in the pizza, sandwich and prepared meals sectors in over 50 countries worldwide.

The business has been established since 1985 and has expanded as consumer eating habits have switched to sandwich bars and other out-of-home eating.

The company has also benefited from the growth in retail sales of prepared consumer meals.

Dawn Pork and Bacon is a primary pig processor in Co Waterford and will have been on the rollercoaster that has been international pork trade in recent years with the rise and fall in Chinese pigmeat imports. Dawn international and QK Meats have significant international meat trading and cold storage businesses, with QK Coldstores having a 30,000-pallet capacity in Lincolnshire, England.

The Arrow Group is a diverse group of businesses involved in primary processing such as pigmeat, as well as further processing and preparation of food ingredients, trading, storage and distribution.

Apart from the primary pig processing, interface with farmers is limited.

However, being a value-added-based business, it is a key outlet for many primary meat processors.

The Queally family, who are the principal shareholders in the group, are also founders of the separate Dawn Meats business with Dan Browne in the early 1980s. While the financial accounts give a clear picture of the financial strength of the combined Arrow Group performance, they don’t shed light on how the individual businesses within the group are performing.

Energy costs

No doubt COVID-19 and Brexit had an impact, particularly earlier in the year, and the processing sector just like farming will have been hard hit by energy and road fuel costs.

A 3.3% operating margin would be considered good in the food processing industry, which is very much volume-dependent for driving profits.

• Arrow Group is the holding company for Queally family businesses.
• Group turnover of €617m in 2021, up from €585m in 2020.
• Operating profit down to €20.2m compared with €27.1m in 2020.
• Government COVID-19 wage subsidy contribution of €2.5m, down from €6.6m in 2020.
• Almost 2,000 employees, costing €86.6m, a 6.5% increase.