United Dairy Farmers, parent company of Dale Farm, has reported on its annual results for year ending March 2016.
The United Group profits saw a good recovery, after a dip in 2015, with Group operating profit increasing from £3.5 million to £9 million and profit before tax increasing from £1.28 to £6.82 million. The improvement was driven by Dale Farm which continued to deliver strong growth in consumer products despite the general fall in market returns and weakness in international dairy markets.
Overall Group turnover fell by 12.2% to £370 million reflecting lower market prices for milk and dairy products with Dale Farm turnover decreasing by 5.1% to £304 million. Turnover in Dale Farm consumer product sales increased by 2.8% to £220 million helping to offset a 17.5% fall in ingredient sales turnover to £65.5 million and a 31.8% fall in commodity sales to £26.7 million.
The improved profitability and a reduction in working capital of £10.4 million, largely due to the fall in dairy market returns, helped generate a strong cash flow with net debt decreasing from £82.5 million to £66.6 million.
Commenting on the results, David Dobbin United’s Group Chief Executive said: “The volatility and weakness in dairy commodity markets has validated our strategy to grow in added value consumer and nutritional products and thus deliver a more competitive price to our farmers with Dale Farm topping the rolling 12 month NI milk price league for the reporting year. Dale Farm has delivered another year of strong volume growth, especially in consumer cheese and butter products and whey protein products, however overall turnover was down due to depressed market returns.
“The outlook for the current year remains challenging with Brexit adding to market volatility and uncertainty. On a positive note, the growth in European milk production is slowing, especially in the UK, and this together with a fall in the value of sterling is leading to some recovery, mainly in cheese and butter returns. However it is too early to call to call a market recovery, especially in milk powders. There are still significant public and privately held powder stocks overhanging the market and while the growth in milk production is slowing down, global milk output is still running at an historical high.
“The United Group is in sound financial shape with increasing profit and a falling level of debt. Dale Farm is well placed with the majority of its output now in consumer products being sold into the UK market and a strong pipeline of new innovative products, such as its protein milk and WPC 80 nutritional products, driving further growth in sales and added value.”