Belfast-based dairy firm Dale Farm moved back into annual pre-tax profit last year despite a 5.1% fall in annual sales.
The Northern Irish cheese producer saw sales in the full year to 31 March 2016 fall back from £320m to £304m, but it moved back into profit as it grew volumes and concentrated on higher-margin consumer products.
The group made a pre-tax profit of £5.3m after recording a pre-tax loss of £64k in the previous financial year.
Dale Farm said it saw “continued growth in throughput and consumer product sales volumes” but these were offset by lower market returns.
Consumer product sales rose from £213.9m to £220m, but ingredient sales dropped from £79.4m to £65.5m.
It said this reduction in ingredients sales reflected “the decline in dairy market returns prices” as well as a “conscious effort to switch output into more added value consumer product sales, especially in cheese and butter”.
This growth in profitability came despite the continued downturn in the milk market during the 2015/16 financial year, as supply remained well ahead of demand leading to downwards pressure on prices.
“Product realisations were further impacted by the strengthening in value of sterling verse the euro and US dollar, which eroded returns from exports and has made imported dairy products cheaper,” the accounts stated.
This meant the farmer price paid for Dale Farm Red Tractor milk fell during the year from 21.4p per litre to 17.2p in March 2016.
Dale Farm said this oversupply in milk had continued in its first quarter of 2016/17, although the build-up of intervention stock has stabilised the market.
During the year the company launched 75 new products (slightly down from 79 in 2015) and 118 product variants (117 last year). It rejuvenated a further 20 products and 30 product variants, up from 10 and 14 respectively in 2015.
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