Norbrook says equipment issues a factor as profits slump by 82%
Veterinary pharma firm Norbrook Holdings has reported an 82% slump in pre-tax profits to £8m in a "challenging year" following an equipment breakdown.
The company, led by chief executive, Liam Nagle, reported a 14% fall in sales to £237m for the year to August 2019.
It comes as the company continues to plan for hard Brexit, with Mr Nagle saying it had spent £5m over the last few years, including large sums to expand a site in Monaghan.
Mr Nagle said the failure of manufacturing equipment at its site on Armagh Road in Newry had followed some "under investment".
He said he could not quantify the percentage loss to capacity as a result of the failure of the equipment, which had affected production of sterile injectables and some antibiotics.
He said the equipment problem had been confined to one "suite" for manufacturing. "We had some equipment issues with it and what we decided to do in order to fix it properly and permanently, we decided to take the suite down for 10 months for extended preventative maintenance... that had an impact on the business, so operating profit fell to £11m from the prior year of £45m and revenue declined 14%, so clearly it was a big issue."
Asked what exactly caused the issue, he said: "Just equipment failures. We probably had a history of somewhat under-investment, which we have been correcting in the last four or five years, and we just had an unfortunate series of pieces of kit or equipment that failed.
"The good news is that we're now back in manufacturing, so we've been making product and shipping product over the last number of weeks."
But he said no jobs had been cut as a result. The business employs around 1,700 people.
He said that the business is split, with large farm animals accounting for 78% and "companion" animals 22%.
Companion animals were a high margin business, with more growth than farm animals, though the veterinary sector was growing overall, he said.
He said that the business, which marked its 50th anniversary this year, was continuing to plan for a hard Brexit. "We've invested to transfer licences to allow ourselves to be in a place where we can test and release products in Europe, for Europe.
"We have a small facility in Monaghan we've invested in that to be able to release and test products."
And he said he hoped that the Northern Ireland protocol outlining its future trading relationships could be more well-defined in future, pending the outcome of the General Election.
"Hopefully the election will bring certainty and hopefully if the NI protocol is better defined, it could give NI an opportunity where it can operate within the UK, but still have unfettered access to the EU. While the NI protocol is there, it is not clearly defined. We are hoping that when it does gets defined that we will be in a place where we can make product in NI and release it into Europe."
Over the last three or four years, he said the company had spent £5m on Brexit planning.
Much of the cost around preparing the Monaghan site was for the transfer of licences. "We've put a couple of million into Monaghan, most of that is infrastructure, equipment and some people."
He said that an £11m dividend had been paid in the latest financial year, compared to £13.7m the year before. And he said the Haughey family, who own Norbrook, were fully committed to continuing the business, with no plans for a stock market float or to bring in outside investment.
Founder Eddie Haughey, later Lord Ballyedmond, died in a helicopter crash in 2014.
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