Hanging in there

ANALYSIS:TEN MONTHS into a credit squeeze and browsing the top 1,000 companies list it quickly becomes apparent that the highest-ranked 25 firms seem in good shape to weather the storm remarkably well, writes David Labanyi.

Although share prices have taken a hammering most large companies have maintained strong balance sheets and resisted the temptation to borrow heavily.

Just three companies; telecoms provider Eircom (27th), media firm Independent News & Media (30th) and pharmaceutical distributor and wholesaler United Drug (32nd) have fallen out of the top 25 echelon and even then, they have not fallen far.

Rising through the rankings this year is internet firm Google Ireland, which is now placed 12th, a rise of 14 places, while retailer Primark has risen nine places to 23rd.

Also joining the top echelon is the Quinn Group which is now ranked 25th, a rise of two place and has seen its estimated turnover increased by over €500 million to €2.1 billion following its acquisition of Bupa Ireland. Over the year the company's workforce has risen by 3,000 to 7,500.

Despite the controversy surrounding DCC arising from the Fyffes court case the company enjoyed a 37 per cent rise in revenues to €5.53 billion.

With petrol costing almost 10 cents per litre more at €1.25 in May than compared with a year ago, it is little surprise that Topaz Energy Group has moved up nine places to 10th in our rankings.

With a 35 per cent share of the Irish fuel market and its recent takeover of Shell's forecourt operations in Ireland, the rise in oil prices has seen turnover double to an estimated €4 billion.

Topaz is controlled by Dublin-based Ion Equity and lists Denis O'Brien and hotelier Gary Barrett among its shareholders and is one of the country's largest privately owned companies. The company has set a target of increasing turnover by 50 per cent over the next five years.

There was no change at the top where building materials giant CRH is again ranked number 1, reporting revenues almost double that of its closest rival. CRH reported turnover of €20.9 billion and a pre-tax profit of €190 million in the year to the end of December.

Computer-related and internet firms account for seven of the top 25-ranked companies this year and Microsoft has traded places with Dell for second place behind CRH.

During the 2007 financial year, Microsoft Ireland Operations Limited (MIOL) had a turnover of €10.6 billion and booked a pre-tax profit of €2.37 billion. MIOL paid its parent €1.485 billion, accounting for just over 10 per cent of pretax profits at Microsoft Corporation.

It employs more than 1,100 staff at its European operations centre in south Dublin where the main activity is supply-chain and backoffice support to Microsoft operations in 126 countries in Europe, the Middle East and Africa.

For Dell, a year to forget in 2006, when it was overtaken by a resurgent Hewlett Packard as the world's number one computer manufacturer and the emergence of accounting irregularities, was followed by an equally challenging 2007.

Last summer the company announced plans to cut more than 8,800 jobs - or at least 10 per cent of its workforce as part of a drive to cut costs by $3 billion (€1.9 billion) annually by 2011.

In April it said 250 of its 4,500 employees in Ireland would be made redundant. The impact of a high cost base can be seen from its results announced last February when Dell announced a 10 per cent rise in revenues year-on-year to €10.2 billion ($15.9 million) but a six per cent fall in net profit to $679 million.

Dell remains hugely important to the Irish economy. It is the largest employer in the mid-west and accounts for an estimated six per cent of GNP. There is concern that as the company moves to trim costs it may increasingly look overseas to lower cost manufacturing sites. It has already opened a second European manufacturing plant at Lodz in Poland.

Another technology giant important to the Irish economy that is in the midst of a cost-cutting programme is Intel, which has slipped one place in the rankings to 6th.

The company employs fewer than 5,000 people at its factory in Leixlip, Co Kildare, and last year sought around 200 voluntary redundancies from its Irish workforce as part of a company programme to reduce employee numbers by 10,500 worldwide.

Intel is seen as a strategically important investor in the Irish economy having already ploughed more than $7 billion (€5.02 billion) into its factories and infrastructure.

Food processing firm Kerry Group (8th) and Glanbia (22nd) both remain unchanged, largely due to their ability to pass on increasing raw material costs to customers.

Kerry's turnover last year rose by 7.5 per cent to €4.7 billion and in his first agm as chief executive Stan McCarthy told shareholders that the goal was to double turnover in the next five years through strong organic growth and acquisitions.

In March, Kerry paid €165 million for Reox, the Dairygold spin-off which produces well-known Irish food brands; Galtee, Shaws and Michelstown cheeses, although the deal is now subject to a Competition Authority investigation.

Glanbia, which produces a third of Ireland's milk and cheese, expects to match last year's double-digit growth in 2008. The company had turnover of €2.2 billion last year - up 19 per cent.

It has invested nearly €300 million since 2004 to recalibrate its business and build up its food-ingredients and nutrition unit that generates close to two-thirds of sales.