Ikea Ireland's profits drop more than half each year since 2010

Profits at Ikea Ireland have plunged by more than 50 per cent each year since 2010, the Swedish home-furnishing giant’s first full year in Dublin.

Ikea Ireland’s overall profit more than halved to €2.4 million for the 12 months ending August 31st, 2012, despite static revenue, with shoppers spending almost €2 million per week in the Dublin store. The company posted a profit of €5.4 million for the 2011 financial year and €11.7 million for 2010, according to accounts filed with the Companies Office.

Revenue at the Irish arm of the furniture multinational amounted to €102 million in 2011 and 2012. However, the cost of sales increased from €69 million to €71.7 million.

The company posted an operating profit of €5.03 million last year, down from €8.8 million in the 2011 financial year.

The retailer attributed the increased cost of sales to more expensive raw materials.

“Despite 2012 being a tough year for the Irish economy, we listened carefully to what our customers were telling us and invested in improvements to create a better shopping environment. For example, in the market hall we have made it more inspirational and easier for customers to locate products,” said Paul Reid, store manager at Ikea in Dublin.

The Dublin outlet – which is equivalent in space to 5½ soccer pitches – contains 9,000 home-furnishing items, a 550-seat restaurant, a food hall and creche and has 1,850 car parking spaces.

While the number of staff employed at the Irish outlet of the company dropped from 449 in 2011 to 435 last year, staff costs increased to €9,537,518 from €8,490,779.

An Ikea spokesperson attributed the rise in staff costs to variations in the number of full-time and part-time staff employed in the Ballymun store.

William Fry partner Owen O’Connell is a director at Ikea Ireland and his law firm was paid €33,092 last year in respect of legal services provided to the company.

According to the directors’ report the directors were “satisfied with the results of the company for the year”.

The directors said they were confident the company had access to additional funding should its working capital needs significantly change as a result of a deterioration in trading conditions.

Worldwide sales at the company increased 9.5 per cent to €27 billion last year with profits up 8 per cent to €3.2 billion due to strong sales, particularly in new markets including China, Russia and Poland.

Earlier this week, authorities in the Czech Republic said horse meat had been detected in Ikea meatballs.

Ikea Ireland by the numbers

REVENUE

€102,693,721 in 2012

€102,827,444 in 2011

COST OF SALES

€71,726,824 in 2012

€68,999, 009 in 2011

OPERATING PROFIT

€5,036,833 in 2012

€8,800,938 in 2011