Posted on Monday 3 December 2018 by John Mulgrew
Dale Farm chief executive Nick Whelan speaks to John Mulgrew about bringing pride to the business, growing profits, facing Brexit hurdles and expanding the dairy giant’s portfolio
Nick Whelan took over at the helm of Northern Ireland’s largest dairy co-operative just as the UK decided it wanted to leave the world’s largest trading bloc.
Now, marking two years in the role, after replacing long-time boss David Dobbin, he says he wanted to grow earnings and profit to more than £20m, while diversifying into product lines with bigger margins for the some 1,300 farmers which own the operation.
At the time of writing, we still haven’t agreed what arrangement will be in place to safeguard the current trading freedoms Northern Ireland producers have. A deal is on the table, though.
Nick says that, aside from issues around getting staff, a transition must be in place after March 29 for export certificates, otherwise he can’t sell product outside the UK.
“I have an ambition to get it to the mid-20s (EBITA earnings in millions). We are growing our EBITA from the £12m average to about £30m.”
Pre-tax profits have cracked the £12m mark in the last year, while turnover has soared by almost £100m to £482m.
Nick says he turned his attention to attracting back some of the farmers which it has lost to other competitors.
“At one point we had a billion litres of milk, now it’s around 850 million. We hadn’t been paying a particularly good milk price.
“What it (the business) had done is invested in itself quite heavily, and invested in the future, and had made a really brave strategic decision in 2012, long before I came here, to get out of producing milk powders, and getting in to cheese and whey.
“Now, that cost them £40m to do that. That was really brave.
“The first thing we did was get out to farmers, and explain to them what their business was.
“We have paid a leading milk price, and that has brought genuine pride.
“We needed to get into the business. The most fundamental change – it’s a people agenda. We were a very centralised business and all decisions came from the top, and went out.
“Now, we have put the business into seven strategic business units and we are getting more adept with strategy, day-to-day, and developing people within the business to take ownership.”
Nick says it’s about getting the right people into the business, and helping mentor and develop strong teams to ensure Dale Farm’s success.
“We have spent a lot of money on additional people in the business. It’s not about numbers, it’s not about capacity, it’s about capability. We are really trying to find world-class people. >
He said the firm will spend another £2m on its people this year. Meanwhile, data and decision making is another area it’s expanding and developing. >
“We have a little bit of latency in the business, and I’m saying how do I get live information to those people?”
That includes looking at new markets and products. Nick says the business had been focusing on the macro, and perhaps missed potential opportunities.
“We have massive opportunities for growth,” he said. “The EBITA growth isn’t necessarily about growing your top-line, although it will grow a bit. We process 850 million litres of milk. Are you making sure you are making products which will give you the most profit from that – the answer to that is no.
“We can switch categories and products, and we can make a whole lot more money with the 850 million litres.
“It’s looking at consumer trends by getting out of commoditised type products and getting in to more value-added products. That’s about understanding your consumer.”
He said the business has made “serious traction” in the last two years, as a company.
As for growth in the future, with March 29 around the corner, Nick says it will continue “as long as there isn’t something mad and disruptive from Brexit”.
“That could happen. A ‘no deal’ and no transition Brexit is mad and disruptive and changes everything. I don’t think people have really looked at it, and really understand what it means. We have looked at it, and it’s very challenging.”
For Dale Farm, Nick’s Brexit concerns centre around staff and people – with around 22% of the workforce EU nationals.
Nick says the company has struggled to get lorry drivers when milk supply is at its peak.
But for Dale Farm, and other food processors, there is a concern over the certification process, following Brexit. “It’s basically an export certificate for dairy products. You are not allowed to export without this certificate,” Nick says.
“For example, we have signed a quite public announcement with Lidl. We are supplying Lidl all over the world. If Lidl were to ask me in the morning, can you guarantee that you can supply my countries outside the UK on April 1? I actually can’t.
“It’s nothing to do with tariffs or costs. If I don’t have animal health export certificates approved well-ahead of Brexit – these things take about six months to negotiate.
“I’m screaming at DEFRA (Department for Environment, Food and Rural Affairs) and DAERA (Department of Agriculture, Environment and Rural Affairs) here to get this done now.”
“Why don’t you agree the wording, and have the work done, so when the agreement is or isn’t made… now you can start.
“It’s a huge risk for this industry here, if we can’t get stuff off the island.”
Around 37% of Northern Ireland’s dairy output goes to the EU and the rest of the world.
“In milk, milk keeps flowing. We can’t say to farmers ‘we can’t sell the product, can’t get the certificates, tell the cows to take a break for a few weeks’. It doesn’t happen.
“I’m going to have to reassess... ‘how long can I survive not selling my 37% of dairy off the island?’
“If there is a no-transition no-deal Brexit it will be really bad for business. Supply chains will be severely disputed and you’ll have a shortage of products everywhere.” ■