Profits fall 15% at Irish arm of Heinz

THE Irish arm of US food giant Heinz recorded a 15% drop in pre-tax profits last year to €14 million, with directors citing the highly competitive Irish grocery market as a key reason.

According to accounts just returned to the Companies’ Office, HJ Heinz Company (Ireland) sustained a 7% drop in turnover from €108.9m to €101m to the year ended April 28 last. It also sustained an 18% drop in operating profits from €15.9m to €13m.

The company’s Irish operation — north and south — is engaged in the sales, marketing and distribution of all Heinz brands.

Heinz also sells and markets former brands of HP Foods including the HP, Lea Perrins and Amoy Brands.

According to the directors’ report, “while volume growth was achieved in the Republic of Ireland, volume is flat overall for Ireland due to a decline in Northern Ireland”.

The directors state: “This is due to an increase in share for multiples sourcing from their own UK distribution centres and therefore a re-allocation of value to our Heinz affiliates in the UK.”

They added there was also a fall in the like-for-like revenues for the British agency business, while material commodity cost increases was also a factor.

The directors state: “Currency is a material contributor to the decline in turnover due to the impact of the average 6% deterioration in the average sterling-euro exchange for the sterling denominated Northern Ireland business and UK agency sales.”

The figures show that the company paid a dividend of €7.5m to its parent last year following a dividend payout of €12m in 2009.

The company had accumulated profits of €29.8m at the end of April this year.

The figures show the company employed 36 employees at the end of April — down three on the numbers employed a year earlier.

Staff costs last year came to €2.7m, while remuneration for directors remained static at €558,949.

The filings show that the company’s cost of sales last year dropped by 8% from €86.8m to €81.5m.

On future outlook, the directors state that “the commercial environment is expected to remain highly competitive”.

They added: “Further retailer share concentration will continue allied to retailers expanding their ‘own brand’ ranges while we endeavour to further enhance our in-store presence in the challenging economic, retail and consumer environment.”

The report goes on: “However, with a continuing focus on product quality, asserting the strong brand value and benefits allied to relevant product developments to meet evolving consumer needs, we are confident that the business will continue to trade successfully in the future.”