Donegal's Q1 profits decline on lower dairy prices

Donegal Creameries' pre-tax profits dropped by 57 percent to EUR1.5 million for the first half of 2009, down from EUR3.5 million the same time last year.

Revenues fell by 17 percent to EUR57.7 million, a result attributed to the poor market conditions that had negatively affected both dairy producer and processor.

Poor commodity markets, poor weather, a shortage of cash at a farm level, Donegal's border location and the weakening of sterling impacted the company's bottom line.

Turnover in Donegal's dairy division fell by 23 million to EUR23.1 million, reflecting the major decline in global dairy prices. The company said that milk producers have had the most challenging season in memory due to poor prices and persistent inclement weather.

The agri-inputs division reported a loss of EUR1.6 million but the company said the division's outlook is improving.

The company said that good progress continues to be made in the strategic growth areas of valued added dairy, organic food and seed potatoes.

The company said the board is confident that the markets for agri-inputs will return to a more sustainable position as sterling strengthens, commodity prices stabilise and milk prices improve.

US$1 = EUR0.685640 (Sept 11)