Ornua aims to make Kerrygold a billion euro global brand

Massive global sales drove the dairy giant to a strong 2016...

Ornua has reported on an extremely healthy year of trading despite home market volatility, as global sales climbed 9% to €1.75 billion in 2016.

Operating profits at the group, which is owned by most  of the larger Irish dairy co-ops, was up 46% on the previous year to €26.6m.

Earnings before interest, taxation, depreciation, and amortisation were recorded at €43.1m, a 18% annual increase.

Gross operating profits margins remain tight at close to 3% but Ornua said that Irish product prices are outstripping the growth in Irish milk supply.

Kerrygold expands its kingdom

The country's biggest exporter of butter, cheese and other dairy products and ingredients singled out Kerrygold's performance as the chief reason behind the growth.

Total sales of the brand topped €900m, helped by the successful launch of new products such as yoghurts in key markets like Germany and 20% volume growth in the US – its recent Stateside success means it is now one of the largest branded butter imports across the Atlantic.

Back in Europe, more than 10 million pots of Kerrygold yoghurts were sold in Germany during its first six months on sale.

Ornua is now setting its sights high for the brand, stating:

"Ornua’s ambition is to move Kerrygold from being a world-class butter brand to an instantly recognisable €1 billion global dairy brand in the coming years. 2016 saw the successful launch of Kerrygold Yogurts in Germany, Kerrygold Spreadable in the UK and the continued roll-out of Kerrygold Irish Cream Liqueur across Europe and the US."

The group now trades in over 110 countries around the world.

The past year saw "significant progress" in terms of in-market expansion, with the opening of a new facility in Saudi Arabia, upgrade works to the existing production facility at Neukirchen-Vluyn in Germany and the development of a purpose-built production line for yogurt brand, EasiYo, at Ornua Nutrition Ingredients UK.

In addition to organic expansion, Ornua acquired US powder ingredients business, CoreFX Ingredients.

The year also saw investment in Ireland with the opening of Kerrygold Park, the new global home for the Kerrygold brand.

The €38m butter production and packaging plant, with a production capacity of 50,000 tonnes, enables Ornua to deliver new product formats to its consumers around the world.

Ornua is not factoring in WTO tariffs on exports to the UK in the event of a hard Brexit but believes the profitability of its €600m business there will be impacted.

Last year, the revelation that nine Ornua executives were paid total remuneration of €4m caused a stir with farmers and co-ops.

Newstalk's Vincent Wall asked chief executive Kevin Lane on Breakfast Business whether that concern had been addressed.

The CEO responded:

"You'd hope with the results we've been able to get over the past number of years that it is to be managed in a way where you pay for the talent that's in place, you make sure that you're working to international standards.

"If you want to grow your business on a continual basis with top quality people that's the correct remuneration level that's out there. It's benchmarked against industry peers."