Donegal Investment Group, formerly Donegal Creameries, has reported a slight dip in profits in the six months to the end of February.

The company reported a pre-tax profit of €2.8m for the six month period, down €400,000 year on year.

Revenues for the half year were also lower, falling by €2.2m to €44.2m

However it also saw an exceptional gain of €19.2m following the disposal of its share in the Monaghan Middlebrook Mushrooms business.

Donegal Investment Group said that revenues in its Produce division were down €2.7m to €18.9m, with profits decreasing by €0.7m to €1.8m compared to the first half of last year.

It noted that adverse weather conditions across Europe resulted in lower than expected yields, which in turn gave rise to a reduction in the availability of seed potato. 

This resulted in volumes sold falling lower than planned in some key markets, but Donegal added that some of these losses were offset by improved trading margins. 

It also said the business saw difficult trading conditions in its South American market with the seed potato industry in Brazil experiencing a major downturn in demand due to the economic climate.

Revenue from Donegal's Food-Agri and Property division rose by 0.5% to €25.3m in the six month period. 

Donegal noted that its speciality dairy business continued to see good volume growth with a number of additional listings secured with key customers in the UK. 

The company's animal feeds business - Smyth's - performed satisfactorily during the year, with tonnage sold marginally ahead of the same time last year.

Donegal has also proposed a return of capital to shareholders of up to €47.5m by the conversion of ordinary shares into redeemable ordinary shares and subsequent redemption of the redeemable ordinary shares. 

The Donegal board said it believes a return of capital in cash presents the most effective use of company funds and that the continued strength of the company's balance sheet and its cash flows after the return of capital will be sufficient to continue its ongoing strategy.

This move has to be approved by shareholders at a planned EGM in May.

Looking ahead, Donegal said it is optimistic that all of its businesses remain on track for the rest of the year.

"The board will continue to progress its non-core asset disposal programme during the second half of the year, particularly in respect of its remaining property assets, " the company's chairman Geoffrey Vance added.

Shares in the company were lower in Dublin trade today.