Operating profit at Lakeland Dairies reached £28.7 million in 2022, an increase of £5.1 million (15%).
The cross-border dairy processor has today (Wednesday, April 12), released its financial results for 2022, which show an uplift in revenues of 45% to £1.7 billion.
The farmer-owned co-op collects over 2 billion litres of milk from 3,200 farm families across 16 counties in Northern Ireland and the Republic of Ireland.
The cooperative has a portfolio of 240 different dairy products made on eight processing sites which it exports to over 100 countries worldwide.
Group revenues and operating profit
The report states that Lakeland Dairies’ revenues increased by 45% to £1.7 billion across its four operating divisions: Food Ingredients; Foodservice; Consumer Foods; and agri-business, Lakeland Agri.
This yielded an operating profit of £28.7 million, up by £3.79 million (+15%) and EBITDA (Earnings before Interest, Tax, Depreciation and Amortisation) of £53.2 million, which increased by £4.2 million.
During the year, Lakeland Dairies said that it distributed £973 million in payments to milk-supplying farms across 16 counties, spanning both the north and south of the island.
Lakeland Dairies closed the year with shareholders’ funds of £241 million.
Food Ingredients
Food Ingredient revenues increased by 43% to £1 billion. According to Lakeland, this was based on a “very strong performance, where Lakeland processed extra milk volumes while meeting consistently high demand across its dairy food ingredients portfolio”.
The increase is also attributed to ongoing investment in plant optimisation and efficiencies.
The cooperative exported record volumes of milk powders and butter during the year, benefiting also from increased market prices.
Foodservice and Consumer Foods
Foodservice revenues increased by 39% to £275 million, up by £87.4 million on the prior year figure of £187.6 million.
According to Lakeland, this was achieved in spite of a difficult period for the global foodservice sector with continuing pandemic lockdowns and the war in Ukraine presenting challenges around cost inflation, supply chain disruption and fears of recession.
Despite this, with a resumption of traditional service models and consumer behaviour, confidence returned to the sector enabling a more sustainable platform for business growth and development, the co-op has said.
Lakeland Dairies Consumer Foods division experienced a 60% uplift in revenue to £241 million, up by £98.4 million on the prior year figure of £142.6 million.
This includes positive organic growth across the company’s consumer portfolio of products including new listings and price adjustments which it said were necessary to address key inflationary pressures.
Lakeland Agri
Lakeland Agri increased revenues by 45% to £111 million based on a combination of strong operational performance and solid demand, according to the yearly report.
According to the company, 2022 was challenging given overall market volatility, including supply chain disruption due to the war in Ukraine and unprecedented increases in the cost of energy.
While raw material costs increased significantly and this influenced animal feed prices, Lakeland Agri said that it sought to minimise increases for all customers.
Lakeland Dairies group chief executive, Colin Kelly said: “These positive results are based on a strong, progressive and resilient performance, underpinned by the overall quality of our milk producers, people and operations, notwithstanding a deeply competitive and uncertain global market environment.
“The impact of geopolitical problems and continuing economic uncertainty were seen globally with serious inflationary effects across every cost base, at farm and organisational level.
“Nevertheless, the dairy markets yielded strong returns and Lakeland Dairies was able to pay a very competitive milk price to our milk producers,” he added.
“Market conditions for 2023 are proving much tougher for our suppliers and will remain contingent on global factors including the overall balance of supply and demand, across our extensive product portfolio, while economic uncertainty remains a serious concern, with the potential for continued market volatility.”
Lakeland Dairies chairman, Niall Matthews added: “2022 was an exceptional year with strong market returns, increased revenues and high milk prices.
“This was welcomed by milk producers in the context of very high input costs, rampant inflation and an overall cost-of-living crisis in economies across the world.
“The £1 billion that we distributed in milk price payments to our farm families has a continuously positive multiplier effect where our dairy farmers create economic, social, and environmental benefits as essential participants in their rural communities.
“We have the capacity to invest where required in future initiatives for the overall development of the business,” he stated.
