Pre-tax profits take a hit at software firm

Pre-tax profits at the Cork-based Irish arm of the US-owned Altera Corporation last year decreased by 4.5% to $21.4m (€16.7m), new figures show.

Accounts recently filed with the Companies’ Office show that profits reduced at Altera European Trading Company Ltd in spite of revenues increasing by 3.2% from $804m to $829.9m in the 12 months to the end of Dec 31, 2011.

The company established its European Shared Services Centre at the Cork Airport Business Park in 2004 and the site is the administrative centre for the company’s European region sales and Japanese sales.

Altera designs, manufactures and markets programming logic devices and software development tools.

According to the directors’ report, the decline in pre-tax profits is primarily due to an increase in the cost of sales driven by changes in the product mix.

“This resulted in the gross margin dropping slightly from 13.2% in 2010 to 12.7% in 2011,” it read.

The directors state that the increase in revenues “is due to a number of factors but primarily to an increase in demand for more field programmable gate arrays and market share gains flowing from the company’s technology leadership in the programmable logic device industry programming logic devices industry.”

The figures show that 62% or $516.9m of the company’s $829.9m revenues were generated in the EU with the remaining $312.9m in Japan.

The company had accumulated profits of $110.81m at the end of December last.

The firm had cash totalling $306m. Shareholder funds at the end of last year totalled $113.6m.

The figures show that the company’s operating profit last year dropped marginally from $22.2m to $21.2m.

The filings show that the numbers employed by the firm remained static at 25 with staff costs of $3m.

Directors’ emoluments last year increased from $204,000 to $416,000.

Altera established its Cork centre to centralise a number of key functions at one location to achieve greater savings.

The functions at the Cork site includes management of the complex network of independent European distributors; product pricing; contract negotiations; and financial shared services.