Ornua enjoys strong 2019 but warns of coronavirus impact on business

• Kerrygold became Ireland’s first food brand to reach €1bn in annual retail sales

• Ornua has also reopened its pizza cheese factory in Ávila, Spain following a devastating fire in 2018

• The business said it was in a “strong financial position to manage the unprecedented challenges presented by Covid-19”

Irish dairy co-op Ornua saw turnover and profit both rise in 2019. However, it warned the coronavirus crisis would negatively impact its business and “severely impact market sentiment”.

Ireland’s largest exporter of dairy products and the parent of Pilgrims Choice owner Ornua Foods UK delivered a “very strong trading performance” last year, according to its 2019 accounts.

Group turnover rose 11.5% to reach €2.3bn, group EBITDA before exceptional items of €71.8m was up 18.7% on 2018, while operating profit before exceptional items was up 21.5% to €49.1m.

Key highlights included another standout year for Kerrygold – which became Ireland’s first food brand to reach €1bn in annual retail sales.

This contributed to a total members’ bonus payout of €26m, up 36.8% year on year. Ornua also reopened its pizza cheese factory in Ávila, Spain after a €30m rebuild, following a devastating fire in 2018.

The success of the business last year had been achieved against a backdrop of “significant external challenges”, it said.

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These included uncertainty due to US tariffs, Brexit and market volatility. But in the weeks since year-end, trading complexity had “increased significantly due to the impact of the global Covid-19 pandemic”, said CEO John Jordan.

This had led to overnight changes in usage occasions, and as a result, Ornua had seen an increase in demand for its branded and own label cheese and butter.

But with demand for Ornua’s foodservice products falling sharply as a result of widespread shutdowns of the foodservice and hospitality sectors in Europe and the US, the net impact of the pandemic would lead to a decrease in consumption of its dairy products worldwide, it warned.

Operationally, Ornua’s biggest challenge was to “keep its supply chain operating to ensure markets for Irish dairy remain open at a time of great uncertainty”, it added.

A huge Covid-19 response effort was underway to mitigate risk, keep markets open and serve its customers, the dairy co-op said. This included a commitment to continue purchasing product from its member co-ops across Ireland, keeping all its factories operating and protecting staff in factories through a variety of measures.

Ornua had also moved to maintain and secure additional storage facilities “to spread risk locally and internationally”, secured additional international shipping containers at a time of global shortage and reallocated staff from its ingredients business into its consumer business in order to ensure increased demand could be met.

And while warning the coronavirus pandemic would cause disruption and dampen demand, it stressed it was in a “strong financial position to manage the unprecedented challenges presented by Covid-19”.

“Our key focus for 2020 is to support our 2,400-strong team, our customers, our member co-ops and farmers as we face the challenges of Covid-19 together,” said Jordan. “We are firmly focused on protecting the health and safety of our people, keeping our factories running safely to serve our customers and ensuring markets for Irish dairy remain open.”