Tough trading period for Donegal companies

Donegal Creameries plc generated a pre-tax profit of €3.62 million in the six months to the end of June 2004. That's back on the profit of €4.05 million reported for the corresponding period of 2003.

At operating level the higher prices paid for milk in Northern Ireland impacted on profits in the dairy division. Overall operating profits fell by a third to €1.9 million down from the €2.8 million made in the first half of last year. Total turnover was back by 5.2% to €65.2 million.

Chairman Lexie Tinney said that there were difficult trading conditions in the dairy sector. Profits were down due to the cost of sourcing milk in Northern Ireland. But the lower profits and sales were not confined to just the dairy division. Lower farm input sales and lower mushroom sales were also experienced. The group's animal feed mill and the trading stores generated lower profits. The potato businesses, Irish Potato Marketing and Donegal Potatoes, reported lower turnover and profits, which the company put down to seasonal factors. The Oatfield sweets business was in line with last years performance.

The Carbury mushroom business was merged with Monaghan Middlebrook mushrooms just before the end of this financial period. Profits from this business improved and Donegal's share was €383,000 for this opening half year.

Property developments continue to make an important contribution to the plc's financial results. Asset disposals in this period amounted to €1.33 million up from €1 million in the corresponding period of last year. The company report that the section 50 student accommodation which the group developed in Letterkenny has been completed. The group has taken a decision to hold on to these properties and rent them out. Other potential property developments are being examined on the group's land bank in Letterkenny. It also holds property in Sligo. The An Grianan estate, the largest farm in the country, continues to make a rental contribution to the group's result.

IAWS agri profits hit

IAWS has revealed the profitability of their two business divisions, food and Nutrition/agri for the first time ever in their latest set of accounts to the end of July 2004. It shows the higher contribution and higher margins in the group's food business, but it also reveals what a strong mature business the agri unit is.

Both chairman Philip Lynch and chief executive Owen Killian stressed the importance of the Agri/Nutrition business in throwing off free cash to invest in establishing the food business initially in Ireland and the UK and more recently in Canada and in the United states.

The agri side experienced tough trading during this financial period due to the volatility of feed raw material prices which impacted the R and H Halls business. The marine protein business was affected by the impact of the weaker dollar on prices. Overall the operating profits of the agri/nutrition business were €4million lower than in theprevious year. There is €470 million invested in assets in the food businesses compared to €120 million invested in the Nutrition/agri businesses. Meanwhile outgoing finance director David Martin has sold 100,000 shares at a price of €10 per share. He still retains 80,158 shares in the company.

Northern mushroom business expands in Scotland

The Co Armagh-based McGearys Mushroom Group has purchased Cairns Mushrooms in Ayr in Scotland. This is the company's second growing and processing plant in the South west of Scotland, having bought a similar plant near Kilmanock in 2001.

It's expected that the purchase of the Cairns' operation will allow McGeary's to service its customers in Great Britain, like Lidl and Co-op, more effectively. Managing director of the group Thomas McGeary said that he firmly believe there is a future for mushroom production in the UK and Ireland at the present time and he is prepared to invest accordingly.

He said: "the influx of cheap Polish imports has resulted in a spiralling downward of prices in the market.

"Efficiency of production at all levels is the only way forward for the industry as it represents the only means by which we can meet the challenge of imports head on!''