Arrabawn Co-op achieved its highest ever turnover in 2018 thanks to a five per cent increase in milk supply and a very strong year on feed sales from its agri-division, its CEO Conor Ryan stated in its annual report.
The year also saw record volumes of milk (326 million litres) processed at its main plant, at Nenagh, County Tipperary.
Arrabawn has almost 1,000 milk suppliers, is headquartered in Nenagh, with a liquid milk processing plant in Kilconnell, County Galway, feeds operations in Limerick and retail stores in Tipperary, Galway, Offaly, Clare and Roscommon.
Turnover, the accounts show, reached €271.2m, a €22m increase on 2017. Gross profit, at €62.7m, was up by €3m on 2017. Operating profit before exceptionals was €2.38, a €2.3m decrease on 2017. However, EBITA (earnings before interest, tax, depreciation and amortization) was back by €1.8m to €8.2m.
This was, its CEO said, due mainly to supporting suppliers’ milk price in the last four months of what was a challenging year due to snows of last March, drought in the summer and resultant fodder/feed shortage.
Milk price supports from the co-op enabled milk price to reach 35.66cents/litre but still back from the 37.45cents/litre in 2017.
Shareholder funds, however, reached €51.4million, a 22 peer cent increase on five years ago. The CEO anticipated that milk supply will grow by a further 10 per cent this year.
The liquid milk business continued to be competitive in 2018 and, thanks to a number of new product launches with key customers and the development of new business, Arrabawn continues to progress in the market place. Agri business also had an extremely strong year due to unprecedented feed demand.
Mr Ryan said that the key focus in the business today was capital investment and, to that end, last year Arrabawn invested not only to ensure it has capacity to process all suppliers’ future milk but also to maximise the return it achieves from the market for suppliers.
In 2018, it finalised whey processing capacity, completed stage 1 of the effluent plant project and added increased milk intake and separation capacity.
The next steps, he continued, are the building and commissioning of a new casein plant, finalisation of the effluent plant and upgrade of the entrance facilities on the site.
“It is our intention that this plant will meet best-in-class expectations for energy efficiency, reduction of carbon emissions and reduction of water usage on site,” the CEO added.
In 2018, Arrabawn also finalised two other key projects – a new logistics centre at its Kilconnell, County Galway, site and the development of a new agri store in Athenry.
Arrabawn Chairman Edward Carr said that in spite of the weather difficulties last year, which he said was “saved by very good weather at the back end,” milk supplies still increased by 5.3 per cent.
“Milk volumes have increased faster and stronger than anyone imagined,” he states in the report, addressing suppliers. “Since 2012, the volume purchased from you, our suppliers, has increased by 53 per cent.
“On top of that, the level of milk solids in the same period has increased by 60 per cent. This growth has come, in part, from increased cow numbers, some new entrants to dairying, which as a cooperative society we welcome and wish all well in their new venture.
“But I think an often-overlooked reason is better stock from improved breeding and better management of this stock through grassland management, in particular.”