Foods group Donegal Creameries has continued its steady growth, with pre-tax profits in the half-year up almost 14 per cent to €2.5 million (£2 million).

Turnover at the group - whose activities embrace dairy processing, confectionery, potatoes and most recently mushrooms - was nearly 23 per cent higher on €47.3 million (£37.3 million). Shareholders, who are largely farmers in the Donegal area, are to get a 25 per cent increase in the interim dividend to 3.8 cents (3p) per share.

Sales in the dairy division rose only marginally to £14.9 million, with increased prices of manufactured milk being offset by intense competition in the liquid milk market in the Donegal area. There was a big jump in sales of other products, with agri-trading turnover in the company's stores boosted partly by the addition of three new stores in Northern Ireland acquired from Lakeland.

The Robert Smyth feed milling business and Donegal's potato marketing business increased sales and profits. But the Ennis Foods breakfast investment has turned sour for Donegal and the group has written off its investment in Ennis Foods at a cost of £173,000. Donegal still has a 13 per cent stake in Ennis Foods but says that the company "has not achieved the market position envisaged."

The half-year results do not include any contribution for Carbury Mushrooms, the mushroom group acquired in June by a consortium in which Donegal has a 40 per cent stake. Donegal paid £3.5 million for its stake, with NCF holding 26 per cent and Carbury management and former shareholders owning the remainder. Under the terms of this investment, Donegal and NCF have the right to buy out the management shareholders after five years.