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Lakeland continues to expand as profits double for the year

By Louise Hogan

All-island agri-food firm Lakeland Dairies - which took over Northern Ireland dairy processor Fane Valley - has reported a 33% jump in sales to £683m.

Its operating profit more than doubled from £6.2m to £14.9m during 2017.

Profit before tax was £14.1m in 2017 and the co-operative closed the year with a 19.5% increase in shareholders' funds at £104.3m.

It said it had kept open its milk powder and butter facility at Banbridge, which provides continuing flexibility to help it respond to Brexit.

Lakeland Dairies also has a major logistics centre at Newtownards.

The co-op is supplied with milk by 2,500 farmers from 15 counties.

Michael Hanley, Lakeland group chief executive, said it was targeting the "value added markets" with a third milk drying plant opening at Bailieboro in Co Cavan following an investment of €40m (£35m).

He said this had brought greater "efficiencies" and it intended to continue to work in the infant formula area as partners of three of the top four producers - Danone, Abbott and Nestle.

"We have capacity now to handle the extra growth that our farmers are going to give us now over the next three to four years," he said, with the milk pool expected to grow by around 4-5% over the coming years.

Lakeland is witnessing the greatest growth potential out of the 80 customer countries in Asia including Malaysia, Thailand and China.

"We have routes to market in those 80 countries, we have the hard part done. We have relationships with partners, distributors or producers in those countries," Mr Hanley said.

"We'll be looking at Asia and China in particular," he added, saying that it was seeing growth there year-on-year across the business. Over the year its milk pool soared to 1.2 billion litres due to a full year's production from Fane Valley.

The larger number of suppliers at 2,500 across 15 counties means it could also remove milk collection charges, which cost farmers around €5m (£4.4m) a year.

Mr Hanley said the Fane Valley acquisition gave it a massive "safety net", as half its milk pool now comes from each side of the border and it gives it the opportunity to "mix and match" products if needed.

He said the longer Brexit transition period if agreed would give it time to "readjust" packaging and other business items.

Agribusiness revenues increased by 20% to £54.7m.

The increase had been driven by record sales of over 200,000 tonnes of feed and 25,000 tonnes of fertiliser.

A co-op spokesman said: "Reflecting an overall improvement in dairy market conditions, and unfavourable weather, many farmers provided supplementary feeding in addition to grazing to boost milk output by their herds."

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