Donegal Creameries has seen its profits drop significantly in the first half of 2012, despite a 12.5% increase in turnover.

The company, which has operations in Ireland, Britain, the Netherlands and Brazil, recorded a pre-tax profit of €150,000 for the first six months of the year, down from €1.07m for the same period last year.

Turnover was up nearly €4m to over €35.1m, with revenues increasing across all sections of the business.

In its accounts summary the company said the drop in profits was largely attributable to “a difficult European and South American season for seed potatoes due to the temporary market oversupply”.

Increased profit in its agri-inputs division was also partly offset by a continued investment in the speciality dairy business, the company said.

The company previously decided to sell its liquid milk and retail business to focus on areas like seed potato produce and speciality dairy.