Annual Report 2009 - Dairygold

Dairygold Co-Operative Society Limited Annual Report and Accounts 2009
Chief Executive’s
Review
The market environment for Dairygold and its various operations
remained extremely challenging throughout 2009.
“all divisions
of the business
made a positive
contribution to
the bottom line”
The slump in returns from world dairy
markets combined with the ongoing
turmoil in financial markets created
what has probably been the most difficult
operating climate in our history.
Despite these difficulties, Dairygold
delivered retained profit for the 2009
financial year of €8.1 million on a
turnover of €555 million. I’m pleased
to be in a position to report that all
divisions of the business made a positive
contribution towards the bottom line.
The 2009 profit was delivered against
a backdrop of borrowings increasing
by €9.7 million on 2008 to €77.9
million. This increase in borrowings
was necessary to fund the increase in
farmer debtors, capital investment in the
business and the acquisition of seven
4HOME stores and a small industrial
cheese business in France.
Dairygold has significant borrowings and
requires a defined level of profitability
to secure the support of our bankers
for the ongoing financing of the
business. The current phase of our Dairy
capital investment programme is now
largely complete and our borrowing
requirements should be reduced over the
coming years from the performance of
our existing activities.
As a Co-Op we were disappointed with
the returns available for our Members’
milk. While cognisant of the low returns
from international markets and our
requirement to fulfil our financial
obligations, Dairygold nonetheless lifted
the milk price paid to Members at the
first available opportunity.
True to our Co-Operative ethos, Dairygold
raised its milk price in response to early
signs of some recovery in world prices
which began to emerge in the latter part
of the year.
On the efficiency side, payroll savings
of some €3 million were achieved over
the course of the year through the
implementation of a number of initiatives
including, among others, a pay freeze
across the Society, a 40% cut in variable
pay and a base salary reduction for
senior management, strict control of
overtime, a reduction in temporary and
contract work and some 35 redundancies.
Further operational efficiencies were
achieved including a re-alignment of work
practices.
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