Top 1000: the winners, the losers, and the fastest growing companies

The UK’s vote to leave the European Union; the election of Donald Trump as US President on a protectionist ticket; the introduction of new tax rules aimed at limiting profi t shifting – despite myriad challenges on the economic front, Ireland’s top companies have continued to out-perform over the last year.

Indeed nothing seemed to stop them from reporting stellar growth rates and outsize profi ts in the TOP 1000 2017, the definitive database of Ireland’s leading companies.

Whether they can continue, in the face of such challenges, remains to be seen of course. But for now, this year’s picture is largely one of industry rebounding.

TOP 1000 companies reported gross sales of a staggering € 489 billion in their most recent financial years – far in excess of the income Ireland as a country is generating.

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Indeed, Irish GDP stood at about €262 billion in 2016, or about €56,000 per capita; TOP 1000 companies on the other hand generate income of about €1.1 million per employee.

And they are also increasingly profitable. On a net basis, profi ts of Ireland’s leading companies rose to €34 billion since the 2016 survey, up from €28 billion in 2016 and €22.4 billion in 2015. Of course, given that so many multinational companies, including the likes of Apple, Penneys, Boston Scientific, IBM and Intel do not report fi nancial fi gures for their Irish operations, the true profit figure is likely to be considerably north of €34 billion.

Banks are again contributing heavily to these profit flows, with just 7.5 per cent of the financial institutions in the red. Back in the black are formerly troubled institutions including Bank of Ireland, AIB, Ulster Bank and Depfa Bank, while leading the charge is the Central Bank

Who’s at the top in this year’s survey?

CRH demonstrates it doesn’t need to work on the US president’s proposed wall between the US and Mexico; it’s got plenty to do without it. Yes the construction giant has held onto the topspot once more, on the back of turnover of some € 27 billion, despite the imminent threat from the likes of pharma giant Medtronic.

Having become an Irish company when it acquired Dublin-domiciled surgical supplies group Covidien in a high-profile $50 billion inversion deal in 2015, the pharma group is inching in on CRH’s lead, with turnover of €26 billion in the year to April 2017. Elsewhere, Google has moved up one spot into third place, thanks to substantial growth in its revenue, while Microsoft, a former leader in the survey, has slipped down two places to fourth, and Oracle has inched up two places to make the Top 10.

Other companies encroaching on the Top 10 include Facebook, which has gained five places in this year’s survey to move into 13th position, while Ryanair is also flying high. It gained five places to move into 15th place, and Dunnes Stores also moved up the rankings. While the supermarket giant does not disclose financial figures, it managed to significantly increase its share of the Irish grocery market thanks to initiatives such as its Shop & Save vouchers, so moved up the rankings accordingly.

Who’s making the most money?

The rich are getting richer or to paraphase, Ireland’s most profitable companies continue to get even more profitable, even if there are only nine companies in this year’s exclusive “profit billionaires” gang, down from ten last year.

Indeed, Ireland’s second largest company, Medtronic, added almost €300 million to its profits in 2017, which means it continues to hold the title of Ireland’s most profi table company, with a staggering €4.1 billion in profits – surely a new record for an Irish company?

Of course just like many of the companies on the list, Medtronic does not generate most of thesprofi ts in Ireland; they are derived from its global business, just like another new arrival, Eaton Corporation, which makes number three on this year’s list, with profi ts closing in on €2 billion.

Irish construction giant CRH also makes the list, thanks to a significant €700 million bump in profi ts, while airline Ryanair continues to fl y high – even if its profi ts did dip, down to €1.47 billion in 2016 from €1.7 billion the previous year.

Other Irish companies also boasting hefty profits include Smurfit Kappa (€654 million); Kerry Group (€611 million) and Kingspan (€314 million).

But it is the banks which make most of an impression on the Top 10 list, with the Central Bank again close to the top in second place, with record profi ts of €2.3 billion in 2016 – about €1.8 billion of which will make its way into the Government’s coffers.

However, this largesse is unlikely to be around for much longer – the gains are largely due to the performance of the bank’s “special portfolio”, acquired as a result of the liquidation of IBRC, and will be sold off over time. Still, for now, the regulator is out-performing both AIB (€1.7 billion) and Bank of Ireland (€1 billion).

Who’s still in the red?

Oil exploration group Tullow Oil again racked up losses in 2016, going into the red for the third year in a row, losing some €833 million on the back of falling oil prices. It was the biggest loss for an Irish company over the past year; but it wasn’t the only company to report a loss.

In the financial sector, a number of companies failed to generate a profit, with historical lending issues continuing to weigh down both ACC Loan Management, which is currently being wound down with losses of some €107 million, and Permanent TSB, which lost €226 million in 2016. However, despite the significant loss, it marks the bank’s best performance in more than five years, and it is still eyeing a return to the black in the future.

Another bank, EAA Covered Bond Bank, which is in wind-down, also reported a loss of €290 million. Elsewhere, medical devices company Bard Shannon remained in the red for the third consecutive year, with losses of some €323 million, while pharma group Alkermes was also loss-making, losing €319 million in its most recent financial year.

Amaris Hospitality, Lone Star’s hotel investment and hospitality group, responsible for a portfolio of more than 70 hotels in the UK and Ireland, including Jurys Inn and DoubleTree by Hilton, lost €176 million as it took a €83 million impairment charge.

Similarly, catalogue retailer Argos took a sizeable impairment charge which saw it report losses of some €153 million. The UK retailer impaired goodwill of some €153 million on the back of a review of the business in light of an offer from J Sainsbury for the purchase of Home Retail Group. The supermarket giant subsequently acquired the owner of Argos for £1.4 billion.

Swiss pharma group Roche, which closed its Clarecastle facility in 2015, lost some €133 million as it took a €130 million write-down.

Who’s paying the most tax?

While we often focus on the companies who don’t pay enough tax in Ireland, we sometimes forget about those that do. And thanks to outsize profits, the larger companies in the survey are also paying outsize tax bills.

It means that the Top 10 taxpayers in our survey paid some €2.9 billion in tax in this year’s survey, up from €2.7 billion last year.

Of course, not all this tax will be paid in Ireland, as evidenced by the higher than expected effective tax rates but, as a rough approximation, it means that the Top10 taxpayers according to TOP 1000 2017, paid more than two thirds of the total corporation tax haul of €7.4 billion in 2016.*

Medtronic, Ireland’s most profitable company, is also Ireland’s biggest taxpayer, with a tax bill of some €518 million for 2017, indicating an effective tax rate of some 13 per cent.

CRH, which generates a lot of its earnings in the Americas region, paid tax of some €471 million last year, or an effective rate of 27 per cent.

Packaging group Smurfit Kappa has one of the highest effective tax rates in our survey at 30 per cent, paying €196 million of tax on earnings of €654 million.

While where the companies pay their tax will impact on the effective tax rate, another factor is whether a company is carrying losses forward or other variables in their finances.

Corporate taxation doesn’t always follow the 12.5 per cent rule; some companies will pay tax at a higher rate in one year, and a lower rate another.

*Note this is an approximation only as not all company accounts are for 2016 and not all tax may have been paid in Ireland.

... And the least?

But while many companies make hefty contributions to the Exchequer, other companies, for various reasons, from year to year, do not.

Irish convenience food group Greencore, for example, paid tax of just €343,863 on profits of some €55 million in 2016, or an effective tax rate of just 0.6 per cent.

Similarly, Shannon-based Gecas Services, an aviation subsidiary of the General Electric group, paid tax of just €41,000 on profits of €8.5 million in 2015, or an effective rate of just 0.5 per cent, while Aughinish Alumina, the alumina refinery owned by Russian aluminium giant Rusal, paid just €68,575 of tax on profits of €12.8 million in 2015.