Full Year Financial Results for year ended 31 December 2016

Aurivo Co-Operative Society Limited

Full Year Financial Results for year ended 31 December 2016

Strong revenue and business development performance in 2016

Wednesday 5th April, 2017:  Aurivo, the globally focused agri business headquartered in the north west of Ireland, today announced financial results for the financial year ended 31 December, 2016.  While 2016 brought with it a number of significant challenges, namely continued global milk price difficulties and Brexit, Aurivo is pleased to report that the business, with a focus on long term sustainability, performed strongly in terms of revenue generation, profitability and business development.

Financial summary:

  • Group annual revenues at €391m – (2015: €420m)
  • Group operating profit (before exceptionals) at €3.56m – (2015: 2.84m)
  • Consumer Foods revenues at €88.4m – (2015: €80.4m)
  • Dairy Ingredients revenues at €102.1m – (2015: €99.5m)
  • Agri Business revenues at €97.2m – (2015: €101.4m)
  • Marts revenues at €78.5m – (2015: €86.5m)
  • Other activities at €24.8m – (2015: €52.1m)

Operational highlights:

  • Focus on efficiencies continue to strengthen business for success and growth
  • Continued support of suppliers through introduction of two Fixed Milk Price Schemes in 2016
  • Strong performance in Consumer Foods business with 21% increase in liquid milk volume driven by new retail partnerships, most notably with Tesco, and through year on year growth for Connacht Gold brand
  • Sports nutrition business through the For Goodness Shakes business grew in 2016 with volumes up 31% and turnover up by 22%
  • Creditable performance from Marts and Agri businesses
  • Disposal of Aurivo shareholding in ECC Timber and Progressive genetics enhances focus on core business and puts capital to optimum use
  • Net debt at €16.6m (2015: €8.6m)

Commenting on Aurivo’s results, Chief Executive, Aaron Forde said:

“In what was a challenging and volatile year, we are pleased to announce a robust performance by Aurivo across all facets of its business in 2016.  The year was a difficult one for the dairy farmer and farming in general as the collapse in milk price continued well into the year before stabilising in July.  With this and general all round economic uncertainty as a backdrop, our focus was twofold – to support our suppliers, while at the same time focusing on delivering efficiencies across the business to safeguard its continued financial and operational success.

“The current year is a better and more sustainable one for the agri sector.  With our excellent and innovative team of people, operating efficiently through a philosophy of sustainability, we will continue to enhance our business development and execute our growth strategy.”

Pat Duffy, Chairman of Aurivo said:

“Aurivo had a good performance in 2016 and is positioned well for the current fiscal.  Regardless of market, political and economic challenges, centring on our core business areas, aligned with supporting suppliers and being customer-focused, we will continue to implement the efficiencies and plans to effectively deliver for all of Aurivo’s shareholders.”

ENDS

Issued on behalf of Aurivo by Drury Porter Novelli, contact Paddy Hughes / Luke McDonnell at: 01 260 5000.

 

Aurivo contact: Karen McGarty, 087 1484763 | karen.mcgarty@aurivo.ie

About Aurivo:

Aurivo is one of Ireland’s leading co-operatives, with businesses in Consumer Foods, Dairy Ingredients, Retail Stores, Animal Feeds, and Livestock Trading.  Employing approximately 630 people, Aurivo is a globally focused agri-business with regional, national and international brands, and dairy ingredients exports to almost 50 countries in markets as diverse as Afghanistan, Africa, Central America, Costa Rica, Germany, Iraq and the United Kingdom.

Aurivo – FY 2016 Performance overview and outlook

Operational review

Aurivo reported a total Group operating profit of €3.56m in 2016 (before exceptional items), an increase of 25% on the outturn for 2015.  This was delivered on a total turnover of €391m, a decrease of some 7% on turnover for 2015, primarily due to the disposal in 2016 of our shareholding in ECC and a more challenging year for our Marts and Agri businesses.

Our Consumer Foods and Dairy Ingredients businesses performed strongly, and while factors outside of the Co-operative’s control impacted our Marts and Agri businesses, both reported a creditable performance for the year.

Supporting our suppliers through what was a very difficult and challenging period was of paramount importance to Aurivo in 2016, and to this end, we introduced two Fixed Milk Price Schemes in 2016, both of which were received very positively.  As we continue to operate in volatile conditions, Aurivo will continue to look at ways and means to support our valued milk suppliers.

The year under review was one of change for the Co-Operative.  To ensure that our business is fit for purpose across all facets of our operations, and that all our facilities are well invested and are operating on a sustainable basis, we moved our butter packing to Ornua’s new production facility in Mitchelstown, Co. Cork.  The decision presents Aurivo with a range of efficiencies in our butter operation and growth opportunities.  2016 also saw Aurivo taking the decision to dispose of its shareholding in two investments, namely; ECC and Progressive Genetics.  The disposals allow us to focus on our core business areas and to put Aurivo’s capital to optimum use.

Consumer Foods:

Aurivo’s Consumer Foods business performed exceptionally well in 2016 with overall sales across milk, butter and sports nutrition increasing by €8m to €88.4m (2015: €80.4m).

It was promising to see milk volumes increase by 21% in 2016.  This was mainly driven by Aurivo being successful in obtaining a contract with Tesco Ireland. Operationally we are very well placed to continue leading growth in the market.

The Connacht Gold butter brand grew by 3% over the period, and through our ongoing commitment to brand investment, Connacht Gold’s butter brand was highly visible through a national TV and print advertising campaign.  The brand continued to raise its profile nationally through the awarding of two Great Taste Awards.

The For Goodness Shakes brand had a stellar year in 2016, with volumes increasing by 31% in the year, turnover by 22% and market share in the United Kingdom growing by four percentage points. The brand presents the business with a number of growth opportunities in a sports nutrition category that continues to grow from strength to strength. The My Goodness Limited business recently relocated its office in South West London to a new location in the central London area.

Dairy Ingredients:

Following on from a very difficult year in 2015 (in terms of global milk price), milk price only began to stabilise and move in an upward trajectory in July of 2016.  Against this backdrop, it was satisfying to see that Dairy Ingredients increased its turnover by €2.6m to €102.1m (2015: €99.5m).

It was a year of investment in our Dairy Ingredients operations; A €1.6m investment has been directed into a milk powder packing  line , while 2016 also saw the commencement of a €5m investment programme (over the next four years) in our Dairy Ingredients facility in Ballaghaderreen, Co. Roscommon. These and other investments enable exciting new product development and further positions the Co-Op to meet global demand and anticipated market growth.

Agribusiness:

Our Agribusiness reported a decline in turnover to €97.2m (2015: €101.4m).  This was due to several factors, namely reduced commodity pricing on fertiliser, reduced disposable income at farm level and poor weather conditions. Notwithstanding this, the business performed well in the period.

Feed sales grew in the period, for the third year in a row, which was encouraging and reflects the success of the Nutrias brand as a brand of quality and value. Under our successful Nutrias brand, the Nutri Start Calf Milk Replacer was launched in early 2016 and has gained a 70% market share in Homeland in its first year.

Our Farm Profitability Programme had another successful year and it is pleasing to note that our Farm Commercial Specialist Team had a busy year providing a range of commercial advice and services to our customers.

Throughout Aurivo’s retail business, there was a continued focus on delivering outstanding customer service.  This was further demonstrated through 12 of our Homeland stores being awarded Customer Service Excellence Ireland’s ‘Excellence Award’, and our Westport Homeland Plus store being recognised as one of the top 15 retail stores in Ireland.

Marts:

Notwithstanding a decline in turnover to €78.5m (2015: €86.5m) due to poor cattle prices and weather conditions, our Livestock Marts business performed well in 2016 with a worthy performance in what was a difficult year.

Aurivo’s investment in its Mart operations continued in 2016, and the improved handling facilities in Ballinrobe and Ballymote assisted in a 21% increase in sheep sales.

Outlook

While we continue to operate in volatile conditions, the outlook is that 2017 will be a more positive year for farming in Ireland.

Aurivo has a robust, efficient, innovative, globally focused and sustainable business model.  Regardless of market, political and economic challenges, centring on its core business areas, aligned with supporting suppliers and being customer-focused, the Aurivo Board and management team will implement the efficiencies, the processes, and the plans to effectively deliver for all its shareholders in the years ahead.


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