Profits hit at Donegal Creameries
Published 02/09/2011 | 05:00
DONEGAL Creameries' motives for wanting to sell its Dairy Ireland division became clear yesterday, after the company posted worse than expected half- year results on the back of high milk prices and the ongoing struggles of the consumer foods sector.
The Letterkenny-based company would not comment on reports that it is in talks to sell the division to Connacht Gold, but talks are believed to be at an advanced stage with an agreement between the two companies expected "imminently".
A loss of nearly €1m by the Dairy Ireland business helped cut the company's profits after tax for the first six months of the year to only €862,000 -- down €2.77m year-on-year.
The lower profit came despite turnover that was up 13.5pc to €68.7m.
"The overall result reflects the challenging domestic market conditions experienced since the second half of 2010, and in particular the market for liquid milk," said chairman Geoffrey Vance.
"This is due to the significant time lag in recovering cost increases within a very competitive market."
Donegal closed the day down 5.56pc at €3.40.