Company of the Month July 2019: Dale Farm, the NI dairy co-operative reports jump in profits despite Brexit

Business, Company of the Month | Wed 31 Jul | Author – Business & Finance

Dale Farm, Northern Ireland’s largest farmer-owned dairy co-operative reported a 19% jump in pre-tax profits this July, overcoming ‘big distraction’ of Brexit.

Dale Farm, Northern Ireland’s largest farmer-owned dairy processing cooperative reported a 19% jump in pre-tax profits in July, with the announcement of its latest financial accounts showing £12m (€13.3m). The Group also grew its turnover by 5.6 per cent in the 12 months to March 2019, up to £509 million.

Dale Farm is made up of more than 1,300 dairy farmers across the North, England and Scotland. The Group’s activities span the food chain, from providing farm inputs and services, to collecting and marketing its members’ milk supplies, manufacturing an extensive range of dairy consumer and food ingredient products, and distributing these to both the domestic and over 40 export markets world-wide.

The latest results announcements marked the  fourth consecutive year of solid growth for the co-op. Nick Whelan, group chief executive of Dale Farm revealed that one of the key factors in its success has been managing the volatility in the sector.

Volatility is a big issue in the dairy sector – both in terms of the supply chain and at farm level it’s massive, and in the last three to four years we have worked very hard to support our farmer owners.”

Mr Whelan continued, “We’ve strengthened our balance sheet, and we paid the leading milk price as per the 12-month rolling milk price league in Northern Ireland throughout this past financial year.”

Despite what Mr Whelan described as the “big distraction” of Brexit, the Group  grew its group operating profit by 18 per cent to £14.3 million, while EBITDA also increased by 15 per cent to £20.9 million.

Big wins

Major new contracts have been part of the last year’s successes, with Lidl signing Dale Farm on to supply cheddar cheese to 8,000 stores in 22 countries. This is the largest single deal that the German retail group has signed with a Northern Ireland agri-food company to date. And is precisely the kind of deal that a no-deal Brexit could jeopardise.

Mr Whelan said,

I’ve been very vocal that I believe a no-deal Brexit is a disaster, not just for the agriculture sector in Northern Ireland but for Ireland and the whole of the UK. My challenge over the last year has been to convince some farmers that Brexit is not good for you – half of our members get it, half don’t. If there is no deal it will be very hard to plan. I believe we have massive opportunities for growth, particularly because there is a growing consumer trend to connect with real supply chains – to know exactly where the product is coming from and that is great for us.”

Investing in the future

The co-op has over the past year looked to future proof with £30.2 million investments in its facilities and operations and reported a 15.8 per cent group Return on Capital Employed.

Mr Whelan commented:

Our co-operative ethos is underpinned by a long-term vision to support dairy farming across Northern Ireland and Great Britain, and that will remain the driving force behind our development going forward. This ethos has attracted a significant number of new members and suppliers over the past financial year, with growth of over 7 per cent in our milk pool.”

This May the co-op also secured a major three-year contract to supply leading food-on-the-go retailer Greggs with cheese, for use in its shops across the UK.

Business & Finance, Company of the Month

Business Person the MonthBusiness & Finance, in association with KPMG, recognises excellence in business through the ‘Company of the Month’ award. The Company of the Month award recognises the company which best demonstrates outstanding business leadership, sustainable growth, innovative strategy, strong financial returns and employee development.