Donegal Creameries profits rise despite fall in sales
The food group yesterday reported preliminary pre-tax profits of €5.9 million, an increase of 2% on the previous year, despite an 0.5% drop in sales to €134.7m.
Sales fell in the group’s agri-retail stores and in its animal feed business, but dairy sales rose by nearly 10% to €47.9m. Earnings per share were up 4% to 49.2 cent.
Sales to other processors continued to account for a large proportion of the dairy division’s turnover. The contribution to profits from this business was up on 2002 due to higher margins achieved and increased gallonage.
Turnover in the agri trading division dropped from €91.7m in 2002 to €86.8m in 2003, a decrease of 5.3%, primarily in the group’s agri retail stores, compound feed mill and mushroom joint venture.
The turnover at the division’s potato operations at Irish Potato Marketing (IPM) and Donegal Potatoes (DPL) was in line with last year. However, profitability increased as a result of higher margins achieved generally and higher tonnages to higher margin markets.
Donegal Creameries said trading conditions in some of its operations have been difficult in the first quarter of 2004, particularly in the dairy and retail stores divisions, though it believes it will deliver a ‘satisfactory’ performance.
Noting that the liquid milk market remains very competitive, both locally and nationally, the group said it will continue to seek to develop this business particularly outside Co Donegal and to seek acquisition opportunities.
The group, whose land at An Grianan continues to be let for satisfactory rentals, said it will continue to sell selected sites from the estate which will not impinge on the rentals achieved.
Lexie Tinney, chairman, and John Keon, managing director, predicted that the group’s mushroom operations should return to profitability during the current year.
