Irish-based food and agribusiness Donegal Creameries has announced that its profits will be “substantially below market expectations” for 2004.

The company said trading conditions in the dairy sector were difficult in the first half of 2004, a trend that continued into the second half of the year, mainly due to high milk procurement costs relative to market returns, particularly in Northern Ireland.

The group’s potato operations also experienced difficult trading conditions due to a significant rise in freight costs amid higher oil prices. Meanwhile, strong yields in the potato harvest in Europe depressed selling prices.

Donegal Creameries also said income from assets sales would be substantially below market expectations.

“Although a number of substantial asset sales have been agreed, these sales are subject to planning permission which is taking longer to obtain than previously expected,” the company said.