Michael Hanley, CEO, Lakeland Dairies

Contemporary Scholars Conference Cavan, Ireland 2016

Lakeland Dairies is a farmer owned co-operative

with a heritage of excellence in dairying spanning

over 100 years. It is an internationally recognised supplier

of superb dairy ingredients and foodservice products with

an outstanding mix of high quality raw materials, modern

processing facilities and a highly skilled workforce.

Lakeland - The Dairy Experts

Heritage Killeshandra Co-operative (estd. 1898)

Lough Egish Co-operative (estd. 1902)

MERGED 1990

Acquired Bailieboro (Golden Vale) and Nestle (Omagh) 2002

Acquired Pritchitts (Newtownards) 2003

Opened R&D Knowledge Centre (Newtownards) 2003

Closed Omagh and rationalised production to Lough Egish and Bailieboro 2006

Commissioned new 7M Tonne/Hour Niro Dryer at Bailieboro 2010

Closed Lough Egish Drying Facility / Rationalised all drying to Bailieboro 2010

Quota Abolition 2015…..

Lakeland Dairies is creating a Sustainable Future for our Milk Producers

Some Key facts & figures Our Revenues: €625 million 2014 Our Employees: 670

Milk Processing Volumes: 850 million litres Our Milk Suppliers: 2,100

Milk Processing Locations: 4 Corporate structure: 100% Co-operative

1898 – 1995 – 2015

Irish milk processor catchment areas

Dark Green = Lakeland

Shaded Green = Shared

Organisational Structure

Lakeland Dairies Board

14 elected directors 1 non exec

Chief Exec Mr Michael Hanley

Food Ingredients Business Unit

Foodservice Business Unit

T/O €100m

Agribusiness Unit

Milk Assembly NI

Group Services Financial

Purchasing Personnel

Socious Ingredients USA

Scale, Efficiency, Market Access, Competitiveness

Processing 1.1 Billion Litres of Milk

160,000 Tonnes Milk Powder

30,000 Tonnes Butter

170 Branded Products

77 Countries

500,000 Tonnes of Feed

€10.9 m

Operating Profit – 2011

.

2050: 9.7 Bn

Asia Africa

More than 3 out of every 4 people on the planet live in either Africa or Asia (UN 2012)

Ireland dairy exports to China growing rapidly

0

50

100

150

200

250

300

350

400

450

500

2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015

百万

Trends driving dairy food production

World Milk Supply Jan-Dec 2015 (Key Exporters)

-1,000 -500 0 500 1,000 1,500 2,000 2,500 3,000 3,500 4,000

USA

EU28

NZ

Australia

Argentina

Net Position

000’s Tonnes

-1.3%

-1.4%

+2.1%

+1.2%

+2.2%

+1.4%

World Milk Supply Jan-Dec 2014 (Key Exporters)

-2,000 0 2,000 4,000 6,000 8,000 10,000 12,000

USA

EU28

NZ

Australia

Argentina

Net Position

000’s Tonnes

+3.7%

+3.7%

+8.4%

+4.5%

+2.4%

-3.9%

EU Milk Production Jan-Dec 2014

0 200 400 600 800 1,000 1,200 1,400 1,600 1,800 2,000

Other EU

Poland

Ireland

UK

Netherlands

France

Germany

000’s Tonnes

+5.7%

+2.1%

+8.3%

+4.2%

+7.1%

+3.9%

+3.6% est.

Global Dairy Trade Price Index 2000 - 2015

GDT Auction Results 3rd Jan 2012 to 2nd Feb 2016 (US$/MT)

0

1,000

2,000

3,000

4,000

5,000

6,000

3 Ja

n 2

012

1 F

eb 2

01

26

Mar

20

123

Ap

r 2

012

1 M

ay 2

01

25

Jun

201

23

Ju

l 20

12

1 A

ug

201

24

Sep

20

12

2 O

ct 2

012

6 N

ov

20

124

Dec

201

22

Jan

201

35

Feb

20

13

5 M

ar 2

013

2 A

pr

20

131

May

20

13

4 Ju

n 2

013

2 J

ul 2

01

36

Au

g 2

013

3 S

ep 2

01

31

Oct

20

135

No

v 2

013

3 D

ec 2

013

7 Ja

n 2

014

4 F

eb 2

01

44

Mar

20

141

Ap

r 2

014

6 M

ay 2

01

43

Jun

201

41

Ju

l 20

14

5 A

ug

201

42

Sep

20

14

1 O

ct 2

014

4 N

ov

20

142

Dec

201

46

Jan

201

53

Feb

20

15

3 M

ar 2

015

1 A

pr

20

155

May

20

15

2 Ju

n 2

015

1 J

ul 2

01

54

Au

g 2

015

1 S

ep 2

01

56

Oct

20

153

No

v 2

015

1 D

ec 2

015

5 Ja

n 2

016

2 Fe

b 2

016

Addressing the need…

Joint Lakeland & Teagasc Programme Targeting…

Milk protein content

Grass utilisation

Herd fertility

- Business management awareness meetings

- Producers are focussed on growth, new investment and sustainability

- Strong potential for new milk from start-ups and converters

… (A) Make current production more efficient

… (B) Facilitate profitable expansion

Lakeland FutureMilk Initiative…

Lakeland Dairies - Foodservice Division (trading as Pritchitts)

Turnover: over €170m

Processing over 140m litres of dairy and non dairy liquid ingredient

Production sites

Newtownards, Northern Ireland

Killashandra, Southern Ireland

Sales and Marketing

Bromley, United Kingdom

Minipots Minibutter & Powders

Innovation

Markets - Food Ingredients & Foodservice

Now Fully Operational

New Global Logistics Centre

‘Just in Time’ Global Distribution 14,000 Pallet Spaces Robotic Order Assembly

Adding value today Coolicious Acquisition

Global partnerships…

Adding further value for tomorrow €40m Bailieboro Dryer No. 3 (on target for Spring 2016)

Planning for The Future Graduate Development Programme

Priority… The main pillars for the Dairy Industry must be…

• Sustainability in Production and Processing

• Economies of Scale and Total Efficiency

• Technology and Value Added Products

Lakeland is delivering on all these fronts

National Branding for Sustainability

• 85% of all agrifood manufacturers are members

• Certification for sourcing, manufacturing, social responsibility

• 43,500 beef farms. 90% of all beef production

• 18,000 dairy farms starting into new quality assurance scheme

• Goal: Every farm, every business to be certified by 2016

Lakeland Dairies is creating a Sustainable Future for our Milk Producers