With Ireland’s largest dairy exporter reporting profits (EBITDA) up 25% to €53.8m for 2017, it seems there is no stopping the growth at Ornua.

The increased profits were on the back of an 18% increase in sales to €2.1bn and were primarily driven by higher volumes and pricing.

While volumes purchased from dairy processing members increased 4%, hitting a record 338,000t, they were below the 9% supply growth of the Irish milk pool. While this is a slight reduction in share, which can be expected in strong markets, Ornua has increased its share of the milk pool over the last five years.

Following the disposal of its US distribution business last year, the business is now split evenly between two divisions – Ornua Foods and Ornua Ingredients. The ingredients business drove the growth and reported a 21% (€190m) increase in sales to €1.2bn driven by increased dairy prices and volumes.

The foods business, which includes the Kerrygold, Dublin and Pilgrim Choice brands, reported an increase in sales of 16% (€130m) to €952m.

The company does not break out divisional performance. Overall group profits (EBITDA) increased 25% to €53.4m, while operating profits increased 32% to €35.2m for the year.

These reported profit figures are after declaring a 57% (€4.5m) increase in the members’ payout, which goes back to the dairy processing members, of €15m. If this is included, EBITDA increases to €68m and operating profits to €50m. Margins were 2.6%.

The Kerrygold brand continued to enjoy double-digit volume growth in its two key markets of Germany and the US. While the US market is now over 20,000t, it is still only about a third of the size of sales in the German market.

Its Kerrygold butter facility in Mitchelstown produced 30,000t, or 15% of Ireland’s butter output, last year.

Last March, Ornua acquired FJ Need Foods, a UK-based cheese ingredients company, for €17m. It also expanded its German butter factory, bringing the total investment to date at the site to €60m.

In November 2017, Ornua refinanced its bank facilities for another five years, increasing them to €610m. This money is used to support the cashflow of members and dairy industry expansion.

Ornua had net cash of €300,000 at year end, which provides it with the capacity to leverage its balance sheet further.

While Ornua says it has no immediate plans to acquire other businesses, it would have the financial fire power to conclude a large deal should the right opportunity arise.

Outgoing CEO Kevin Lane told the Irish Farmers Journal that despite volatile market conditions and Brexit uncertainties, Ornua “remain on track to deliver our 2021 vision of a €3bn revenue business with a sustainable EBITA margin of 3%”.

He said the global market is growing at 2% currently, while demand growth is around 1.5%. This means stocks are still building, according to Lane. Coupled with some volatility, Ornua is predicting a milk price of 28-30c/l for 2018.