€526k payout to former manager hits firm’s profits

A payout of more than €500,000 to former Ireland manager of Alcatel Lucent Kevin O’Callaghan and exceptional costs contributed to the firm slipping into the red last year.

The 57-year-old stepped down from the top job at the Irish arm of the French-owned telecommunications giant at the end of December last year and new accounts show that director Mr O’Callaghan received €526,237 to compensate him for his loss of office.

The payment to Mr O’Callaghan contributed to the Dublin-based Alcatel Lucent Ireland Ltd recording a pre-tax loss of €3.66m that followed the firm recording a pre-tax profit of €2.28m in 2011.

Globally, the telecoms multinational lost €1.4bn last year and in June announced a plan to slash costs by €1bn in a bid to turn the business around.

Figures for the main Irish arm show that the €3.6m pre-tax loss occurred in spite of revenues increasing by 23% from €15.53m to €17.8m in the 12 months to the end of December last.

The Irish unit employs 129 and according to its directors’ report, “following the introduction and initiation of a company-wide performance plan in 2012, redundancy plans were communicated to Alcatel Lucent Ireland Ltd employees in Jan 2013. The affected employees will be leaving the company during the course of 2013”.

Along with the payout to Mr O’Callaghan, exceptional operating expenses of €2.48m and impairment of financial assets totalling €3.16m last year also contributed to the loss.

The principal activity of the company is the provision of research, development, technical installation and support services for the Alcatel Lucent product range. The figures show the firm recorded an operating loss of €199,132 last year compared with an operating profit of €5m in 2011.

The operating loss arose mainly from the firm’s other operating expenses rising from €12.8m to €16.3m and the €2.48m exceptional operating expenses.

The €2.48m in exceptional costs related to restructuring costs of Alcatel Lucent worldwide, that include severance costs of €1.269m and building reorganisation costs of €449,832 along with a VAT settlement of €770,000 as a result of a VAT audit in Italy.

The firm’s performance was also hit by other operating income amounting to €769,442 compared with €2.43m in 2011. The €3.1m impairment charge related to the write-down of the assets in a subsidiary.

The figures show that staff costs increased by 9% from €12.47m to €13.6m last year with directors’ remuneration of €491,866.

A loss of €4.85m on the firm’s pension fund contributed to the firm having a shareholders’ deficit of €6.4m at year end.