IN a year when milk prices were weaker across the dairy sector, West Cork suppliers again benefited from Carbery’s industry-leading price boosted by the success of its growing international food ingredients and flavour businesses. The continuing ability to deliver a competitive milk price for shareholder suppliers, whilst also significantly increasing shareholder value, illustrates the ongoing progress the Carbery Group continues to make expanding its global footprint.
The West Cork-based dairy group, which is a leading international manufacturer of value-added ingredients, flavours and cheese, reported strong results across all divisions for the year ended December 31st, 2015. Carbery’s earnings before interest, tax, depreciation and amortisation (EBITDA), increased by 33% to €35.3 million, up from €26.5 million in 2014, on an increased turnover of €349.5 million (2014: €316.6 million).
Operating profit, before amortisation and exceptional items, increased to €25.5 million in 2015 from €18.3 million in 2014. An exceptional credit of €6 million reported in the 2015 accounts relates to the sale of Carbery’s 50% stake in the Nutrifont joint venture in Brazil.
Following the removal of milk quota restrictions in 2015 milk supplies from Carbery’s West Cork shareholder suppliers increased by 13% in the 2015 calendar year to 450 million litres. For the full year post-quota to the end of March 2016, milk supplies were up 18%.
Re-investment in the business remains critical to Carbery’s growth plans and, during 2015, group capital expenditure amounted to €20 million. Amongst other projects, this includes an investment in an Enterprise Resource Planning (ERP) project for Synergy, Carbery’s international flavour and natural extracts business.
The group’s net debt position at December 31st, 2015 was reduced by 20% to €27.8 million. The increase in 2015 operating profit is attributable to increased earnings in Carbery’s ingredients division, partly offset by lower earnings in Carbery’s dairy division.
Earnings growth in the ingredients division is due to year-on-year earnings growth in Carbery’s nutritional ingredients business as well as strong organic growth in the Synergy division. The lower reported earnings in the dairy business is primarily due to Carbery paying a higher milk price to its suppliers in increasingly-challenging global dairy markets.
The growth in Carbery’s shareholder value during 2015 is reflected in the increase in the share price of the Carbery milk supply share scheme where shares have increased from €2.21 to €3.08.
Carbery Group chief executive officer Dan MacSweeney said that the impressive performance for 2015 was achieved against the backdrop of weakening dairy markets, particularly in the latter part of the year: ‘Volatility continues to be an unwelcome feature of dairy markets and milk pricing. During 2015, Carbery offered two fixed milk price schemes, one covering a 29-month period from April 2015 to December 2017 and a second scheme covering an 18-month period from January 2016 to June 2017.
‘These schemes, allied to other tools to manage milk