Donegal Creameries profits plummet

PRETAX PROFITS at listed company Donegal Creameries fell by 86 per cent in the first half of the year compared with the same period last year, as the company’s main potato business suffered as a result of low potato prices.

The company, which sold its milk business and retail agri-stores to Connacht Gold late last year, saw pretax profits drop to €150,000 compared with €1.1 million during the same period in 2011. Revenue grew by 12.5 per cent to €35 million during the first half of the year.

The company said the drop in profits reflected the weak seed potato market in Europe and South America, where a temporary market oversupply led to a drop in price. However, it noted that the seed potato business was weighted towards the final quarter of the year, when 75 per cent of profit was generated. As a result the company “remains confident of a strong performance for the full year 2012”, it said.

Donegal Creameries made €7.5 million profit on the sale of its liquid milk business to Connacht Gold, net of redundancy costs, the accounts show.

Donegal Creameries’ primary focus is now on seed potato produce as well as its speciality dairy business, which produces dairy products for the Irish and British markets.

The dairy division represented about 12 per cent of overall revenue during the first half, with the company winning a number of new listings during the period, particularly with its brands Rumblers and Good Heavens in the UK.

However, it noted that the Irish market remained under pressure, with its Organic For Us range facing a “challenging consumer market” in Ireland, where discounting and promotions are having a negative impact on margins.

The company, which also has an investment in Monaghan Middlebrook Mushrooms, saw its net debt reduce from €33.2 million at December 31st, 2011, to €21.6 million at the end of June.

It wrote down its investment in One 51 by €0.33 million during the period. An interim dividend of 7.0 cent a share will be paid to shareholders in December, in line with the previous year.

Donegal Creameries, which is listed on the ESM in Dublin, is forecasting full-year adjusted earnings to be in the order of €5.1 million or 51 cent a share, an increase of 5 per cent on 2011. Shares finished up 1.5 per cent at €3.35 in Dublin yesterday evening.