Profits rise at Donegal Investment Group helped by strong dairy performance

Profit rose to €3.1 million at Donegal Investment Group, formerly Donegal Creameries, helped by double digit growth at the company's speciality dairy business.

The agribusiness, which has a portfolio including potato production, said sales grew from €40.6 million to €45.2 million in the year ended August 31st. The 2018 results have been restated after Donegal off-loaded animal feed business Robert Smyth & Sons earlier this year for €17.25 million.

The Smyths business manufactures animal feeds from a facility in Ballindrait, Co Donegal, and supplies branded and own-brand feed products for the beef, dairy, sheep, pig and poultry industries across the north and northwest of Ireland.

Profit before tax for the group rose from a restated €2.02 million to €3.1 million before exceptional items.

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Donegal's produce division comprises the seed potato business Irish Potato Marketing (IPM) and AJ Allan in Scotland. IPM has 30 proprietary potato varieties, including names such as Rooster and Slaney. Its dairy division controls the Nomadic Yogurt brand.

The dairy arm “continued to deliver to management expectation with double digit growth in a competitive marketplace”, the company said. Its seed potato business, meanwhile, experienced revenue growth through increased demand despite being constrained by weather related setbacks.

Adverse weather

Seed potatoes account for €27 million of Donegal's turnover with dairy products accounting for the remainder. "Adverse weather conditions in European growing areas impacted the 2018/19 potato crops which led to poor availability of seed in the wider market," said chairman Geoffrey Vance.

“We continue to invest in the development of innovative seed potato with six new varieties commencing commercialisation in the coming year,” he added.

In respect of the company's dairy arm, Mr Vance noted that a significant capital project is underway to double the company's capacity in its Killygordon, Donegal, based business.

Managing director Ian Ireland said in respect of the dairy arm that the brand will see significant investment in marketing early next year to further support its growth.

“Furthermore, and in response to the broad consumer concerns re sustainability, the business will undergo a significant change to its pack format in early 2020 which will remove 200+ tonnes per year of plastic from the supply chain,” Mr Ireland said.

Following the sale of Smyths, Donegal Investment Group posted a cash position, net of debt, of €21.3 million at the end of the year.

“The group will continue its strategic review to assess all options available to maximise shareholder value, and shareholders will be updated at the appropriate time,” Mr Vance said.