4 May 2022
By Tom Collins
Carbery Group, the West Cork based international ingredients, flavours, and award-winning cheese producer, has recently reported a positive financial performance for the year ended 31 December 2021. Overall, group turnover increased by 17% to just under €535.7m.
Group turnover increased by 17% to €535.7m, while on a constant currency basis turnover increased by 18% year-on-year. Group EBITDA (Earnings before interest, tax, depreciation (net of grants), amortisation of goodwill and other intangibles and exceptional items) increased by 12% to €50.1m (2020: €44.9m). On a constant currency basis EBITDA increased by 14%.
Group EBITA (Operating Profit before interest, tax, amortisation of goodwill and other intangibles and exceptional items) increased to €31.2m (2020: €28.3m) reflecting a year-on-year increase of 10%. On a constant currency basis EBITA increased by 14%. Group Net Debt as at December 31st 2021 increased to €79.6m (2020: €57.8m).
CEO Jason Hawkins commented “Carbery will be measured into the long term by more than just our annual results, but it is key that we continue to deliver against our short-term business objectives and targets. I am, therefore, very pleased to report another strong set of financial results in 2021. While our financial performance was solid, I would characterise 2021 as having a focus on investing for the future. We saw the first full year of production in our new Ballineen cheese facility, while also bringing online expanded R & D facilities in the US, as well as our acquisition of US based Innova Flavors in May 2021. This was a key strategic acquisition for us, expanding our savoury capabilities in the US for our customers, and adding new markets globally.
This investment, and our pursuit of new products and new markets globally, has allowed us to continue to deliver a strong milk price for our shareholders, as well as supporting them with knowledge transfer, environmental initiatives and continuing investment in sustainable farming practices.”
Milk volumes at the Carbery Ballineen plant increased to 612m litres, all processed in West Cork, an increase of 2.7% from 2020 volumes. Carbery continue to produce cheese for 12 months of the year, and of the 63,000 tonnes produced in 2021, 10,000 of this was mozzarella.
Carbery Chairman Cormac O’Keeffe said “We are proud of the performance of Carbery this year, and the Board would like to thank the employees of the company, who have continued to excel throughout the challenges of Covid, Brexit and supply chain issues. We also thank the shareholders of Carbery – the farmers of West Cork – who continue to support the growth and investment strategies of the company, while supplying world-class milk and operating sustainably and responsibly.
2021 was a year which saw a lot of focus and pressure on the farming sector in relation to climate targets and other issues. I know that farmers are up for the challenge of meeting these targets, as long as the sector is supported and credited for all the progress that has already been achieved. As we see the issue of food security back in focus as we deal with the fallout of the crisis in Ukraine, I hope that the importance of farming to the Irish and global economies, and Ireland’s position as a sustainable producer of high quality food and nutrition products can be appreciated. “
Sustainability continues to be the foundational principal on which Carbery operates across all our sites. As well as prioritising environmental issues, Carbery’s strategy on sustainability also covers community, marketplace, supply chain and people. This in recognition of the principle that to be truly sustainable, a company must consider their impact on the planet, but also on the communities and society in which they operate.
The Group is pleased to report further progress towards its’ sustainability ambition of becoming carbon neutral across all manufacturing sites by 2035. Greenhouse gas emissions reduced across all global sites by 4.16%, due to reduction in energy use and conversion of some facilities to procuring 100% renewable electricity. Water usage across the Group reduced by 17%, due to consistent focus by employees on reduction of water usage across the Group, plus the continuing success of investment in reverse osmosis projects. While Group energy use is down by 0.93% in 2021, GHG intensity is down by 3.22%, despite production increases. Green Teams were established across global sites to assist in driving sustainability initiatives in local offices.
The goal to reduce Scope 1 and 2 emissions is now being expanded to include Scope 3 emissions. A project began at the end of 2021 to measure all scope 3 emissions across the group including those from Carbery supplier farms. Measuring the full extent of these will allow Carbery to set Science Based Targets for reduction of emissions and the development of a roadmap to achieve this.
Carbery continues to drive a number of initiatives to support farmer suppliers in becoming ever more sustainable. Sustainability on farms was also supported through a number of initiatives including the further growth of the Agricultural Sustainability Support and Advisory Programme (ASSAP), focusing on water quality, the Carbery Greener Dairy Farms and the ongoing work on Farm Zero C. A number of Carbery farms are also taking part in the Monitor Farms and SignPost farms projects with Teagasc, both focused on reducing farming’s carbon footprint.
According to Sustainable Dairy Assurance Scheme (SDAS) audit figures, the carbon footprint of Carbery farmers reduced further in 2021 and now stands at 0.94kgCO2 equivalent per litre of milk. Increasing numbers of Carbery suppliers have participated in the ASSAP programme to assess water quality on farm, and participants in the Carbery Greener Dairy Farmers programmes increased, with 38 of that Group having gone on to complete a Diploma in Environmental Science with UCC. Carbery farmers were also in receipt of 60,000 trees to plant on their farms in 2021, bringing the total number of trees planted under the West Cork Trees project to more than 105,000.
The Groups’ flagship sustainability project Farm Zero C, with partners BiOrbic, and supported by funding from Science Foundation Ireland, continued in its ambition to create a climate neutral model for dairy farming. With the €2m funding support secured under the SFI Zero Emissions challenge in June, the project team has expanded to include more researchers, and several different technologies and approaches are being trialled at Shinagh Farm in Bandon. To date, Shinagh’s carbon footprint has reduced to 0.75kgCO2-kg-eq in 2021, with the ambition to be net zero by 2027.
The Carbery cheese business continued to perform strongly in 2021. In the first full year of production in the expanded facility in Ballineen, the €80m investment is coming to fruition, with more than 63,000 tonnes of cheese produced, almost 10,000 tonnes of that being mozzarella. Carbery also continued to focus on new markets and customers, with investment in tools and infrastructure to provide customer insights and collaborate with global customers. The Carbery Dairy brand has continued to expand geographically. The focus is on building business with key strategic partners throughout Europe and Asia, while continuing to work with key partners in the UK, Europe and Asia. In the Irish market, strong retail performance continued on a volume basis in 2021 and online shopping played a key role in the retail performance of our cheese, including Dubliner and Carbery Cracker, this year.
The Nutrition team continued to acquire new customers in new geographies, with a focus on infant and sports nutrition, and a move into clinical products for European and Asian customers. Asia continues to be a key focus for the nutrition business. In 2021, Carbery continued to make inroads with their Optipep® range into sports nutrition, targeted at protein bar and protein powder applications. The Nutrition team have also established targets and opportunities in the clinical nutrition sector in China, where they developed whey protein ingredients for specialised oral nutritional supplements with specific functional and nutritional requirements. The team also continue to be at the leading edge of innovation, both in-house and with a range of partners. The Nutrition team are also looking at a portfolio diversification into fermented proteins.
Taste (Synergy Flavours)
The acquisition of Innova Flavors was an exciting development in a year of strong performance for the flavours division, with the expanded capabilities and savoury flavour range creating new opportunities for existing customers and new avenues into new markets. The emergence of the low and no alcohol beverage category has seen the recently developed hop essence becoming a key performer in Synergy’s essence portfolio. The Foodservice business enjoyed a successful rebound in 2021 with many customers in the hospitality sector seeing a return to pre-Covid levels. The team brought leading insights and new products to customers via innovation and consumer insight campaigns. The R&D laboratories and other collaboration spaces were expanded this year to allow increased collaboration for the R&D team with customers at Synergy U.S. headquarters in Wauconda, Illinois.
The Group invested in R&D infrastructure, people and partnerships globally in 2021 and are already seeing the return on many of these investments. Investment will continue to ensure that Carbery remains well positioned for the future
Commenting on what is to come for the Group in 2022 and beyond, Hawkins said “Our investments will continue to ensure that we are creating the next phase of success for Carbery Group. The market is changing fast, as are employee and stakeholder expectations. We will need to continue to develop our innovation capabilities, our R & D, and our partnerships with our many collaborators and stakeholders, to ensure that we have a company that is ready to embrace the next phase of growth. We will face the same challenges as others, in terms of supply chain, increasing costs, especially energy, and other unforeseen circumstances. I am confident, having seen the business be resilient in the face of the challenges of the last few years, that we have the right business model and team in place to see Carbery through to another positive performance next year and in the years ahead. “