Ireland's Donegal Creameries has neither confirmed nor denied rumours that it plans to offload its under-performing dairy division.

Reports today (1 September) outlined how the company could sell the division, which reported a loss in the first of the year, to Connacht Gold, one of Ireland's largest co-operatives.

However, Donegal Creameries was coy about the future of the business. "Donegal Creameries notes the recent media reports concerning the future of its dairy business," it said this afternoon.

"As with any other company, Donegal Creameries continuously assesses the strategic direction and options available to it and its businesses. As it is the company's policy not to comment affirmatively or negatively on market rumours or speculation, Donegal Creameries has no further comment to make on these reports."

Donegal's first-half results, released today, showed the company's revenue rose 13.5% to EUR68.7m in the first six months of the year.

However, adjusted operating profit was down from EUR1.4m to EUR800,000. Donegal's dairy division made an operating loss of EUR980,000.

"Overall result reflects the challenging domestic market conditions experienced since the second half of 2010, and in particular the market for liquid milk," the company said.

Donegal Creameries was more positive about the market's prospects in 2012. "Dairy volumes are growing and it is expected that the division will return to more normal levels of profitability in 2012, consistent with previous years," it said.

The company's dairy division acquired a controlling interest in UK-based company Bio Green Foods in January.

Donegal Creameries already supplies milk to Connacht Gold and other co-ops, as well as manufacturing its own liquid milk and yoghurt products.