Dell Direct records profit of €14m

DELL DIRECT, one of the companies which makes up the computer maker's sales and support operation in Cherrywood, Co Dublin, made a pre-tax profit of €14.03 million in the 12 months to February 1st last, but has since that date made 182 staff redundant.

Profits at the unit were down sharply from €42.93 million the previous year, as it had in that year booked a €27.1 million gain on the sale of Dell's old facility in Bray, Co Wicklow.

In April, the PC manufacturer announced it was planning to shed 250 staff in Ireland as part of a global plan to reduce staff numbers and cut costs. It was expected that 180 to 200 of the job losses would come from Cherrywood, where 1,500 staff worked, and the remainder from its Limerick plant, which employed 3,000.

Speculation has mounted in recent months that Dell may pull out of Limerick, where it is primarily involved in manufacturing. The technology firm opened a second European manufacturing plant in Lodz, Poland, in late 2007 and there are fears in the midwest this may ultimately take over the activities currently in Limerick.

The world's former number one PC maker has been struggling in the face of stiff competition from rivals, including HP. In September it warned it would seek to reduce its long-term cost structure as a result of falling demand for its products.

A note to the accounts reveals that Dell Direct reduced its staff numbers by 182 as a result of the cost-cutting, which, the accounts state, are "substantially complete". This suggests Dell's direct sales and telephone support operations for Ireland and the home and small-to-medium business sector in the UK shouldered the bulk of the announced redundancies.

For the 2008 financial year, Dell Direct revenues grew 7.5 per cent to €161.5 million. Selling expenses amounted to €10.3 million, while other operating expenses were €137.2 million.

The recognised profit of €12.7 million, after payment of €1.3 million in tax, was added to the company's retained profits and the directors did not recommend payment of a dividend. The company's corporation tax liability of €1.8 million was reduced primarily by availing of €451,285 in manufacturing relief.

Dell Direct had a balance of €62.5 million in its profit-and-loss account on February 1st last. The net assets of the company were €90.6 million.

The average number of people employed by Dell Direct during its 2008 fiscal year was 1,543, up slightly from 1,505 in 2007. The company's bill for wages and salaries rose considerably from €79.3 million to €91.8 million over the same period.

At year-end Dell Direct was owed €103 million from group companies. It primarily has a relationship with Dell Products, for which it provides sales and support services. This company has filed a return but not accounts for the period in question.

The US firm declined to comment on the accounts.