Carbery Group reported an operating profit for 2024 of €24.8m on revenue of €668m, an improvement on the €19.6m operating profit and €616m revenue result for 2023. The co-op said that the strong performance in 2024 allowed it to set €8.6m aside for its milk stability fund to support milk price in future.
The co-op processed 574m litres of milk at its Ballineen facility during the year, a 2% drop on 2023’s level. Carbery said it paid its second-highest milk price on record during the year.
On a divisional level, dairy had a challenging start to 2024 due to bad weather conditions but milk supply recovered in the second half of the year. Carbery said that its flexibility in producing both mozzarella and cheddar has become crucial in managing its cheese business and maximising returns in the market.
The company produced 14,000t of mozzarella and 47,000t of cheddar in 2024.
The taste division which produces and supplies flavours for food manufacturers saw record performance in all regions with significant volume growth in the US and Brazil.
The company said it has plans to invest in capital, personnel and operational elements in these markets to ensure the performance can be supported.
In nutrition, Carbery noted that the global whey protein market continued to experience significant growth in 2024, and that its range of products catering to infant formula, sports nutrition and clinical nutrition customers allow it to tap into multiple market segments and drive growth.
Speaking to the Irish Farmers Journal, Jason Hawkins, CEO of Carbery Group said that the processor continues to benefit from the flexibility and diversity of its portfolio. He said that the key priorities for the company are the continued investment in growth opportunities across the business and the continued reduction in scope 1, 2 and 3 emissions.
Investment
On where Carbery sees the best place to put money to work over the coming years, Hawkins said that with the outlook for milk deliveries from its farmer suppliers looking flat over the forecast horizon, that dairy production would not be the main focus for expansions.
“We’re looking at mergers and acquisitions and ways to add to our capabilities, whether is be in taste or nutrition,” he said. “[The investments] could be products which are adjacent to whey where we are selling into those customers and could add flavours.
“We’re also looking at the market for probiotics and vitamins in terms of investments at the moment as well.”
On the possible size of investment which Carbery would have the power to make, the company’s chief financial officer Liam Hughes pointed to the net debt on the balance sheet at the end of 2024 which stood at €39.5m, a figure equal to 0.75 times the earnings before interest, taxes, depreciation and amortisation (EBITDA).
“We’ve managed our debt over the last couple of years specifically to allow us flexibility on capacity for investment,” Hughes said.
“We have covenants in place which would allow us to up to 3.5 times EBITDA. We think we could pay that down pretty quickly after an acquisition, particularly with the cashflows from the flavour business.”
Maxing out at 3.5 times 2024 EBITDA would give a potential investment pot of around €150m.
Hawkins made clear that the company “is in no rush to run out to deploy that.” He added that “it is good to have a healthy balance sheet. We’ve tried to be quite discerning buyers over the last number of years, so any move will be very selective on good value. There could be opportunities on the flavour side where we could gain synergies, but we would have to be careful to ensure we could justify [the price paid] post-acquisition. We could also look at joint ventures.”
One interesting investment Carbery did undertake in 2024 was to partner with an Irish-based venture capital fund. Hughes said that the fund will help Carbery “get access to new technologies, specifically in the biotech and biomanufacturing space”.
“The fund is investing in emerging companies in that space and it gives Carbery a different way to generate new products and innovation.”
Hawkins said that the investment allows Carbery to get transparency into what those emerging companies are developing and if there is something that could be used in the business, allow Carbery to become a customer or a partner to those new companies.
“We would see the investment as being complementary to Carbery’s own research and development efforts,” he said. “What we are focused here on site is the whey side of things and some adjacencies.
“This investment puts us into very new areas without making large research investments, or indeed having to buy new companies.
“If you go back to the balance sheet, this investment of €5m over five years is a low-risk way of getting exposure to lots of ideas, rather than spending €150m on one acquisition with one idea.”
Spectator
No conversation about co-op investment would be complete without a look at where the Irish dairy industry as a whole is at the moment.
Hawkins said: “When you get to a point in any industry, dairy or otherwise, where you say that now we know the supply is going to be limited from a growth perspective, then you’ve got to sit back and look at what that means from an asset utilisation and cost optimisation perspective.
“I think it is inevitable that you will see some more consolidation across the industry. It is a natural progression from where the industry is.”
On Carbery’s role in any industry consolidation, Hawkins said: “I think we see ourselves as a spectator rather than being a consolidator or being consolidated, simply because we have that speciality arm.”
Optimism
On the longer-term outlook for the dairy industry, Hawkins is optimistic.
“I’m a huge believer in the long-term outlook for whey protein. Consumption is just a catch-up on everyone needing to consume more protein, particularly with people living longer.
“There is uncertainty over how much cheese production will come on stream. I have my doubts that cow numbers in the US will expand enough to meet the demand from new facilities,” he said.
“Looking at market prices for cheese in the US, even with extra production already coming online, prices are holding up very well.”
On a global level, Hawkins said the outlook for milk should be positive for dairy prices. “All the market dynamics point to demand for dairy going up, and I don’t see where this extra milk is going to come from.”
Comment
Carbery is, as one other co-op CEO said to the Irish Farmers Journal recently “the model” for other processors to follow. A strong dairy business with complementary businesses attached.
While it might be slightly unfair to call Carbery a mini-Kerry Group, there is some validity in the description.
The company’s CEO readily admits that the Carbery’s future growth – and investment portfolio – is more likely to come from those taste and nutrition businesses rather than from dairy processing.
With milk supply forecast to remain relatively stable over the coming years, Carbery is probably right to focus on those potential growth drivers and is already well-placed to trade through whatever milk supply does do.
For other processors with significantly larger milk pools and a less diversified business, the future may not be so easy. The need, on one hand to diversify is clear, but also the need to maximise efficiency in dairy production is greater than ever. In recent weeks we saw the announcement of the proposed merger of Arla and DMK co-ops in Europe creating a processor with a milk pool which is multiple of the total milk produced on this island.
As Hawkins said, moves towards consolidation are inevitable.
It would serve everyone involved in the Irish dairy industry best to accept the way the wind in blowing and explore the best ways that the industry as a whole can achieve the efficiencies needed to secure the future for all.
In brief:
Carbery increased profit and revenue.Co-op put €8.6m into milk stability fund.Milk supply to be flat over coming years. Investments focused on taste and nutrition.
Carbery Group reported an operating profit for 2024 of €24.8m on revenue of €668m, an improvement on the €19.6m operating profit and €616m revenue result for 2023. The co-op said that the strong performance in 2024 allowed it to set €8.6m aside for its milk stability fund to support milk price in future.
The co-op processed 574m litres of milk at its Ballineen facility during the year, a 2% drop on 2023’s level. Carbery said it paid its second-highest milk price on record during the year.
On a divisional level, dairy had a challenging start to 2024 due to bad weather conditions but milk supply recovered in the second half of the year. Carbery said that its flexibility in producing both mozzarella and cheddar has become crucial in managing its cheese business and maximising returns in the market.
The company produced 14,000t of mozzarella and 47,000t of cheddar in 2024.
The taste division which produces and supplies flavours for food manufacturers saw record performance in all regions with significant volume growth in the US and Brazil.
The company said it has plans to invest in capital, personnel and operational elements in these markets to ensure the performance can be supported.
In nutrition, Carbery noted that the global whey protein market continued to experience significant growth in 2024, and that its range of products catering to infant formula, sports nutrition and clinical nutrition customers allow it to tap into multiple market segments and drive growth.
Speaking to the Irish Farmers Journal, Jason Hawkins, CEO of Carbery Group said that the processor continues to benefit from the flexibility and diversity of its portfolio. He said that the key priorities for the company are the continued investment in growth opportunities across the business and the continued reduction in scope 1, 2 and 3 emissions.
Investment
On where Carbery sees the best place to put money to work over the coming years, Hawkins said that with the outlook for milk deliveries from its farmer suppliers looking flat over the forecast horizon, that dairy production would not be the main focus for expansions.
“We’re looking at mergers and acquisitions and ways to add to our capabilities, whether is be in taste or nutrition,” he said. “[The investments] could be products which are adjacent to whey where we are selling into those customers and could add flavours.
“We’re also looking at the market for probiotics and vitamins in terms of investments at the moment as well.”
On the possible size of investment which Carbery would have the power to make, the company’s chief financial officer Liam Hughes pointed to the net debt on the balance sheet at the end of 2024 which stood at €39.5m, a figure equal to 0.75 times the earnings before interest, taxes, depreciation and amortisation (EBITDA).
“We’ve managed our debt over the last couple of years specifically to allow us flexibility on capacity for investment,” Hughes said.
“We have covenants in place which would allow us to up to 3.5 times EBITDA. We think we could pay that down pretty quickly after an acquisition, particularly with the cashflows from the flavour business.”
Maxing out at 3.5 times 2024 EBITDA would give a potential investment pot of around €150m.
Hawkins made clear that the company “is in no rush to run out to deploy that.” He added that “it is good to have a healthy balance sheet. We’ve tried to be quite discerning buyers over the last number of years, so any move will be very selective on good value. There could be opportunities on the flavour side where we could gain synergies, but we would have to be careful to ensure we could justify [the price paid] post-acquisition. We could also look at joint ventures.”
One interesting investment Carbery did undertake in 2024 was to partner with an Irish-based venture capital fund. Hughes said that the fund will help Carbery “get access to new technologies, specifically in the biotech and biomanufacturing space”.
“The fund is investing in emerging companies in that space and it gives Carbery a different way to generate new products and innovation.”
Hawkins said that the investment allows Carbery to get transparency into what those emerging companies are developing and if there is something that could be used in the business, allow Carbery to become a customer or a partner to those new companies.
“We would see the investment as being complementary to Carbery’s own research and development efforts,” he said. “What we are focused here on site is the whey side of things and some adjacencies.
“This investment puts us into very new areas without making large research investments, or indeed having to buy new companies.
“If you go back to the balance sheet, this investment of €5m over five years is a low-risk way of getting exposure to lots of ideas, rather than spending €150m on one acquisition with one idea.”
Spectator
No conversation about co-op investment would be complete without a look at where the Irish dairy industry as a whole is at the moment.
Hawkins said: “When you get to a point in any industry, dairy or otherwise, where you say that now we know the supply is going to be limited from a growth perspective, then you’ve got to sit back and look at what that means from an asset utilisation and cost optimisation perspective.
“I think it is inevitable that you will see some more consolidation across the industry. It is a natural progression from where the industry is.”
On Carbery’s role in any industry consolidation, Hawkins said: “I think we see ourselves as a spectator rather than being a consolidator or being consolidated, simply because we have that speciality arm.”
Optimism
On the longer-term outlook for the dairy industry, Hawkins is optimistic.
“I’m a huge believer in the long-term outlook for whey protein. Consumption is just a catch-up on everyone needing to consume more protein, particularly with people living longer.
“There is uncertainty over how much cheese production will come on stream. I have my doubts that cow numbers in the US will expand enough to meet the demand from new facilities,” he said.
“Looking at market prices for cheese in the US, even with extra production already coming online, prices are holding up very well.”
On a global level, Hawkins said the outlook for milk should be positive for dairy prices. “All the market dynamics point to demand for dairy going up, and I don’t see where this extra milk is going to come from.”
Comment
Carbery is, as one other co-op CEO said to the Irish Farmers Journal recently “the model” for other processors to follow. A strong dairy business with complementary businesses attached.
While it might be slightly unfair to call Carbery a mini-Kerry Group, there is some validity in the description.
The company’s CEO readily admits that the Carbery’s future growth – and investment portfolio – is more likely to come from those taste and nutrition businesses rather than from dairy processing.
With milk supply forecast to remain relatively stable over the coming years, Carbery is probably right to focus on those potential growth drivers and is already well-placed to trade through whatever milk supply does do.
For other processors with significantly larger milk pools and a less diversified business, the future may not be so easy. The need, on one hand to diversify is clear, but also the need to maximise efficiency in dairy production is greater than ever. In recent weeks we saw the announcement of the proposed merger of Arla and DMK co-ops in Europe creating a processor with a milk pool which is multiple of the total milk produced on this island.
As Hawkins said, moves towards consolidation are inevitable.
It would serve everyone involved in the Irish dairy industry best to accept the way the wind in blowing and explore the best ways that the industry as a whole can achieve the efficiencies needed to secure the future for all.
In brief:
Carbery increased profit and revenue.Co-op put €8.6m into milk stability fund.Milk supply to be flat over coming years. Investments focused on taste and nutrition. 
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