Upturn at dairy company

Golden Vale, the troubled Irish diary products distributor, turned in an improved pre-tax profit of Irpounds 8m (pounds 7.84m) for the six months to June this year, compared with Irpounds 4.4m in the corresponding period. Turnover rose to Irpounds 283m, compared with Irpounds 246m.

The upturn in fortune follows a setback last year which saw full-year profits fall by over a third to Irpounds 12.7m, which was well below original expectations

But Golden Vale's chairman, Dennis Wallis, said that he expected the Irpounds 1.5m restructuring programme which was undertaken last year to continue reaping dividends to the year- end.

The recovery has been helped by several factors. Some senior managers have bought back shares and there has been the launch of a new new-low fat spread, though a collaboration with rival dairy distributor Irish Pride, which is intended to capitalise on healthier eating habits.

The product was the first of of a new generation of "functional foods" containing products which are intended to improve health or prevent disease.

The launch, which was the first of its kind in Ireland, was claimed by Golden Vale to be a technological break-through.

Golden Vale profits have been hit hard by external factors such as the new milk marketing regime implemented in the UK in 1994 which analysts estimated added a total of pounds 14m to its milk-buying costs. The seriously weakened market for Irish dairy products, poor demand, rising stock levels and a strong Irish pound against a weak US dollar took their toll.

Internal problems included extra costs from the group's purchase of Netherlands cheese maker, Vonk, for Irpounds 33m. The deal proved expensive after the company discovered its new acquisition required severe pruning.

Despite the continuing squeeze in market conditions Mr Wallis remains confident that the restructuring is sufficient to rebuild the company's fortunes.

"Golden Vale continues to operate in highly competitive dairy markets," he said. "Its strategic focus as a low cost operator in its key product areas remains unchanged."

The turn-around produced a rise in earnings per share Ir4.3p compared with Ir2.3p for the comparative period and an interim dividend per share of Ir0.66p versus Ir0.6p.