Strong year of growth for Dale Farm

United Dairy Farmers, parent company of Dale Farm, increased its profits to the year ending March 2016.

Operating profit increased from £3.5 million (€4.1m) to £9 million (€10.6m) and profit before tax from £1.28m (€1.51m) to £6.82 million (€8.08m). 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.

Turnover in Dale Farm consumer product sales increased by 2.8% to £220 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.

David Dobbin United’s Group chief executive, says, “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 Northern Ireland 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.”