Donegal’s core seed potato business, Produce, grew its top line sales by 5% to €33.9m but actual profits fell by 72% to €939,000 as adverse weather conditions negatively affected the quality and supply its potato products

Ian Ireland, chief executive of Donegal, told the Irish Farmers Journal this week that, despite the effects of the bad weather, the company’s core business remained very strong and the company was on course to expand its potato varieties, particularly its processing varieties like Infinity.

Donegal’s sales footprint expanded with the opening of new offices in France and Brazil during the year.

And following the successful integration of Donegal’s recent acquisitions like AJ Allan in Scotland and Solanex in Brazil, the group continues to develop its exports with its seed potato varieties now being sold in over 40 countries

Donegal’s net debt fell by 34% to €21.7m. This was helped by the sale of its liquid milk and stores business to Connacht Gold for €15.3m.

The board is recommending a final dividend of nine cent per share, which, if approved, will bring its total dividend to 16c and will maintain the 2011 payout.

“With a predicted additional one billion people to feed on the planet within the next seven years, mainly concentrated in Asia and Africa, and the associated increased demand for potatoes, our business is well positioned to capitalise on these future developments,” Ireland said.

Donegal’s share price is up 7% year to date, valuing the company at €36m. Its dividend yield is 4.4%.

By division

Agri-food : This division focused mainly on the British ‘food to go market’ and reported strong sales, which were helped by Donegal’s acquisition of Biogreen Dairy, a specialist yogurt producer last year.

Donegal’s ‘Organic for Us’ retail brand was part of sale to Connacht Gold last year.

On the agri side, animal feed sales (120,000-tonne sales) grew because of the bad weather last year.

Associates: A 130% increase in profits from associates to €4.5m was reported, mainly from Donegal’s 35% stake in Monaghan Mushrooms.

This company was more profitable last year as its key British market returned to normal consumption levels during the year.

It is the second largest mushroom producer in the world.

Monaghan Mushrooms has made a series of acquisitions recently, in Canada and Holland, which will complement and diversify the company’s activities. Monaghan has also acquired the Netherlands-based company, Walkro, in association with Gimv.