| Key Performance Indicator
|| Outturn ‘€’
| YoY Change
| Profit before Tax
| Operating surplus (EBITA)1
| Payout to Members
| Net Assets
|| +€5.3m / +1.3%
| CAPEX and acquisitions investment (Net)
|Note  From continuing operations.
Record sales of Kerrygold, total branded sales up 17% (value) and 3% (volume)
Record returns for Irish dairy farmers despite tough economic environment
Significant progress made in advancing the IDB’s development plans:-
New €350m Loan agreement secured ahead of 2015 industry expansion
Reinvigorated iconic Kerrygold brand: successful international roll-out
Investment in key development markets: North Africa, China and the Middle East
Continued focus on cost efficiencies
Commenting, Kevin Lane, Chief Executive, Irish Dairy Board [‘IDB’] said; “2011 was a year of
continuing progress in realigning our business to the evolving needs of an expanding industry
gearing up for the abolition of milk quotas in 2015. The international roll out of our new look
Kerrygold brand has been tremendously well received culminating in record sales and we continued
to enhance our presence in key export regions, most notably in Africa.
"The group’s underlying performance reflected a strong outturn in our German and US consumer
markets and across dairy and cheese ingredients as well as a more challenging environment in some
international consumer markets and in our US Distribution business. We continue to mitigate these
downside pressures through tight cost management and efficiency improvements coupled with
enhancing our management capability and talent development. These measures together with our
successful negotiation of a new €350m financing facility, provides the IDB with a far more robust
platform from which to leverage our natural advantages in dairy on international markets.
“We continue to be cautious in our outlook. We believe trading conditions will improve but short
term milk prices are likely to soften as the market adjusts to increased volumes. Based on our
strategy of business transformation and investment in international markets we are optimistic that
we will continue to deliver for our members." Mr Lane added.
Review of the Year
Global dairy markets performed well during 2011. The first six months saw increased production
being absorbed by strong market demand and stock replenishment. Overall international supply of
dairy products grew as 2011 progressed, buoyed by favourable weather conditions and no
significant supply shocks. This resulted in global production reaching record levels in 2011. Demand
softened towards the end of the year and consequently prices weakened from early autumn.
The underlying group performance was impacted by a very challenging environment in the US
distribution business and margin pressure in the UK and in some international consumer markets.
These challenging conditions were substantially offset by strong performance in the German and US
consumer markets where the group successfully recovered raw material price increases while still
achieving strong volume growth.
New consumer markets in North Africa, the Middle East and China reported solid increases in sales
in the period and continued to show encouraging growth. The Dairy Trading & Ingredients division
had a strong year with good performance in both its Irish dairy ingredients and international added
value cheese ingredients operations.
Consumer Foods Division
The Consumer Foods business reported sales from continuing operations of €771.8m, up 9.7% on
the previous year. This was a satisfactory performance though profitability was impacted as higher
input costs in some markets were not fully recovered.
Combined branded sales rose by 17% in value and 3% in volume due to like for like sales growth and
the opening up of new and strategically important markets.
2011 saw the successful roll-out of the redesigned iconic Kerrygold brand and pack design. The new
look premium range of Irish dairy products debuted in Belgium and have since been launched in
over 50 markets involving 30 global Kerrygold production and packaging sites.
In Germany, Kerrygold had another strong year with sales up by 19.7%, out-performing the sector
which saw the total butter market in Germany grow by 14.9% in value (AC Nielsen). Kerrygold
continued to establish brand leadership, in the face of intensified competition and remains the clear
No. 1 butter in Germany with a market share of 14.1% in value. The positive sales momentum that
has been achieved by Kerrygold Extra - a spreadable butter product which is a blend of Irish
creamery butter and rapeseed oil - continued and it achieved excellent year-on-year growth. The
product has won numerous awards since its launch and in 2011 Lebensmittelpraxisit named it
Product of the Year 2011 in the "Margarine, Oils, Fats and Butter" category.
In the USA Kerrygold reported an excellent performance with double digit sales growth in both
volume and value. The brand continued to grow its market share and is now a top ten butter brand
in the USA and is ranked the number 1 imported butter.
Trading conditions in the UK continued to be challenging with price increases difficult to achieve in
a price resistant market environment. Pilgrims Choice finished the period as the No. 3 UK cheddar
brand both in value and volume terms. Of particular note in 2011 was the successful introduction
of Pilgrims Choice lighter mature cheese. The business also introduced a new cheese brand called
“MU” targeted at young families. Sales have been very strong since the launch in October 2011.
In July, the IDB in conjunction with Teagasc announced the creation of the new IDB Dairy Innovation
Centre that will develop new added value products, which will be manufactured by IDB members
and marketed internationally by the IDB.
Dairy Trading & Ingredients
The Dairy Trading & Ingredients division delivered a very good performance with positive volume
and earning growth, driven by strong contributions from the Group’s Irish and international added
value cheese ingredients operations. It reported sales of €566.5m, up 21% on the previous year.
In the UK, the group completed its capital investment programme and moved to a new, 65,000
square foot, state-of-the-art facility dedicated to developing customised dairy ingredients solutions
for customers in the UK and export markets. The new facility includes an innovation centre and will
be a route to market for Irish dairy ingredients.
In the US, the division acquired Thiel Cheese & Ingredients LLC, based in Wisconsin, USA, a well
established and leading cheese ingredients solutions company. This acquisition will complement
and strengthen the IDB’s existing added value cheese ingredients business. In addition the Group
acquired the remaining 66.6% shareholding in Meadow Ingredients USA LLC, a value added cheese
ingredients company based in Minnesota.
In the US Distribution division challenging and competitive trading conditions continued in 2011.
The performance was adversely impacted by weak consumer spending in speciality food products
and intensified competition within the marketplace. A significant restructuring of the business was
carried out during the period to align the cost base to the new business environment.
IDB Balance Sheet
The IDB has a well capitalised balance sheet which is sufficient to meet the operational and
development needs of the business as it implements its ambitious plans to develop international
markets with its members in advance of the abolition of milk quotas.
The IDB successfully secured a new three year bank debt facility of €350m with a group of Irish and
international bank, which provides the Group with the capacity for future growth.
This new facility comprises two parts:
a €160m syndicated loan facility to fund IDB’s existing requirements and to invest in
developing its international growth strategy; and
- a €190m committed syndicated Reverse Invoice Discounting facility to fund the working
capital requirements of IDB’s members. This will provide IDB’s members with an
incremental €50m and greater security of funding, replacing the previous uncommitted
working capital funding lines provided heretofore by IDB to its members.
For the year ended 2011, payout to members increased by 9.3% to €12.9m, comprising a €5m yearend
cash bonus and €7.9m redeemable loan stock. A further €4m has also been allocated to the
annual bonus fund.
Enquiries: Liam O’Neill, Corporate Communications Manager | Tel: + 353 1 602 2268