Microsoft subsidiary reports decline in pretax profits

The Microsoft company that sells, distributes and markets software globally from Dublin saw its profits fall last year as expenses rose and turnover showed a slight decline.

In the year to June 30th 2015, Microsoft Ireland Operations Limited (MIOL) reported pretax profit of just under $1.1 billion (€980 million), down from $1.4 billion a year earlier. Turnover for the year was $21.83 billion, with the Republic accounting for more than $278 million of that figure.

The UK figure rose slightly to $3.29 billion, with the rest of Europe at $15.3 billion.

Turnover is being driven by the company's move to cloud services, including its Office 365, Azure and Dynamics CRM products. Chief executive Satya Nadella has been positioning Microsoft as "mobile first, cloud first" as the tech giant tries to keep pace with the changes that have hit its core industries.

Operating profit was down to $989.8 million for the year, a decline linked to fluctuations in the value of the euro versus the dollar.

The company paid an effective corporate tax rate of about 12.5 per cent, with a tax bill of $128.3 million. That was down from last year’s $204 million tax bill.

MIOL continued to recruit over the year, with 762 employees on the books as of the financial year-end, compared with 735 the previous year. However, staff costs fell as the exchange rate fluctuations between the dollar and the euro had an effect.

Subsidiary

The company is one of the software giant’s Irish subsidiaries. Its operations here also include the unlimited company Microsoft Ireland Research; Flat Island Company, which licenses Microsoft software for use in Europe, the Middle East and Africa; and Round Island One.

Microsoft, which has been in Ireland for more than 30 years, is building a new campus to host its Irish workforce on one site. The development will be located in Leopardstown, Dublin, and is expected to be completed by May 2017.

Once completed, staff will move from the Atrium building in Sandyford and two buildings in Leopardstown to the new site. The development can accommodate the 2,300 staff employed by Microsoft’s Irish operations.