Financial Results for 2013
Aurivo Delivers Excellent Financial and Operational Performance Building on Three years of growth.
Successfully re-branded in 2013 to Aurivo from Connacht Gold, the Co-operative had a very strong financial year, successfully delivering robust results, based on a roadmap for sustained growth.
Summary Financial Highlights:
- Turnover (Continuing operations) increased by 11% to €454m (2012: €407m)
- Operating profit increased by 199% to €5.25m (2012: €1.75m)
- Net debt decreased by 33% to €12.9m (2012: €19.4m)
- Shareholder Funds increased 13% to €38.7m (2012: €34.1m)
- Bonus share issue approved at the December SGM, one new share is to be issued for every two shares previously held
Operational Highlights:
- Record milk price paid to dairy farmers
- Successful re-brand to Aurivo from Connacht Gold
- A revitalised strategic focus that positions Aurivo for growth in post milk quota era
Commenting on the financial results, Aaron Forde, Chief Executive of Aurivo said:
“It is gratifying to report on what was a transformational year for the business in terms of both financial and operational performance.
“The year under review saw a significant improvement in profitability with an operating profit of €5.25m.Group turnover increased by 11% in 2013 to a record €454m. This higher than ever sales figure, generated both in Ireland and internationally across 46 countries, was driven by a combination of added milk volumes in strong dairy markets, increased feed volumes across our Agri business, and a strong performance from investments.
“The results were delivered while reducing net debt by 33% to €12.9m, increasing shareholder funds to €38.7m, and all against a backdrop of paying a record price to milk suppliers during 2013.
“2013 was a year of achievement and progress in the deployment of a strategic model that provides a robust basis for continued growth across our business, and enhanced value to our owners in the in the years ahead. 2014 has started well for Aurivo and I can say with some conviction that we look to future years with renewed confidence.”
Padraig Gibbons, Chairman of Aurivo said:
“We are very pleased with what was an excellent year of progress for our Co-Operative and its members. Our members delivered record volumes of milk and received a record price. Aurivo also played a leadership role in responding to the fodder crisis in spring 2013.”
Operational Review
Dairy Ingredients
The Dairy Ingredients business had an excellent year with a record milk volume processed. Sales grew to €125m due to increased demand and stronger milk supply, as well as increased price levels in the market.
Aurivo’s milk suppliers expect to grow supply by 20% after the ending of quotas in April 2015, and the business is well positioned to process the additional volumes. The business has worked extensively with customers to ensure that demand will exist for extra milk supply.
In 2013, Aurivo revitalised its strategy around Focus 2020. A series of road shows for suppliers were undertaken in March 2014 to consult on the plan and supplier involvement insame, and feedback to date has been positive.
A farm profitability and sustainability programme is being rolled out reflecting the need to have profitable sustainable farmers supplying a profitable sustainable business. The Aurivo milk stability fund has been established to assist member owners who commit to the business through the expected volatility of 2014 and 2015.
A new wood-fuelled energy system, which was installed at the Aurivo dairy ingredients plant in Ballaghaderreen, will cut carbon emissions in half through a dramatic reduction in usage of heavy fuel oil. The €5.25m biomass plant, will use 30,000 tonnes of woodchip per annum, sourced from Aurivo subsidiary ECC Teo and will result in the annual displacement of almost five million litres of heavy fuel oil. The plant is the first of its kind in the west and Aurivo will become the first large scale milk processor in the country to switch to biomass as a source of energy. Ultimately, it will be developed into a combined heat and power (CHP) plant and, by 2016, Aurivo plans to be exporting energy into the national electricity grid.
Medium to longer term, confidence in dairy and the opportunities it brings to the business are as strong as ever.
Consumer Foods
Aurivo’s Consumer Foods business is now a focused dairy operation with a strong market position in liquid milk and butter, where turnover has increased from €40m in 2009 to €75m in 2013.
Aurivo’s butter brands performed exceptionally well with butter sales reaching new records in sales terms, growing by 15% in 2013. This was due in part to a strong investment in promoting the brands through a high profile national advertising campaign. Export opportunities in this area are being actively pursued and the business will continue to invest in key brands domestically, such as Connacht Gold, to underpin its growth.
Agri Business
Aurivo’s Agri business performed strongly with sales of €125m. During the year, transaction numbers rose modestly in Aurivo’s 39 stores and average transaction value grew, both being key measures of customer confidence and retention.
The Agri business is positioned to deliver an excellent service to Aurivo’s growing customer base.
As Aurivo’s business footprint continues to expand geographically, and as a broadening of the businesses’ product range has been initiated to meet wider customer needs, a new name, “Homeland” is being successfully rolled out across all 39 stores.
Marts
Aurivo’s Marts business had a solid year, recording turnover of €84m. Throughput was marginally down against a stronger decline regionally. Over the past number of years, a significant investment programme has been undertaken in the business, and it is intended thatinvestment will be maintained in 2014.
Aurivo’s marts will continue to provide an excellent service with the confidence of its customer base as a fully compliant regulated entity.
Future Prospects
The Board and Management of Aurivo believe the strategic and financial position of the Co-operative provides a sound basis for growth. 2014 and beyond is being viewed as a serious opportunity to grow the business of Aurivo to the enhanced benefit of its shareholders. The current year has got off to an encouraging start, and there is confidence that Aurivo’s evolving business model will prove resilient and provide significant growth opportunities across all core business areas.
