Dairygold diversifying ahead of Brexit

DAIRYGOLD is moving on its “Brexit-proofing strategy” as it targets the nutritional powder sector and moves to diversify its cheese portfolio with a decision on planning for the new Jarlsberg plant due shortly.

Dairygold CEO Jim Woulfe said they have put people on the ground in Shanghai to work to grow their business in China.

Launching its 2017 annual report, Mr Woulfe said they were keen to add value to their growing milk pool as volumes surged 8.3pc to 1.3 billion litres last year.

Michael Harte, Dairygold CFO, said the aims under the Food Harvest 2020 plans were to grow milk by 50pc of the 2009 levels by 2020. However, he said volumes were now up 55pc by the end of 2017, while milk solids were 64pc higher.

Mr Harte said the opening of the €86m Nutritionals Campus in Mallow was a key “milestone” on their aims to target the “value-added sphere” of powders.

Mr Woulfe said the campus allowed them to work on adding more value “to that ourselves” and it will require further investment. “There is a demand for dairy nutrition and we believe we can play a greater role in that area,” he said, adding they have worked successfully with partners in this area.

A decision on planning permission for the Jarlsberg factory investment is expected within four to six weeks, with the aim of having it operational by October 2019.

Mr Woulfe said it was part of their “Brexit-proofing strategy”, with a portion of their milk destined for the global cheese brand and research into alternative cheeses. “It would take a lot longer for us if there is a hard Brexit to diversify away from current product portfolio,” he said.

Mr Harte said they were focused on looking at alternative markets for cheddar on the European mainland and were looking at product diversification to allow them to potentially switch milk if there is a ‘hard Brexit’ into other products. Mr Woulfe said the UK may still prove the most valuable market.

Mr Harte said they expected collections from suppliers to grow at around 3-3.5pc a year.

Dairygold generated €965.5m in 2017, up €209.4m, with 76pc from dairy side, 23pc from the agri-business and 1pc from investments and property.

The operating profit stood at €32.4m, up €14.9m, while net bank debt dropped €9.1m to €79.6m. He said this now allowed them to look at acquisitions.

Mr Harte said they were now looking at the next stage of investments after spending €162.1m investing in the business over the last five years.