Donegal Investment Group (formerly Donegal Creameries) has reported double-digit growth in half-year profits following a strong performance by its seed potato business. Announcing half year results on Tuesday, Donegal saw operating profits surge by 22% for the six months to the end of May 2019 to reach €3.8m.

Operating profit margins in the business widened to 8.3% in the first half of the year, which was up from 7% in the same period last year. Turnover for the first six months of its 2019 financial year increased by 5% to reach €46m, while adjusted earnings per share almost tripled to 79.1c per share.

The group’s net cash position reduced from €46m last year to just under €3m at the end of May after Donegal returned €51m in cash to shareholders last August following the sale of a number of non-core assets.

Produce Division

Donegal said its produce division, which includes its seed potato business IPM, saw turnover increase 3% for the six month period to €19.2m. Profits in the division increased 20% year on year to €2.7m, as profit margins widened to 14.3%.

Last summer’s drought has reduced the availability of seed potato across Europe and resulted in significant price increases for both seed and ware (table) potatoes, according to Donegal. In April, IPM invested in an Indian start-up company specialising in seed potatoes. India is the world’s second-largest potato-producing country behind China, producing between 45m and 50m tonnes of potatoes every year.

Food-agri & property division

Donegal’s food-agri & property division saw sales increase by 6% in the first half of the year to reach €26.8m. However, operating profits fell by 15% in the period to just over €1.1m as profit margins narrowed to 4.3%.

Smyth’s Animal Feeds, which is Donegal’s subsidiary feed business, had a solid performance in the first half of the year. The group said its speciality dairy business, Nomadic Dairy, continued to deliver strong volume growth due to new listings with key customers in the UK.

Having announced plans to sell its Nomadic dairy business last year, Donegal said this week it has committed to supporting future growth in the business by investing in additional capacity at its Killygordon processing plant.

AGM

Donegal will hold its annual general meeting (AGM) with shareholders on Wednesday 29 May at 11.30am in the Silver Tassie Hotel, Letterkenny, Co Donegal.