Cold storage and distribution group Norish has posted a return to profits but has continued to disappoint the market.

In the first half of this year the group recorded a pre-tax profit of £200,000 (€292,000) compared to a loss of £800,000 (€1.1 million) in the same period last year.

The 2003 figure was distorted by an exceptional charge of £725,000 in relation to restructuring charges.

Turnover remained unchanged at £6 million with the group's profit per share coming in at 1.2p compared with a loss of 7p last year.

In a statement, Norish said trading in its commodity and ambient businesses continued to be difficult, particularly due to the decline of its cocoa storage business.

"The cold storage division historically performs well in the second half of the year and, at this stage, we have no reason to believe that this will not be the case."

Earlier this week, the company's board of directors said it had received an approach which might or might not lead to an offer being made for the company.

Yesterday it said that discussions regarding this approach were still at a preliminary stage. It stated that, as a consequence of these discussions, the board had decided against paying an interim dividend to its shareholders.

Norish shares were unchanged in Dublin yesterday at 85 cents.

The results failed to impress the market in general. Goodbody Stockbrokers issued a note telling investors to "sell" the stock. It said it had assumed the group would have improved its performance more substantially this year yet this was not evident in the interim results.

Its analyst, Mr Liam Igoe also cited Norish's decision to withhold a dividend payment as another reason to dump the stock.

Norish said its cold storage division performed well in a market that was still suffering from overcapacity and pressure on rates as well as increasing electricity costs. A number of its sites also suffered as a result of the outbreak of Asian flu but it added that the business was now more stable. It also said that it had won a significant contract for its Braintree store.

Its commodity stores suffered from the earlier than expected loss of its major cocoa storage contract. This business is spread across its operations at Belvedere and Felixstowe and will finish by the end of the third quarter.

Trading has been extremely difficult at Felixstowe where it currently has excess capacity it said. It hopes to expand its coffee storage business at Belvedere during the second half of the year.

The company stated that its York facility continues to perform well and was experiencing increased demand.