Donegal Investment Group, formally Donegal Creameries, recorded pre-tax profits of €3.5m for its financial year to the end of August 2017.

The result is a significant improvement on the pre-tax loss of €545,000 incurred by the business the previous year.

Turnover for the year stood at €77m, which was 62% ahead of the previous year. This substantial increase is primarily a result of Donegal’s decision last year to change its year-end reporting date to August.

The company’s 2016 financial year was for just eight months.

In October, Donegal announced it had reached a settlement over the value of its 30% shareholding in Monaghan Mushrooms

Donegal reported operating profits of €4.5m, meaning the business has a healthy profit margin of 5.9%.

The company’s balance sheet is in robust shape with cash reserves of €12.2m more than offsetting year end debts of €5.1m.

Donegal disposed of a number of non-core assets during the year including Chef in a Box, a London-based sandwich business, and the 2,400ac farm An Grianan Estate, which netted €17.4m.

Managing director Ian Ireland said the business would continue to release capital for the sale of non-core assets in 2018, which would ultimately allow for capital to be released back to shareholders.

By division

Seed potatoes

Donegal’s seed potato business, which accounts for almost 40% of total group revenues, is comprised of two companies; Irish Potato Marketing (IPM) and AJ Allan in Scotland.

The business generated sales of €30m in its 2017 financial year.

Operating profits for the 12 month period stood close to €2.2m, giving the business a profit margin of 7.2%.

Poor weather conditions across Europe led to a bad seed potato harvest in many countries. This led to tight supplies and meant a strong demand for IPM seed potatoes in the 2016/17 season. Donegal’s seed potato division has 30 proprietary potato varieties such as Rooster, Burren, Banba, Slaney, Nectar and Electra. The business has exports to over 40 countries worldwide.

Agri-food and property

Over 60% of Donegal’s business is generated from its agri-food and property division, which reported sales of €47m. Operating profits in the business were just under €2.4m, with profit margins of 5.1%.

This division includes Donegal’s speciality dairy business based in Killygordon, Co Donegal, which produces a range of on-the-go yoghurt products sold under the Nomadic brand. Donegal said Nomadic delivered double-digit sales growth in 2017, which they expect to continue into the 2018 financial year.

Donegal’s animal feed business, Smyth’s, delivered a satisfactory result with a small increase in feed volumes offsetting lower ration prices.

Court case settled

In October, Donegal announced it had reached a settlement over the value of its 30% shareholding in Monaghan Mushrooms following a four-year legal battle with Danbywiske, the controlling shareholder in Monaghan Mushrooms.

The company is in line for a €45m payout from the sale of its 30% stake in Monaghan Mushrooms, which Donegal expects to be completed by February 2018.

Read more

US farmers will plant smallest wheat crop on record in 2018