Pretax profits plunge 55% to €2m at Donegal Creameries

Profits at Donegal Creameries have slumped following a difficult year across all its trading divisions.

Pre-tax profits at the group fell over 55 per cent last year to just over €2 million, from €4.52 million in 2003. The 2003 figures had been revised downwards significantly following the recent discovery of financial problems at Carbury Mushrooms relating to 2003, when Donegal held a 52 per cent stake in the company.

Donegal Creameries chairman Lexie Tinney described 2004 as "a year in which [ the company] experienced the most difficult trading conditions across many of its businesses for some considerable time".

Group turnover fell 12 per cent to €118.3 million, a feature attributed to the merger of Carbury and Monaghan Mushrooms. As an associate company, Monaghan's turnover is not consolidated in the Donegal figures.

However, turnover was also down in dairy, potato and animal feed divisions and at its chain of 14 agri-retail stores.

Despite its difficulties, the company is proposing a final dividend of 6.5 cent per share, bringing the full-year dividend to 12 cent - the same as in 2003, which, ahead of the restatement, had been a record set of figures.

Carbury was merged with Monaghan Mushrooms last year, leaving an entity in which Donegal had a 23 per cent stake.

Monaghan Mushroom's inability to sign off on its own results as a result of the discovery of historic anomalies meant Donegal could not file its own figures to the stock exchange by an April 30th deadline. The company's shares had since been suspended.

The restatement of Carbury Mushrooms' 2003 results saw a net profit reduction of €2.6 million. Donegal's 2003 profits were restated down by €1.365 million as a result of the size of its shareholding in Carbury.

Group managing director Ian Ireland, who joined the group last January, said trading conditions had continued to be difficult in a number of areas ithe first few months of the 2005 trading year.

He also said there was still no clarity on the likely impact of EU changes in agricultural policy.

He acknowledged that the liquid milk market continued to be very competitive and said Donegal Creameries would look to consolidation and product development to improve performance.

Trading in the agricultural and other trading divisions would be mixed, the company said.