Donegal 'confident' despite fall in profits

AGRIBUSINESS GROUP Donegal Creameries has reported a 57 per cent fall in pretax profits to €1.5 million for the first six months of the year, but said it remains “confident” it will meet full-year earnings targets.

The Letterkenny-based firm said revenues dropped 17 per cent to €57.7 million. “The environment for agri-inputs in general and dairy in particular has been unprecedented for both producer and processor alike,” it said.

The volume of milk collected dropped by 3.3 per cent, and milk prices were significantly lower.Turnover at its dairy division fell 23 per cent to €23.1 million after a decline in global dairy prices.

Donegal said milk producers had faced their most challenging season on record due to poor prices and persistent bad weather.

The company’s agri-inputs division reported “very poor” results due to a combination of weak sterling and historically low prices.

This unit reported a loss of €1.6 million compared to a profit of €1.2 million for the first six months of 2008.

The group’s property and investments unit made no sales last year, but said rental incomes were on budget.

Group borrowings were reduced by 17 per cent to €22.2 million, with operating cash flows improving by 9 per cent to €5 million. At the end of June the group had total assets of €111.2 million and equity of €62.6 million. Net debt has fallen from €26.7 million to €22.2 million.

Donegal said it remained confident of meeting a full-year adjusted earnings per share target of 30 cents.

Adjusted earnings per share for the first half were 14 cent, down 43 per cent on the same period last year. The dividend was 7 cent, unchanged from the same period last year.

Group operating profit was €600,000 compared with €3.1 million the previous year.

Brokers described the results as weak and said its dairy business remained under pressure. Its shares closed unchanged at €2.30.