Pilgrims Choice and Kerrygold supplier Ornua Foods UK has announced strong financial results but warned of “significant inflationary pressures” that could see costs rise over the coming months.
The UK arm of Irish dairy co-op Ornua saw a reduction in turnover to £400m (from £411m in 2020) and a fall in sales volumes by 3% amid a “highly challenging and volatile market environment” in 2021.
However, the supplier’s pre-tax profits rose, by 53.8%, from £5.2m to £8.0m on the back of “favourable commodity price movements and reduced administrative expenses”, according to its annual accounts for the year to 25 December 2021.
But in the face of an increasingly uncertain winter for the dairy and wider food sectors, finance director Stuart Stanley warned that “in the immediate term and in line with others in the industry, we are being impacted by significant inflationary pressures”.
This had been caused by the combination of a tighter UK labour market and the impact of “global events”, such as the worldwide economic shock of the pandemic “and more latterly the war in Ukraine, which had significantly increased costs within the supply chain”, he added.
However, despite these challenges, Stanley stressed Ornua Foods UK was confident it had the processes in place “to enable the company to anticipate, monitor, and adapt to market changes within this environment through frequent and close engagement with key suppliers and customers, the careful management of costs at our facilities, and by leveraging the resources, scale, and expertise of the Ornua Group”.
Ornua said the business performed well in 2021 due to the reduced impact of the Covid-19 pandemic on consumer shopping behaviour. And volume sales were still up 16% compared with pre-Covid levels, due to higher in-home eating and a continued desire for staple ingredients such as cheese and butter.
The supplier also continued to invest in capital expenditure throughout 2021 including in further investment in industry-leading cheese cutting and packing technology at the company’s state-of-the-art packing facility in Leek, Staffordshire. It had net assets of £47.9m, up from £38.4m in 2020.
“Looking ahead, our strategy remains focused on driving continuous improvement, delivering best-in-class category expertise and support to customers, building a strong own-label and branded product portfolio and optimising experience in dairy commodities,” said Stanley.
Ornua also invested heavily in multi-channel marketing campaigns for both its Pilgrim Choice and Kerrygold brands during 2021, with Pilgrims Choice holding its place as the number two branded cheddar and Kerrygold the third position in branded block butter in the UK.
Marketing activity highlighted Pilgrims Choice’s consistent quality and flavour and promoted the innovative ‘Megablock’ pack format that reduces plastic usage by 40% and improves usability. Kerrygold benefited from a continued presence on British TV screens with the new multimedia advertising campaign ‘The Making Of Together’.
No comments yet