1st May 2014
Realising the Opportunity
in a Sustainable Manner
Jim Woulfe, CEO Dairygold
Realising the Opportunity 1
Reali...
2
• Dairy Industry - 2014
• Dairy Opportunities:
— Global Trends
— Dairy Market Supply & Demand
• Realising the Opportunit...
EU27 Ireland
Milk Production billion litres 138.7 5.5
Dairy Cows million 23.1 1.1
Average Milk Yield kg/year 6,669 5,355
%...
Global Trade
54.0
billion litres
c. 8½%
Reference: FH 2020 and Fonterra
Ireland Dairygold
4.7 billion litres 0.95 billion ...
Growing Demand for Food
By 2050 the world
needs twice as much
food as today
Reference UN/FAO
5
Virtually all population growth is
in developing countries
Reference: United Nations Population Division, World Urbanisati...
(200) 0 200 400 600 800 1,000 1,200 1,400
Asia
Sub-Saharan Africa
Latam
N America
Europe
Reference: Population Reference B...
“In Developing World – e.g.
China, urban dwellers consume
6 times more dairy products
than rural dwellers”. FAO
In 1950 -
...
4,000
6,000
8,000
10,000
12,000
GDP/Capita (US$)
Reference: CIA World Fact Book
Growth of Middle
Class consumers
Macro Dat...
Adding as many as 1,000 new locations
in Europe during 2014.
Plans to open 1,500 new stores in 2014
- half of them will be...
0%
1%
1%
2%
2%
3%
3%
4%
2002
2003
2004
2005
2006
2007
2008
2009
2010
2011
2012-15
2015-20
Growth%
Reference: IDF
2.5% 2.4%...
0.0%
20.0%
40.0%
60.0%
80.0%
100.0%
120.0%
China Russia Mexico Brazil Korea Indonesia
Self Sufficiency Rates
Emerging Mark...
Reference: Global Trade Atlas (GTA)
0
100,000
200,000
300,000
400,000
500,000
600,000
700,000
2008 2009 2010 2011 2012 201...
N America
<1%
LATAM
2%
< 1%
Europe
4%
MENA
India
10%
China
7%
1%
OCEANIA
1%
2%
2%
1%
7%
4%
2%
Demand Growth Milk Supply Gr...
Global Trade
Reference: FH 2020 and Fonterra
Ireland Dairygold
54.0 billion
litres
c. 8½%
80 billion litres
by 2020
8.25 b...
• Global demand growth for dairy c. 2.5% per annum and
projected to remain at this level to 2020.
• Demand growth will be ...
Realising the
Opportunity
Dairygold -
“Sourcing Locally &
Supplying Globally”
17
Ensure a growing and sustainable Dairygold.
• Develop the required infrastructure and optimal processing
capacity
• Ensure...
5 Year Financial Performace Overview
19
941 916
959
0
200
400
600
800
1000
1200
1400
1600
Millions
941 916
959
1000
1169
1239
1295
1353
1414
1478
0
200
400
600
80...
0.0%
2.0%
4.0%
6.0%
8.0%
10.0%
12.0%
14.0%
16.0%
2011/13
Grass based production with February Incentive
0.0%
2.0%
4.0%
6.0...
Additional Volume
Product Sector Markets
% Milk
Volume
Cheese 35%
Milk Powders 65%
Additional Volume R2M
Product Sector Ma...
33.4
21.8
29.4
33.6
30.9
38.1
CentsperLitre
6 Year Weighted Average
Price of c. 31.5 CPL
Market Returns/Dairygold’s Milk P...
2015/’16
+ 7.5 ML
2020
52.9 ML
2019/’20
+ 7.5 ML
2011
29.0 ML
2012-13
+3.7 ML
2014
+5.2 ML
Cheese & Whey
Processing
Phase ...
• Market Returns / Milk Price Volatility
• Financing & Cashflow Management
• Land Availability & Mobility
• Sustainable Da...
Mitchelstown
HQ - 2013
Mallow
Development
– 2014/15
Castlefarm
– 2014
Shaping our Future Together
26
• World Dairy Demand is projected to continue to grow.
• Ireland’s natural competitive advantages positions us to take adv...
28
“Looking forward with optimism”
Thank You
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Jim Woulfe-CEO, Dairygold

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Jim Woulfe of Dairygold, Presentation at Irish Agri Event in Fermoy 2014

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Jim Woulfe-CEO, Dairygold

  1. 1. 1st May 2014 Realising the Opportunity in a Sustainable Manner Jim Woulfe, CEO Dairygold Realising the Opportunity 1 Realising the Opportunity in a Sustainable Manner Jim Woulfe CEO, Dairygold 1 May 2014
  2. 2. 2 • Dairy Industry - 2014 • Dairy Opportunities: — Global Trends — Dairy Market Supply & Demand • Realising the Opportunities - Dairygold • Summary Contents
  3. 3. EU27 Ireland Milk Production billion litres 138.7 5.5 Dairy Cows million 23.1 1.1 Average Milk Yield kg/year 6,669 5,355 % of World Wide Milk Production % 24.4% 0.9% Exported Volume % 10% 85% Globally 625 billion litres Milk Produced (Cows) Dairy Statistics 3
  4. 4. Global Trade 54.0 billion litres c. 8½% Reference: FH 2020 and Fonterra Ireland Dairygold 4.7 billion litres 0.95 billion litres Global Dairy Traded Market 4
  5. 5. Growing Demand for Food By 2050 the world needs twice as much food as today Reference UN/FAO 5
  6. 6. Virtually all population growth is in developing countries Reference: United Nations Population Division, World Urbanisation Prospects Macro Data Indicated Population Growth 6
  7. 7. (200) 0 200 400 600 800 1,000 1,200 1,400 Asia Sub-Saharan Africa Latam N America Europe Reference: Population Reference Bureau, 2010 World Population Data Sheet Population Millions Population Growth by Region to 2050 7
  8. 8. “In Developing World – e.g. China, urban dwellers consume 6 times more dairy products than rural dwellers”. FAO In 1950 - c. 80% Rural : 20% Urban In 2000 - c. 50% Rural : 50% Urban In 2050 - c. 30% Rural : 70% Urban Reference: United Nations Population Division, World Urbanisation Prospects Population Growth – Urbanisation Shift 8
  9. 9. 4,000 6,000 8,000 10,000 12,000 GDP/Capita (US$) Reference: CIA World Fact Book Growth of Middle Class consumers Macro Data Indicated Income Growth 9
  10. 10. Adding as many as 1,000 new locations in Europe during 2014. Plans to open 1,500 new stores in 2014 - half of them will be in Asia Source: Bloomberg Source: Bloomberg Source: Bloomberg Will add at least 700 new outlets in China this year Changing Consumption Habits – Leading Global Brands Capitalising 10
  11. 11. 0% 1% 1% 2% 2% 3% 3% 4% 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012-15 2015-20 Growth% Reference: IDF 2.5% 2.4% Global Dairy Demand Growth Rates 11
  12. 12. 0.0% 20.0% 40.0% 60.0% 80.0% 100.0% 120.0% China Russia Mexico Brazil Korea Indonesia Self Sufficiency Rates Emerging Markets have a Supply Deficit 12
  13. 13. Reference: Global Trade Atlas (GTA) 0 100,000 200,000 300,000 400,000 500,000 600,000 700,000 2008 2009 2010 2011 2012 2013 Whole Milk Powder (WMP) Imports - China 13
  14. 14. N America <1% LATAM 2% < 1% Europe 4% MENA India 10% China 7% 1% OCEANIA 1% 2% 2% 1% 7% 4% 2% Demand Growth Milk Supply Growth Reference: Fonterra 2013 Demand Growth & Supply By Region to 2020 14
  15. 15. Global Trade Reference: FH 2020 and Fonterra Ireland Dairygold 54.0 billion litres c. 8½% 80 billion litres by 2020 8.25 billion litres by 2020 4.7 billion litres 0.95 billion litres 1.5 billion litres by 2020 Global Dairy Traded Market to 2020 15
  16. 16. • Global demand growth for dairy c. 2.5% per annum and projected to remain at this level to 2020. • Demand growth will be dominated by emerging economies which are also predominantly milk deficit regions. • Global Supply Trend will match demand but with greater volatility. • Temperate climate countries with surplus dairy supply will benefit from this growth. Global Dairy Market 16
  17. 17. Realising the Opportunity Dairygold - “Sourcing Locally & Supplying Globally” 17
  18. 18. Ensure a growing and sustainable Dairygold. • Develop the required infrastructure and optimal processing capacity • Ensure a sustainable financial plan • Retain Member Control over the business • Develop a robust strategic plan that is flexible, focussed on growth, while minimising risk. “Our single purpose is to maximise our Member Suppliers’ income from farming, by maximising the value we add to current and future milk and grain supply and by minimising the cost of farm inputs, while growing the Net Asset Value of the Business.” Objective 18
  19. 19. 5 Year Financial Performace Overview 19
  20. 20. 941 916 959 0 200 400 600 800 1000 1200 1400 1600 Millions 941 916 959 1000 1169 1239 1295 1353 1414 1478 0 200 400 600 800 1000 1200 1400 1600 Millions +537m Litres Milk Supply – Members’ Forecasts to 2020 20
  21. 21. 0.0% 2.0% 4.0% 6.0% 8.0% 10.0% 12.0% 14.0% 16.0% 2011/13 Grass based production with February Incentive 0.0% 2.0% 4.0% 6.0% 8.0% 10.0% 12.0% 14.0% 16.0% 2011/13 Future Dairygold’s Milk Supply Profile 21
  22. 22. Additional Volume Product Sector Markets % Milk Volume Cheese 35% Milk Powders 65% Additional Volume R2M Product Sector Markets % Milk Volume Cheese Demin Whey Powder UK, Mainland EU, MENA and Russia. Ireland, EU and China 35% Milk Powders WMP / FFMP / IMF Base Infant Milk Formula & IMF Ingredients EU, Middle East, North Africa, Latin America, China / Asia Asia & Baby Food sector 65% 2013 Product Portfolio/Additional Volume R2M 22
  23. 23. 33.4 21.8 29.4 33.6 30.9 38.1 CentsperLitre 6 Year Weighted Average Price of c. 31.5 CPL Market Returns/Dairygold’s Milk Price Tracker 2008-2013 23
  24. 24. 2015/’16 + 7.5 ML 2020 52.9 ML 2019/’20 + 7.5 ML 2011 29.0 ML 2012-13 +3.7 ML 2014 +5.2 ML Cheese & Whey Processing Phase I Mitchelstown Phase II Mallow Stage A Phase III Mallow Stage B Peak Week Processing - Million Litres (ML) Involves €200m Capital Investment over seven years to 2020 Increasing Processing Capacity by 23.9 MLToday Expansion Programme 24
  25. 25. • Market Returns / Milk Price Volatility • Financing & Cashflow Management • Land Availability & Mobility • Sustainable Dairy Assurance Scheme Dairygold is working with Industry Stakeholders to address the above issues and is progressing initiatives to support its Milk Suppliers Key Challenges Faced by Expanding Milk Producers 25
  26. 26. Mitchelstown HQ - 2013 Mallow Development – 2014/15 Castlefarm – 2014 Shaping our Future Together 26
  27. 27. • World Dairy Demand is projected to continue to grow. • Ireland’s natural competitive advantages positions us to take advantage of the increasing demand. • Dairygold: • is well prepared to avail of the opportunities. • expansion plans are modular and aligned to Milk Supplier Forecasts, • has the appropriate financing in place (Members and Banks). • Investments are focussed on availing of value added opportunities. • The increased volumes will generate c. €200m additional revenue for Dairygold Milk Suppliers and a total of c. €350m to the wider community. Summary 27
  28. 28. 28 “Looking forward with optimism” Thank You

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