Lakeland reports annual revenues of £683m and £14.9m operating profit

Michael Hanley, Chief Executive, Lakeland Dairies
Michael Hanley, Chief Executive, Lakeland Dairies

Lakeland Dairies has reported strong financial results for the year ended 31st December 2017, with group annual revenues increasing by 33% to £683m, up from £514.6m in 2016. This yielded an operating profit of £14.9m, compared to £6.2m in 2016.

Profit before tax was £14.1m in 2017 and the co-operative closed the year with a 19.5% increase in shareholders’ funds at £104.3m, up from £87.3m the prior year.

Earnings before interest, depreciation, tax and amortisation (EBIDTA) were £28.9m, increasing significantly from £16.2m in 2016.

Milk volumes processed in 2017 increased to over 1.2 bn litres, reflecting ongoing expansion among Lakeland Dairies’ 2,500 milk producers and a full year of milk supply from Fane Valley dairy farmers (following from the acquisition of Fane Valley Dairies in May 2016).

Commenting on the results, Michael Hanley, Group Chief Executive (pictured), said: “In 2017, Lakeland Dairies achieved performance improvements across all divisions of the business. Trading conditions were helped by a reduction in global milk supplies and product availability. We were able to take advantage of these conditions through our efficient processing capabilities and worldwide market presence, achieving satisfactory results.

“Our global growth has been driven by our strategy, investments, product range and the high quality output of our milk producers. While there are challenges in the global market, it is our intention to continue to drive competitiveness and overall growth, targeting opportunities across infant formulas, dairy proteins and health-related nutritional products.

“With the investments we have made, we are now in a position to process more milk than ever before. We are focused on business performance improvements through continuous innovation, organisational development and further enhancements in operational efficiency.”

Alo Duffy, Chairman of Lakeland Dairies, added: “Lakeland Dairies is growing and well positioned for future developments that will benefit our milk producers. Supplier research undertaken in 2017 indicates that our milk producers will continue to expand output over the next five years. We also welcomed 30 new entrants to milk production during 2017 (totalling 200 new entrants since 2013). This continued growth has been driven by strategically guided programmes and initiatives that have yielded efficiencies across our operations, increased volumes and enhanced the overall quality of our offering.

“We are most grateful to our milk producers throughout Northern Ireland for their support and the very high quality of milk that they send to us for processing.

“Our strategic priority will always be to achieve sustainable profitable dairy farming and we believe that we are well positioned to remain resilient and to achieve future success in the long-term.”

The co-operative has also retained and fully maintained its milk powder and butter facility at Banbridge, Co. Down, which provides continuing flexibility and opportunities in relation to any potential Brexit outcomes.

Lakeland Dairies has a technologically advanced Global Logistics Centre and major dairy processing site at Newtownards, Co. Down.

The efficiencies being achieved through all operations enabled the removal of milk collection charges (cartage), with an overall reduction of costs of £4.4 million to milk suppliers annually.