Shareholders in Cork-based co-operative Dairygold have expressed frustration with the firm's lacklustre performance by returning a motion of no confidence in its board.

The motion was passed at an annual meeting during which recently appointed Dairygold chief executive Mr Jerry Henchy, who is not a board member, outlined plans to bring the firm back to long-term profitability.

Mr Henchy's motion to update the rules and regulations under which the group operates was approved. He said after the meeting he sensed "a very strong mandate" for change and predicted the firm would move back into profit this year after exceptional restructuring costs.

Dairygold suffered an 80 per cent drop in pre-tax profits last year, as operations were hit by low dairy prices, ongoing reductions in EU supports and the impact of euro strength. The €2.71 million pre-tax profit recorded would have become a loss, however, if an exceptional €6.14 million gain from the sale of IAWS shares had not been included. Mr Henchy described Dairygold as a "sleeping giant", insisting the firm retained the potential to be the Republic's leading and most efficient dairy processor.

He said the challenges facing the firm were intensified by international market pressures, noting that the price gained abroad for 1kg of Irish cheddar at one point last year was lower than the cost of the milk required to produce it.

Mr Henchy asked for shareholder support to build a "new and stronger Dairygold" that would sustain profitable dairy processing in the Republic and maximise sustainable returns for farmers. Dairygold, with some 8,000 members, is the State's largest farmer-owned co-op. About 1,500 shareholders attended yesterday's a.g.m. in Mallow.