Local dairy co-op Dale Farm, has delivered an exceptional set of financial results for the year ending March 2024, with both operating profit and profit margin reaching new record highs for the business.

The downturn in the value of global dairy commodities, along with the 2022 decision to close processing sites in Britain, did hit group turnover, which was down 13% to stand at £631.4m. However, costs in the business were also reduced, leaving operating profit at £37.5m, up 5.6% on the previous year.

Operating profit margin now stands at 5.9%, compared to 4.9% and 4.3% in the previous two years. That margin is significantly above that typically reported by other NI agri-food companies, which tends to be in the range of 1% to 3%. In its latest 2023 accounts, Lakeland Dairies reported an operating profit margin at just under 1%.

Once interest payments and other similar expenses are excluded, pre-tax profit at Dale Farm comes in at £29.8m – it is the third year in a row that pre-tax profits have increased.

Re-invested

Speaking to the Irish Farmers Journal, Dale Farm CEO Nick Whelan said the strong profits made over the last three years are being re-invested into assets, ultimately with the aim of delivering an efficient business able to pay a sustainable milk price to members.

He said Dale Farm has paid a “competitive milk price” to members in recent years, but was “not there yet” when it comes to delivering a sustainable price that gives farmers the confidence to invest in their own businesses year-on-year.

“We have a clear line of sight to bring the milk pool to a sustainable milk price over the next three to five years. We know it’s tight on farms. But fighting with retailers is not the solution. It is about repositioning ourselves and investing – that is the journey we are on,” he said.

In May, Dale Farm confirmed a new £70m spend on cheese production at Dunmanbridge outside Cookstown. As well as increased automation and technology to help drive down costs, the investment will increase capacity allowing Dale Farm to process all of its milk at peak.

“We are investing into assets that give high rates of return. We are confident we are spending the money in the right way. In three to four years, my main investment will be done,” said Whelan.

While the co-op has focused on cheddar, it also is involved in ice cream, retail milk and feed, under the United Feeds brand. According to Whelan, all the divisions within the group are profitable, with core consumer brands, such as Dromona and Dale Farm, continuing to perform strongly.

“The NI consumer really supports those brands,” he said.

Strathroy

The other NI dairy company to recently report results is Omagh-based Strathroy Dairy Ltd. The Cunningham family-owned business saw turnover up 25% to £148.5m in 2023, with operating profit at £2.36m, more than treble the £0.66m from the previous year. Operating profit margin in 2023 came in at 1.6%.

Allowing for finance costs, pre-tax profit in the business stood at £1.44m.

Strathroy collects milk from farmers across the island of Ireland and has a Dublin-based operation (Strathroy Dairy (ROI) unlimited), for which no accounts are publicly available.