DONEGAL CREAMERIES has declined to comment on reports that it is to sell its dairy division to one of the country’s largest co-operatives, Connacht Gold.

The company, which has been listed on the Iseq’s junior exchange since 1997, publishes interim results this morning.

Donegal Creameries’ dairy division accounted for about 45 per cent of the company’s €126 million turnover last year. However, it significantly underperformed, with operating profit dropping to €20,000 from €2.2 million in 2009 due to a combination of the increase in the cost of milk, and a competitive retail environment, particularly in Ireland.

The company’s dairy division has also focused recently on developing consumer products for the UK retail market, acquiring a controlling interest in Middlesex-based company Bio Green Foods in January this year.

Donegal Creameries’ other businesses include agri-inputs, property investments, the cultivation of seed potatoes which it exports to 30 countries, as well as a 35 per cent share in Monaghan Mushrooms.

Donegal Creameries already supplies milk to Connacht Gold and other co-ops, as well as manufacturing its own liquid milk and yoghurt products.

Sligo-headquartered Connacht Gold is one of the largest co-operatives in the State. Formed in 2000 following the merger of two Connaught-based co-ops, it had turnover of €300 million in 2010, up from €264 million the previous year.

Pretax profits rose to €5 million in 2010 from €1.8 million in 2009, due in part to the disposal of property.

Connacht Gold has indicated its interest in pursuing acquisition opportunities in 2011. The co-op declined to comment yesterday when contacted by The Irish Times.