Liebherr profits dragged by costs

The Kerry-based Liebherr crane factory dogged by an industrial dispute in the last 12 months saw profits fall sharply as costs surged last year.

Liebherr Container Cranes Ltd, based in Killarney, saw net profit dip from €18.3m in 2012 to €5.2m last year, according to the company’s annual results.

The decrease in profitability was driven largely by rising costs, including raw materials, supplies, and purchased merchandise.

A €19m increase in other operating expenses, including freight, bad debt provision, and a long-term selling provision of €3.45m, also contributed to the erosion of profitability.

Despite the firm’s worsening financial performance, revenue increased by €18m in the year, from €209.9m to €227.8m.

All of the company’s core business areas saw a pick-up in activity with revenues from the sale of cranes climbing by €15m; spare parts contributed an additional €1.6m; while servicing and rework saw a similar increase.

Finance costs also trebled as foreign exchange losses mounted, totalling €10.9m compared to €2.9m the previous year.

Income from other foreign exchange activities also rose, however, offsetting some of the losses incurred.

Liebherr’s total tax expense decreased from €2.76m to €831,000.

Concerns over the future of the Killarney plant mounted late last year and continued over the first quarter of 2014 as an industrial relations impasse developed between the company and its employees.

The dispute relating to payment issues dating back to 2009 rumbled on as workers rejected a Labour Court recommendation in January, leading to concern that the company, which employs approximately 660 people, could reconsider its position in the town after more than 55 years.

In March, however, 300 Siptu workers accepted a package brokered by the Labour Relations Commission which included 2.5% in back pay to May 2012 in return for changed work practices.

Wage costs increased in the year to €34.8m from €30.9m as the number of employees rose to 663 from 606 in 2012.

As of December 31, 2013, the company had €112.4m in total assets, while total equity and liabilities amounted to €93.1m — up from €72.9m in 2012.

The Middle East (€67.9m) remained the company’s most important sales market, followed by Europe (€55.9m) and Africa €37.33m).