Dairygold figures reveal a ‘testing’ year in 2015

WHILE Dairygold CEO Jim Woulfe described 2015 as a “testing year” for the company, it still managed to pay its top executives an average of just under €300,000 in pay, bonuses and pension contributions last year.

Figures released by the company, the largest farmer-owned dairy co-operative in the country, this week showed Dairygold’s nine top executives shared approximately €2.68 million in payments between them during 2015.

The figures for 2015 revealed that Dairygold received a record volume of 1.16 billion litres of milk from its members, while also paying out more that €20 million in milk price support to its 3,000 members.

Dairygold CEO Jim Woulfe said the society had “delivered a strong operational and solid financial performance, despite a very testing year for the diary sector internationally and the need to support its members.”

“The Co- Op is well placed for continuing sustainable growth over the next few years,” he insisted.

Reflecting lower market returns, Dairygold recorded a turnover of €784.9 million for the year, down from €848.4 million in 2014, with pre-tax profits declining by 71% from €32.2 million to €9.2 million.

Earnings before interest, tax, depreciation and amortisation (EBITA) was down by 12.5% at €41.2 million compared to €47.1 million in 2014.

Operating profit totalled €19.2 million against €28.6 million in 2014, after the society paid out in excess of €20 million to members to support farm gate prices.

“We’re now 27 months into a downward cycle in prices that started in the early months of 2014. During a time in which the marketing has weakened, milk production has substantially increased. Given the environment, margins have been slimmed and trimmed on the basis of maximising milk price support for our members,” Mr Woulfe told the Irish Times.

He said further support would be considered for members if required in 2017, a year which Mr Woulfe forecast would be “challenging.”

“We certainly see another nine months of tough market conditions and we will see price corrections. Currently, in Ireland milk prices at farm gate level are below the cost of production and that’s a tough dynamic for the co-operative movement,” he said.

The company said it has managed a “seamless transition” to post quota milk production, receiving and processing an extra 182 million litres of milk, representing an 18.7% increase in milk volumes for the year.

Overall in 2015, Dairygold received a record annual volume of 1,157 million litres of milk from its supplier members.

The company revealed that it invested €50.9 million during 2015 in its post-quota capital investment programme, pumping more than €200 million into the business over the past seven years.

Dairygold said its expansion investment in Mitchelstown was “essential” to processing increased 2015 milk volumes and the first phase of its regeneration of the processing complex in Mallow was currently being commissioned and completing its first production runs.

“|This new, state-of-the-art dairy nutrition and ingredients facility creates platform that enables Dairygold to produce a range of high-end value added products, thereby supporting the development of relationships with the most discerning international customers and partners,” said the company.

Commenting on the Dairygold’s 2015 performance, Chairman James Lynch recognised “the very difficult market environment”.

“Despite this, Dairygold balanced the ongoing development of the business and the needs of its members by supporting milk and grain prices and continuing its capital investment programme, while maintaining profitability,” said Mr Lynch.

“The society remains well placed for continued sustainable growth.”

While the payments to Dairygold’s nine top executives may raise some eyebrows, they were considerably more modest than some of the payments made to senior figures working for other organisations within the agri-food sector.

For example Omua, formerly the Irish Dairy Board, revealed in its annual report that it had paid €9 million to its top nine executives over 2014 and 2015. The report further showed the amount paid out in director’s fees increased by 44% over the past two years.

Glanbia, with revenues of €3.7 billion, paid its top four executives a total of €5.1 million last year. MD Siobhan Talbot received a total remuneration of €1.9 million, with financial controller Mark Garvey receiving a total of €984,000.

The Kerry Group, with revenues of €6 billion, paid its CEO Stan McCarthy €4 million last year. Their four most senior executives, including McCarthy, received payments totalling €9.3 million.

Mr Woulfe defended Dairygold’s decision not to give a breakdown of individual executive salaries, given the disquiet over pay levels at Omua.

He said the co-op had complied with and gone beyond FRS 102 reporting standards, adding that to reveal further details on remuneration would put the society at a disadvantage compared to rivals.

Mr Woulfe said that members had not, as yet, raised the issue of remuneration but added the society would deal with any queries if and when they arose.