Business Review 2018
Lakeland Dairies turned in an excellent business performance in 2018 with record revenues and profitability, underpinned by targeted business development activity, relative stability in global dairy markets and growth in volumes shipped. The commentary and figures provided below, and on the accounts on the previous pages are a summary of the progress and strength of the business for the financial year ended 29th December 2018.
Group Revenues increased by 5.3% from €769.8m to €810.5m, yielding an operating profit of €17.5m (up from €16.8m in 2017). This was driven by strong returns from our three main business divisions where we were also able to capitalise on our significant economies of scale, benefiting from the significant investments of recent years in technology, automation and lean operation across our processing footprint.
Lakeland concluded the year with a strong balance sheet and shareholders’ funds of €130m, an increase of €12.4m for the year. EBITDA (Earnings before Interest, Taxes, Depreciation & Amortisation) of €33.65m increased by €1.05m in 2018 from €32.6m in 2017, reflecting a consistently high level of operational efficiency and profitability from year to year.
The Food Ingredients Division delivered revenue growth of 4.6% to €489.9m, reflecting the quality, flexibility and reliability of our offer and general buoyancy in the end markets and food manufacturing sectors of our customers. This Division continues to meet key food industry trends with the processing scale and efficiency required to be a best in class global provider of choice across multiple food ingredient categories.
Foodservice Division revenues increased by 3% to €246.9m in 2018, maintaining the very robust platform achieved by a significant growth in sales in the prior year and processing record volumes of value-added products. This is in spite of some volatility including variable consumer sentiment and price sensitivity in key markets which we are managing effectively.
Agri-Trading Division revenues increased by 19% to €73.7m, driven by organic growth where our customers required higher volumes of feed during the year, mainly due to radically variable weather conditions ranging from blizzards to drought. Lakeland supplied feed and fertiliser at the most competitive possible prices to ensure value and performance for dairy farmers.
The merger of Lakeland Dairies and LacPatrick Dairies has received all necessary regulatory approvals, following resounding approval by the shareholders of both Societies in October 2018. The new Society – to be called Lakeland Dairies Co-Operative Society Limited – will be the second largest dairy processor on the island of Ireland with a cross-border milk pool of 1.8bn litres, produced by 3,200 farms across a catchment area including 16 counties. The new co-op will have a combined annual turnover in excess of €1bn, creating internationally competitive scale and the opportunity for greater efficiency to be achieved across the amalgamated organisation.