Lakeland Dairies has blamed a “challenging year” for a €300,000 drop in turnover to €1.6 billion in 2023 compared to €1.9 billion in 2022.

The co-op today (Wednesday, April 17) also reported a slump in operating profits from €32.5 million in 2022 to €14.8 million – before exceptionals – last year.

Lakeland Dairies’ latest annual report details that during the year, there were also once-off exceptional expenses as a result of redundancies and facility restructuring costs totaling €14.5 million. It will close its site in Banbridge, Co. Down in June 2024.

According to the co-op, it processed two billion litres of milk collected from 3,200 farmers in 17 counties across the island of Ireland last year.

It paid out nearly €800 million in milk payments to its farmers last year, which according to the co-op helped to “drive a balanced regional economy”.

But Lakeland Dairies said today that its latest set of financial results had been heavily impacted by the “global dairy market collapse significantly influencing revenue and profit” last year.

Some 15% of its trade goes through the Suez Canal and the Red Sea where there have been repeated attacks on commercial vessels.

The co-op’s group chief executive officer (CEO) Colin Kelly said 2023 had been a “difficult year for the dairy industry”.

“Nobody, from farmer to processor, was disappointed to see the back of a year that challenged us at all levels.

“Global markets collapsed, costs at farm and processor level remained stubbornly high, interest rates reached levels not seen for decades, and inflation impacted every one of us both inside our homes as well as inside the business,” Kelly added.

He said despite these challenges the co-op’s balance sheet had remained “robust” and revenues, Earnings before Interest, Tax, Depreciation and Amortisation (EBITDA) and operating profit before exceptionals all showed “a strong and resilient co-op”.

Lakeland Dairies reported EBITDA at €43.4 million for 2023 compared to €60.2 million in 2022.

Lakeland Dairies

In its latest annual report the co-op outlined that its food ingredients had been “most exposed” to the collapse in global diary markets with revenues dropping to €955 million in 2023 compared to €1.2 billion a year earlier.

Meanwhile, revenues at its foodservice/consumer foods division also fell back to €531 million last year compared to €584 million for 2022.

In relation to its agribusiness division, the co-op reported an increase in feed sales while market prices reduced in 2023 and said it had a turnover of €112 million last year.

It also detailed that a total of 235,000t of products was sold to co-op’s customers last year.

Future outlook

According to Kelly Lakeland Dairies is now in a “period of transformational change” and said that the co-op’s “sole focus” is paying as much as it possibly can for every litre of milk over the course of the year.

“Thankfully, there have been improvements in the global dairy markets with the balance of supply and demand becoming more aligned. This has allowed us to increase the price of milk as we start 2024.

“While there are continuing challenges, we are more optimistic regarding milk price for the current year,” he added.