'Difficult' conditions at Donegal Creameries as profits slump

Food co-op Donegal Creameries saw a 55.6% slump in pre-tax profits to €2m for the year ending December 2004, from the restated figure of €5.1m in 2003, the group announced today.

Group turnover fell to €118.3m, down 12% from €134.5m, in large part due to the merger in June 2004 of the group's mushroom operations, Carbury Mushrooms, with Monaghan Mushrooms.

Donegal said it incurred a prior year adjustment of €1.3m due to the necessity to restate Carbury Mushroom's results for 2003 due to a number of factors which had come to light.

The company said that 2004 was a year in which it experienced the most difficult trading conditions across many of its businesses for some considerable time.

The group's operating profit fell to €600,000 in the year under review from €5.1m in 2003 - a slump of 87.4% due to difficult trading conditions in the dairy and potato businesses particularly. Earnings per share decreased by 57% to 15.4 cent, down from 35.9 cent in 2003.

Donegal said that trading conditions remained difficult in some of its businesses for the first number of months of 2005. It added that the full impact of the EU changes in agricultural policy are still difficult to assess at this stage.

'Nevertheless, the directors believe that the group's performance for the current fiscal year will be satisfactory,' the company said in its results statement.

Donegal had suspended its shares from the Irish Stock Exchange from May 3 until today because of the problems in finalising results at Monaghan Mushrooms.