Dairy giant Dale Farm suffers profits slump: Drop blamed on strong pound and tight margins
Dairy giant Dale Farm and parent company United Dairy Farmers have suffered a 50% slump in profits — blamed on tighter margins and the strength of the pound over the euro.
Dale Farm — along with its parent company United Dairy Farmers — saw turnover fall slightly to £421m.
And the entire group's operating profit fell by around 50% to £3.55m, which was blamed on “depressed market returns... made worse by adverse exchange rates with the pound gathering strength versus the euro”.
But on the upside, Dale Farm itself saw a 10% boost in turnover — rising to £320m for the year ending March 2015.
And David Dobbin, Dale Farm’s group chief executive said the “volatility in dairy markets and milk prices reinforces the rationale behind our strategy to grow in added value consumer products and thus deliver a more competitive and stable milk price to our farmers”.
“Dale Farm delivered another year of strong growth however profits were hit by depressed market returns and adverse movements in exchange rates, with the pound gaining significantly in strength versus the euro.
“The outlook for the current year remains difficult with dairy markets continuing to decline as the result of the ongoing global oversupply situation exacerbated by the ending EU dairy quotas in April 2015 which has led to increased output.”
“At the end of March 2015, United reached agreement with the NILGOSC pension scheme to withdraw from the scheme and cap its liabilities eliminating any future risk exposure. This resulted in a one off exceptional net book charge of £1.9m.
During the year, farm gate milk prices “roller-coasted”, according to the firm — starting the year at a high of 32.4p per litre and finishing at 21.4p.
The group said “this reflected a collapse in dairy markets driven by global overproduction in milk, weaker demand from China and a Russian ban on imports of EU dairy produce”.