Connacht Gold Increases Turnover

Turnover at Connacht Gold Co-op reached a record €407m in 2012, an increase of €62m or 18% on 2011.

The increased turnover was due primarily to the acquisition of the milk and retail stores businesses from Donegal Creameries plc which became effective in January 2012. This resulted in a substantial increase in sales in the Connacht Gold agribusiness, dairy ingredients and consumer foods businesses.

The co-op, headquartered in Co Sligo, has also announced proposals to change its name to Aurivo Co-operative Society Limited and to re-brand its retail stores and animal feed businesses.
Operating profit for the dairy, consumer foods and agribusiness co-operative was €1.75m in 2012, compared to €3.29m in 2011. The 2012 profit reflected Connacht Gold’s decision to support the milk price paid to milk suppliers during the peak production months. Furthermore, increased raw material costs for animal feed were not fully passed on in order to assist farmer customers through a difficult year for farming.

The integration of the acquired nine retail stores in Donegal and two stores in Northern Ireland into the Connacht Gold business led to an increase of 29% in agribusiness sales, to €114m. The co-op is now operating 39 stores across the five counties of Connacht, Longford, Westmeath, Donegal, Tyrone and Fermanagh.

The 120m litres milk pool acquired from Donegal Creameries contributed to a significant increase in sales of consumer foods and dairy ingredients. Consumer food sales rose by 52% to almost €70m in 2012 in what was a very difficult marketplace. In spite of continuing poor consumer confidence, Connacht Gold and Donegal milk brands are performing strongly in terms of holding market share. Price increases are required in order to sustain the supply chain as the returns to processors and farmers for liquid milk are inadequate at present. Connacht Gold butter brands enjoyed another successful year and continued to outpace most competitors in growth.

The dairy ingredients business saw an increase of €10m in sales, to €93m in 2012. However, a global increase in milk production led to a fall in market returns of over 9% per litre. Connacht Gold chief executive Aaron Forde said this price volatility can be expected to increase during the coming years as we move to the end of the milk quota system.
“Adding more value to milk in existing and new markets to help minimise fluctuations in commodity prices continues to be a top priority. In this regard, we are making excellent progress in sales of nutritional and beverage solutions, particularly in the fast-growing continent of Africa,” he said.

Sales in Connacht Gold’s four livestock marts held steady at €90m in 2012, the record level achieved in 2011. While throughput of cattle declined, in common with regional trends, average prices increased by 11% or almost €100 per animal. Throughput of sheep increased by 5%, on top of a 17% increase in 2011.

Branding Investment
Chairman Padraig Gibbons announced that Connacht Gold is proposing a new name for the co-operative combined with a re-branding of its retail stores and animal feed business. Following in-depth discussions and market research over the past two years, the board is recommending to shareholders that the name of the co-operative be changed to Aurivo Co-operative Society Limited.

Eligible shareholders will be asked to vote on the recommendation at a special general meeting which will be held in conjunction with the annual general meeting on 10 May.
The co-op’s network of retail stores will be rebranded as Homeland with variants of Homeland Plus and Homeland Agri to reflect the range of products and services available in each outlet. The range of Connacht Gold animal feed products will be marketed under a new brand, Nutrias.

The re-branding will not impact on the high profile Connacht Gold consumer brands, which will be retained as will the Donegal Creameries brand and the recently acquired Organic For Us brand.

Urging shareholders to support the co-op’s name change, Padraig Gibbons said with the growth in both depth and breadth of the business in recent years the time is now right to introduce a range of new brands and update existing brands.

“In taking this decision, we are continuing our tradition of securing our future through innovation. Our investment in new brand architecture will also help us focus on exciting new opportunities to support the communities we serve,” Padraig Gibbons said.

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