€2.1m restructuring costs hit Celestica

RESTRUCTURING costs totalling €2.1m relating to a Canadian-owned firm reducing almost half of its workforce contributed to it going into the red last year.

Accounts just filed by the Galway-based Celestica Ireland Ltd show it recorded a pre-tax loss of €2.1m, with the directors citing the restructuring costs and writing off of bad debts as the reason behind the loss.

In 2009, Celestica’s workforce at its Ballybrit plant reduced by 48%, or 169, to 185, and the company confirms its revenues reduced by 40% from €23.4m to €14.1m to the end of December last.

Celestica provides contract manufacturing services to the computer peripheral industry in Ireland and, according to the directors’ report, the company’s performance was considered satisfactory.

The pre-tax loss follows a pre-tax profit of €1m in 2008.

Without the restructuring costs, the company would have made a modest operating profit last year of €30,000 after recording an operating profit of €845,350 in 2008.

The company had accumulated losses of €9.7m at the end of last year.

However, it has shareholder funds totalling €3.5m that included €2.1m in cash.

The directors cite bad debt provision on a customer in liquidation as another non-recurring charge behind the loss.

The directors state: “Margins remain quite tight for the company due to the pricing contract agreement with its key customer… The directors will continue to seek new opportunities for the company and to effectively manage the company’s cost base and operating margins.”

The accounts show redundancies at the plant reduced staff costs by 40% from €15.2m to €9m. Directors’ remuneration, including pension contributions, increased from €328,369 to €366,331.

The directors state they have assessed the going concern of the company, given the current economic climate. They state: “In particular, they have considered the fact that the company is significantly reliant on one main customer. However, given the contractual position with this customer, the directors are satisfied that business with this customer will continue over the next 12 months.”