A decline in the value of dairy commodities hit profits at Donegal Creameries in 2008, the company reported today (24 April).

For the year ended 31 December 2008, underlying profits dropped to EUR4.7m (US$6.2m) from EUR6.1m in 2007 mainly due to dairy commodity prices and less activity in the property market, in which Donegal has interests.

Operating profit was also down, dropping to EUR5.8m from EUR9.3m in the previous year. The figures included a EUR1.1m of revaluation gains on investment property.

Despite this, turnover increased by 3.4% in 2008 to reach EUR129.9m.

Turnover in the company's dairy division was down by 5% to EUR56.3m but the group's liquid milk business delivered a "solid" performance for the full year.

"The economic climate and outlook have changed significantly in the last 12 months and the group has adapted to meet these new challenges," said managing director Ian Ireland. "In the short term, we have to deal with the impact of weak sterling on retail sales in Donegal for both dairy and agri-inputs and a weakening global economy.

Ireland added: "Food and agribusiness will be very resilient as markets come to terms with the current global dynamic and, while the group has short term challenges which will impact on performance and results, we are confident that over the next few years we will develop good sustainable business and continue to deliver value to shareholders."