Profits at medical company’s Irish arm fall by almost half

Pre-tax profits at the main Irish arm of medical technology firm Becton Dickinson last year almost halved to €54m in spite of the company increasing revenues to €1.07bn.

Accounts just filed by the US-owned Benex Ltd to the Companies Office, show pre-tax profits fell by 47% from €103.3m to €54.1m in the 12 months to the end of September last.

This followed the firm increasing revenues by 1% from €1.05bn to €1.07bn. The company paid a dividend of €85m to its parent during the year.

Company filings since 2003 show between 2003 and 2011, the firm paid €678m in dividends to its US parent. During the same period, it paid €102.7m in corporation tax to the Irish exchequer, including €7.1m last year.

During the year under review, Warren Buffett, one of the world’s richest men, disposed of his shares in Becton Dickinson through his vehicle, Berkshire Hathaway.

The firm transferred its operations from Shannon to Dun Laoghaire, Dublin and it acts as “regional distribution and logistics platform for Europe”.

The turnover recorded by the Irish subsidiary represents 13.7% of the firm’s global revenues of $7.8bn (€6.3bn) last year where the corporation employs 29,000. “2011 was a challenging year for the company with sales growth limited to 1%,” the directors’ report states.

“This reduced growth was due to weaker than expected economic conditions across the main European geographic locations and business segments served by the company.

“There was a 5.8% increase in cost of sales due mainly to increased freight charges which, when taken in combination with the low sales growth, resulted in a decrease in gross profit percentage from 14% last year to less than 11% this year.”

The report states that distribution costs remained relatively flat year-on-year.

Administration expenses rose by 44% from €24.1m to €34.6m as a result of additional supply chain charges. Interest payment costs increased by 73% to €1.3m during the year. The report says “all these factors had a negative impact on profit”.

At the end of September last, the company had €5.3m in accumulated profits. Benex Ltd reduced its employee numbers from 14 to 10 and €568,000 was incurred in “severance pay due to the restructuring programme undertaken in the year”.

The firm also incurred €179,000 for surrender of a building lease. 89% or €956m of the company’s sales took place in the EU.

Last year, cost of sales increased by 6% from €908.4m to €961.3m. Operating profit dropped by 46% from €104m to €55.4m. It recorded €461m in sales of medical products; €375m in sales from diagnostic products and €237m in sales from bioscience products.


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