Horsemeat scandal hits profits at Arrow Group

The horsemeat scandal hit profits last year at one of the country’s largest food processors, the Co Waterford-based Arrow Group.

New figures show that pre-tax profits at Arrow Group Ltd last year declined by 20% from €2.96m to €2.34m.

The group, which employs 1,642 and is owned by brothers, Peter, John and Michael Queally, sustained the drop in profits in spite of group turnover up by 13% from €394m to €446.8m in the 12 months to Dec 31, 2012.

One of the firm’s subsidiaries, QK Meats apologised in May of this year for its handling of the horsemeat scandal.

In a report into how horsemeat got into Irish-made meat products, the Department of Agriculture strongly criticised QK Meats, pointing out that QK knew it had equine DNA in some product imported from Poland from June of last year, but did not tell the authorities until earlier this year.

The company said it never knowingly incorporated horsemeat into any of its beef products and pointed out no material that tested positive for equine DNA was allowed into the food chain.

Minister for Agriculture Simon Coveney confirmed that QK Meats had broken no laws.

In its accounts just lodged with the Companies Office, the Arrow Group state that it incurred €5.8m in exceptional costs that included “the impact of the European beef mislabelling issue” along with property impairment and restructuring costs.

The exact cost of the mislabelling issue is not quantified. However, the property impairments total €1.75m with ‘redundancy costs’ totalling €195,136.

In relation to the cost to the group of the mislabelling issue, the directors state they have made their best estimate of the impact of the issue as it relates to the 2012 financial statements “though the outcome is uncertain at the financial statements approval date”.

According to the directors’ report “2012 has seen reduced profitability due to the significant increase in raw protein costs, European beef mislabellng issue and the increased uncertainty in recovery of the UK market demand”.

The principal activity of the group is the processing of pork, meat processing and meat trading.