Ornua reports “record” €2.1bn revenues, boosted by Kerrygold

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23 Mar 2018 --- Irish dairy exporter Ornua has published record revenues of €2.1 billion for 2017, reporting a bumper year of double-digit growth for Kerrygold in Germany and US. This marks the first year of Ornua’s new five-year growth plan, Ornua 2021, which positions the business as a leading global dairy organization, funded by 33 dairy co-ops, which delivers results for its customers, consumers and stakeholders.

According to the group’s financial results, operating profit was €35 million (US$43 million) which is almost a one-third increase on the 2016 performance. Profit before tax increased 84 percent to €29.1 million (US$35.8 million).

Operating and financial results for the year ended December 30, 2017, also include the strategic acquisition and integration of UK cheese ingredients business; F.J. Need (Foods) Ltd and the expansion of Ornua Deutschland’s production facility, with a total facility investment €60 million (US$74 million).

It was also a record year for Ornua Ingredients North America and the year marked the opening of an innovation center in CoreFX, a US ingredients business.

Ornua’s innovative white cheese ingredients products expanded to UAE, Kuwait and Oman markets and there were 34 new product innovations launched, including a Kerrygold shredded cheese range in Germany.

Ornua also reports new five-year syndicated bank facilities of €610 million (US$752 million) secured to support dairy industry growth and the group also purchased 338,000 tons of product from members.

Group EBITDA was up 25 percent to €53.8 million (US$66.3 million), and operating profit increased by 32 percent to €35.2 million (US$43.4 million). 

The group closed the year with net cash of €0.3 million.  In November 2017 it refinanced its bank facilities for another five years, increasing them to €610 million (US$752 million), leaving it well placed to support dairy industry expansion and to drive further growth across the group.

Click to EnlargeKevin Lane, CEO of Ornua, said that 2017 was a year of significant growth for Ornua with an excellent financial performance as the group successfully delivered year one of our its five-year growth plan. 

“Product innovation continued at pace and allowed us to unlock new routes to market to ultimately drive value for our members, Ireland’s dairy processors and Irish farmers,” he said. 

“A major emphasis on building scale and capability within our core business last year, coupled with the integration of recent acquisitions, leaves us well placed to drive further growth across our group.”

“Despite volatile market conditions and Brexit uncertainties, we remain on track to deliver our 2021 vision of a €3 billion revenue business with a sustainable EBITA margin of 3 percent.

Ornua adds how the 2017 results reflect the strong product price returns paid by Ornua to its members, leading to a €15 million (US$18.5 million) members’ bonus, up from €9.5 million (US$11.7 million) in 2016 (also a €5 million DPI related bonus was paid in 2016). 

Ornua continues to work with members to help them manage the challenges posed by market volatility and increased the volume of purchases under fixed-term contracts.

Outlook
In preparation for the post-Brexit trading environment, Ornua is reviewing a range of strategic measures to help minimize any potential negative impact. It says that it’s five UK businesses are maintaining a rigorous focus on production efficiency, product quality, customer service and new product development so that it remains a supplier of choice in the UK market.

Ornua adds how it will continue to capitalize on its established market leading positions in major export markets such as the US and Germany and to accelerate its development in key emerging markets like Africa, China, Europe and the Middle East. 

The group will continue to invest in new routes to market, in-market presence and new product development to deliver value to its members and farmers in Ireland.