Lakeland Dairies reports revenue and profit growth

Farmer owned Lakeland Dairies collects 1.9bn litres of milk from 3,200 farm families across 16 counties in Northern Ireland and the Republic of Ireland. The co-operative has a portfolio of 240 different dairy products made on eight processing sites which it exports to over 80 countries worldwide.

In Northern Ireland, Lakeland Dairies operates highly modern dairy processing facilities at Artigarvan, Ballyrashane, Banbridge and Newtownards.

Lakeland Dairies achieved record revenues in 2020 which increased by over 5.7% to £985m across its four operating divisions of Food Ingredients, Foodservice, Consumer Foods and Agribusiness.

This yielded a 27% increase in operating profit at £23.48m and EBITDA (Earnings before Interest, Tax, Depreciation and Amortisation) of £45.44m, which increased by over 17% on the prior year.

Lakeland Dairies closed the year with a further strengthened balance sheet including Shareholders’ Funds of £187m.

Food Ingredient revenues increased by 18% to £621.7m based on consistently strong demand for the co-operative’s functional and enriched powders, proteins and dairy fats throughout the year. Lakeland Dairies produced over 250,000 tonnes of powders and butter in 2020.

Foodservice revenues of £163.5m came in higher than expected in a very challenging year, albeit retracting by 24% on the prior year, given the exceptionally difficult market conditions experienced by this sector as a result of the pandemic.

Consumer Foods had a buoyant year in line with an uplift in overall grocery market growth levels, with revenues of £131.3m

Lakeland Agri increased revenues by 4.7% to £68.2m for the year, based on a strong performance with feed sales volumes of 220,000 tonnes and fertiliser sales steady at 27,000 tonnes, similar to the prior year.

Lakeland Dairies Group Chief Executive Michael Hanley said the results are very positive given the global events of 2020.

“Notwithstanding the major operational, logistical and commercial constraints of the pandemic, both domestically and globally, we continued to make strong progress across all of our operations and this has yielded excellent results. We paid a competitive milk price throughout the year in line with market conditions.

“Aligned to our business achievements, we further consolidated the benefits of the Lakeland LacPatrick merger of 2019, achieving ongoing organisational, operational and administrative efficiencies and contributing to overall economies of scale, value creation and long term sustainability for our 3,200 milk producers, north and south.

“This robust performance enabled us to pay a competitive milk price in spite of serious market uncertainties that existed throughout the year. Market returns depend on the dynamic of milk supply and demand that exists between countries, geographies and continents, also including seasonality and ‘force majeure’ issues such as the pandemic.

“We expect relatively stable dairy market conditions through 2021 albeit there are still significant challenges in our operating environment as we await the anticipated beneficial effect of worldwide vaccine initiatives.

“All of our initiatives are focused on serving the long term sustainability of our farm families while working in partnership with our customers throughout the world. We have excellent facilities using advanced systems and technologies. We continue to invest in our innovation capacity, new products and new ways to market. We have long term, loyal and deeply valued customers and we have the scale we require to continue to compete successfully on a global basis.”

Lakeland Dairies’ Chairman, Niall Matthews said: “The global nature of world trade continues to require scale and efficiency in meeting market demands. On one hand, we are always influenced by global socioeconomic considerations; on the other, we have achieved the economies of scale to enable us to be flexible and to successfully steer our course through often choppy waters.

“The 1.9bn litres of milk produced by our dairy farmers is manufactured into the highest quality, natural and wholesome dairy products, creating long term value for our overall co-operative enterprise. Our annual report demonstrates resilience and adaptability which is reassuring for our 3,200 farm families, as primary producers, in terms of the sustainability that we require to underpin the current and future success of our dairy farming.”