Yahoo's Irish unit posts 500% rise in profits

Internet search engine giant Yahoo has reported a 500 per cent rise in operating profits to €34.9 million at its prime Irish trading vehicle in 2005, the year the group set up its European headquarters in Dublin.

Accounts newly-filed for Overture Search Services (Ireland) Ltd, which handles most of Yahoo's business here, show that its turnover rose to €712.4 million in 2005, from €416.7 million in the previous year. Pretax profits rose to €20.6 million from €3.4 million while retained losses declined to €24.5 million from €42 million.

Yahoo is prominent among major US internet players, such as Google, Amazon and eBay, which have significant Irish operations. It plans to employ almost 400 people in Dublin by 2010 and quickly ramped up its business here during 2005.

In common with many US organisations that locate significant international assets in Ireland for tax reasons, Yahoo's main trading company here controls subsidiaries in big European markets such as Germany, Italy, France and Spain. It also controls assets in Brazil and Hong Kong.

Its subsidiaries had a book value of €79.5 million at the end of 2005, the accounts state. However, the new filing also shows that Yahoo moved in the final quarter of 2006 to sell its 100 per cent interest in a French subsidiary and a Brazilian unit to fellow group undertakings.

A Yahoo spokesman did not make any comment on the filing.

Sales of €386.1 million came from European operations, €326.1 million came from Asia-Pacific, and remaining sales of less than €250,000 came from operations in the Americas. It paid taxes of €3.1 million in 2005.

Accounts have not been filed for the immediate parent of this vehicle, Overture Search Services Holdco (Ireland).

This Irish-registered holding company achieved significant financial scale even before Yahoo made public its establishment of a European headquarters in Dublin in February 2005. It reported an operating loss of €49.3 million for 2004 on sales of €523.4 million.

Given the pace of growth at its trading subsidiary in 2005, the holding company is expected to record a considerable expansion in its business when it files accounts for that period.

The Irish business is responsible for accounting and revenue activities for Yahoo throughout Europe and statutory reporting. It also runs a web hosting centre and a customer support centre.