Global dairy market collapse impacts performance at Lakeland Dairies

£694m paid to Irish farm families as cooperative’s group revenues drop to £1.4bn

Lakeland Dairies
Presenting Lakeland Dairies 2023 financial results are the cooperative's Niall Matthews (centre) with vice-chairperson Keith Agnew (left) and chief executive Colin Kelly

The global dairy market collapse has significantly influenced outcomes for the year at cross-border dairy processing co-operative Lakeland Dairies.

Yet despite the market uncertainty, nearly £694 million was issued in milk payments to farmers throughout 2023, in which Lakeland processed 2 billion litres of high-quality milk collected from 3,200 farm families in 17 counties across the island.

Group revenues for 2023 were £1.4 billion compared to £1.7 billion in 2022, resulting in an operating profit of £12.8m before exceptionals, in line with significant market volatility experienced throughout 2023.

During the year, there were once-off exceptional expenses arising from strategic decisions to restructure the co-operative’s processing footprint. This includes workforce redundancy and facility restructuring costs of £12.6m.

Part of that restructuring included Lakeland closing its butter churning and packing and powder storage site in Banbridge, along with two other premises in the Republic, and moving liquid milk production from Monaghan to Killeshandra in Co Cavan.

Lakeland was its earnings before interest, tax, depreciation & amortisation “was robust in the circumstances” at £37.6m.

It retained a very strong balance sheet with shareholders’ funds of £220m and the capability to generate strong earnings even in a year of very significant market uncertainty and turbulence.

Lakeland’s food ingredients division, which was most exposed to the collapse in global dairy markets, had revenues of £828.4m in 2023 while sales in its foodservice and consumer foods business came in at £460.6m. The Lakeland agribusiness division increased feed sales while market prices reduced in 2023 (revenues here were £97m).

Lakeland Dairies is shutting its operation in Banbridge next June and selling off the Rathfriland Road site
Lakeland Dairies revealed last November that it is shutting its operation in Banbridge in June and selling off the Rathfriland Road site

The cooperative’s chief executive Colin Kelly said: “2023 was a difficult year for the dairy industry. Nobody, from farmer to processor, was disappointed to see the back of a year that challenged us at all levels. Global markets collapsed, costs at farm and processor level remained stubbornly high, interest rates reached levels not seen for decades, and inflation impacted every one of us both inside our homes as well as inside the business.

“But despite all these challenges, the financial strength of the co-op and our robust balance sheet ensured that we were well-placed to navigate this volatility. Our revenues, EBITDA and operating profit before exceptionals all show a strong and resilient co-op.

“Notwithstanding these global trade issues, 2023 was truly a defining year for the co-op in our 130-year history, as we commenced our new strategy entitled Foundations for a Better Future, which is focused on our business being fit for growth and embracing value-add opportunities that will benefit the co-op, our farmers and our people sustainably for the future.”