DONEGAL CREAMERIES fell to a loss in 2008 as the decline in global dairy prices hit the IEX-listed company hard.
In its annual results statement, the company said “the painful downside of volatility” was being felt by producer and processor alike, while the dairy group was also affected by the “difficult” property market.
The company’s operating profits fell 37 per cent to €5.8 million, while pretax profits collapsed from €14.9 million in 2007 to €739,000 last year.
This resulted in an after-tax loss for the year.
Turnover from continuing operations increased 3.4 per cent from €126 million to €130 million.
Donegal Creameries’ agri-business division performed well, the company said, with its seed potato business continuing to flourish and its recently-established garden centres making “a useful” contribution.
The company’s expansion into organic foods continued, with further conversion of lands at An Grianán estate, together with increased organic activities at Donegal Potatoes.
The liquid milk business had a “solid” performance, but the weakness of sterling affected sales in the final quarter as consumers moved to shop in Northern Ireland.
Donegal Creameries chairman Geoffrey Vance said that, despite the challenges faced in 2008 and the current economic climate, the group balance sheet remained strong.
The directors recommended a final dividend of nine cent per share, taking the total dividend to 16 cent per share.
NCB Stockbrokers food analyst Paul Meade said dividend growth was unlikely in 2009 given the decline in profits. He described the outlook for the company as “challenging”.
Goodbody analyst Killian Murphy said the results were “disappointing” and fell short of expectations.
“Given the continued pressures on the company regarding its dairy business and the potential impact that rising unemployment will have on rental assets, we retain our cautious stance on the stock,” Mr Murphy wrote in a note to investors.
Donegal Creamery Results 2008
Turnover: €129.9 million (+3.4%)
Pretax profit: €739,000 (-95%)
Basic loss per share: 0.9 cent (eps of 109.8 cent in 2007)
Dividend: 16 cent per share (+3%)
