Dale Farm reports sliding profits, despite increased turnover

By Rick Pendrous

- Last updated on GMT

Dale Farm claims to be Northern Ireland's biggest dairy business
Dale Farm claims to be Northern Ireland's biggest dairy business

Related tags Milk

Dale Farm, Northern Ireland’s biggest dairy business, has reported a decline in pre-tax profits for 2015 because of challenging market conditions, including falling milk prices worldwide, despite growing turnover by 9.2% to £320M.

For the year to March 31 2015, Dale Farm posted turnover of £320M, compared with £293M the previous year. However, the group’s pre-tax profit fell to £3.55M due to depressed market returns especially from milk powder and cheese exports made worse by adverse exchange rates, said the company’s chairman John Dunlop.

Part of the United Dairy Farmers Group farmer co-operative, Dale Farm exports its powders and cheese to 45 countries. The company has operations in Ballymena, County Antrim, and Cookstown, County Tyrone the main cheese production centre.

In addition, it has manufacturing operations in England and Scotland, where it makes butter, cheese, yogurt, ice cream, dairy-based drinks and cream.

Profit decline

In a review of the year accompanying the financial results, directors attributed the profit decline to a reduction in returns for bulk dairy products.

“The growth in global milk supply in the last quarter of 2013/14 continued during 2014/15, leading to an oversupply situation and a sharp reduction in dairy market returns and farmgate milk prices,”​ it said.

“Matters were made worse by a weakening in demand with reduced Chinese dairy imports and by the Russian import ban on EU food products introduced in August 2014.

Eroded export returns

“Product realisations were further impacted by the strengthening in the value of sterling versus the euro and the US dollar, which eroded returns from exports and has made imported dairy products cheaper.”

However, Dale Farm said that despite the “difficult markets”​ it was able to process a record volume of its members’ milk and continued to generate strong growth in consumer product sales, mainly in cheese. “This more than offset the drop in sales in other sectors caused by the significant fall in dairy market returns,”​ it said.

The acquisitions of Ash Manor Cheese in Britain and the Fivemiletown speciality cheese businesses in Northern Ireland, coupled with investment in additional cheese packing capability, supported growth in consumer cheese sales, which more than doubled in the year, the company reported.

Related topics Dairy Dairy-based ingredients

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1 comment

Manufacturing Bottom-Line Returns in Food Manufacturing

Posted by Marcelle Batson-Warner,

Learning from the past year results to create a business model that is flexible and can respond to these type of results is key to future bottom line returns.
Identify the internal business process constraints Enterprise wide and seek to manage them with the big picture number in mind.
Engage all personnel and gain their involvement in what challenges and changes are necessary for the ongoing survival of the business.
Sell on the basis of departmental collaboration not competition. Working together to achieve 'The Number' that has greater overall value and impact on sustainable growth, rather than competing to achieve an arbitrary 5% improvement in each department. Understand how each department contributes towards The Number'.

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