Bord na Mona has posted a sharp decrease in profits for the year to March last, down almost £2 million to £4.9 million, compared to the same period in 1997.

The State company attributes the fall to poor weather conditions during harvest time and a mild winter which meant a substantial downturn in sales.

Bord na Mona's operating profit also fell, from £21.8 million to £18.7 million during the same period. The company's chief executive, Mr Paddy Hughes, said yesterday that the bad weather this year meant that the company has achieved only 30 per cent of its peat production target so far, when it would normally have achieved about 70 per cent.

However, he stressed that if the weather improved in August and September the situation could be dramatically reversed.

Bord na Mona is claiming that its underlying profitability increased from £2 million to £3.8 million last year. This is because the company managed to reduce the price it charges the ESB for its peat supplies.

The figures released yesterday show, however, that the group's operating margin - operating profit as a percentage of sales - has fallen to 13.8 per cent, from 15.1 per cent last year. Operating costs as a percentage of turnover have risen to 86.2 per cent, from 84.9 per cent.

Bord na Mona paid £13.7 million in interest charges in the year to March, compared to £14.9 million the previous year. The group is also getting a total cash injection of £100 million from the Government to pay off its debt, once dubbed unsustainable, but which arose because it had to develop new bogs without being able to charge market prices for its peat during the 1970s oil crises.

In return Bord na Mona must reduce the prices it charges the ESB for its peat supplies.

Mr John Hourican, Bord na Mona's chief financial officer, said the group was aiming to generate pre-tax profits of around £12 million per annum, within the next four to five years. He said this would be done through a combination of acquiring new businesses, consolidating others and continuous cost reductions.

Mr Paddy Hughes said Bord na Mona was no longer just in the solid fuels market, but was now in the residential heating sector.The market for peat briquettes was declining by 5-10 per cent per annum, he added, but Bord na Mona's share was declining by half this figure because of good branding and marketing.

A new peat-fired power station is being built and operated by IVO, a Finnish group, to which Bord na Mona will supply one million tonnes of peat per annum over 15 years. Mr Hughes said IVO revenue would start coming in from the end of 2000. Asked if Bord na Mona was gearing up for privatisation, the group's chairman, Mr Pat Dineen, said such a move was still some way off. He said he would like to see this happen but stressed that it was a matter for the Government.