Last year, Lakeland Dairies faced a loss of €8.1 million, a significant drop from a gain of €24.5 million in the preceding year. The setback occurred due to a weaker dairy market and a one-time expenditure of €14.5 million pertaining to its business reshaping.
In the previous year, the international dairy federation carried out a downsizing process by shutting down three facilities and laying off more than 50 employees. This was done to synchronise its processing capacity with future market requirements. This restructuring led to extraordinary costs of €14.5 million due to asset loss and redundancy payments.
Colin Kelly, the Chief Executive, has pointed out a net shortfall of €8 million for the year. He further emphasised that these extraordinary items are unique and will not be a recurring situation.
The financial statement for 2023 from this Cavan-based group portrays a decline in revenue, from €1.9 billion to €1.6 billion. This is attributable to a drastic drop in dairy market rates due to an oversupply situation, diminished customer requirements in staple markets, and lowered demand from China as it aims for enhanced dairy independence.
Lakeland’s operating profit dipped down from €32.5 million to €14.8 million due to weaker returns, but the company maintains that the downturn was congruent with the substantial market fluctuations experienced in 2023.
The group declared it processed 2 billion litres of milk procured from 3,200 farms across 17 counties the previous year and exported 240 products to over 100 countries.
However, Mr Kelly forewarned that the phase of outstanding post-milk quota growth has ended and the industry now confronts a “new environmental reality” paced by more rigid nitrate restrictions among other factors. This has curbed milk production, given the 220kg nitrates derogation for Irish farmers, which could potentially decrease again when the EU revises the rates. The derogation that permitted some farmers to function with elevated nitrate levels is potentially under threat due to deteriorating water quality associated with a sudden upswing in dairy production. As such, Ireland along with two other EU nations, bear this derogation.
Mr. Kelly stated that Lakeland anticipates its milk output would remain virtually static over the forthcoming five years due to the advent of new restrictions. He emphasised that the priority should shift towards augmenting the value-adds tied to dairy goods.
The corporation has finished taking over the Belgium-based butterfat enterprise, De Brandt Dairy, thereby enlarging its supply circuit and its market reach. Mr. Kelly disclosed that Lakeland has approved an investment reserve of €100 million for prospective acquisitions.