Donegal Creameries reports fall in profits but dairy sector holds up well

DONEGAL Creameries has reported a sharp fall in profits for 2009, which at €46,000 were well off the €739,000 achieved in 2008.

Turnover in the period fell from €129.8m to €113.2m, while adjusted earnings per share rose marginally from 46.1 cent per share to 48.9 cent. Dividend for the year was maintained at 16 cents per share.

The results show that the biggest impact on the group’s performance last year was in its property portfolio. There were no sales or acquisitions, but Donegal reduced the carrying value of the assets by €5m in 2009.

That resulted in a loss of €4.8m in that division compared with a profit of €1.4m the year before.

The Grianan Estate, the group’s largest property asset, continues to be developed and its conversion to organic land is going according to plan, the group said in a statement.

Chief executive Ian Ireland said despite the negative impact of the poor economic environment on many of the businesses “the group delivered a satisfactory performance with excellent strategic performance in key business areas of added value” in the dairy and produce segments of the business.

The progress made in 2009, especially in areas targeted for key strategic growth, leaves the group confident about the future outlook, he said.

During the year bank debt reduced from €26.7m to €20.5m, while improved profits were generated by both the dairy and produce businesses.

Its associates — in particular Monaghan Middlebrook Mushrooms, which is 35% owned by the group — did well during the year.

Donegal said its range of organic products is on course to be introduced to market this year, while the acquisition of Chef in a Box (UK) has increased the sales platform in that market.

Donegal said the first organic crops have been planted by the group on its estate while the acquisition of a majority shareholding in Solanex (Brazil) — a seed potato production company — has given the group access to the South American market.