Cullen confident of return to profit despite €8.5m hit
BILL Cullen's motoring empire lost another €8.5m in 2008, but the 'Apprentice' star yesterday insisted the business had made a "very strong recovery" in 2009 and would return to profit this year.
The difficult 2008 performance -- which followed losses of €18.5m in 2007 -- is revealed in accounts just filed for the entrepreneur's Glencullen Holdings. The new figures chart Glencullen's first full-year since it surrendered the Irish Renault franchise in November 2007.
Mr Cullen (above) retained five Renault dealerships after the franchise split, and the Dubliner blamed difficult conditions in the car market for the recent multi-million euro losses at Glencullen.
"This reflects the VRT debacle. From July 2008 car stocks had to take huge writedowns, and we took a big hit," Mr Cullen said yesterday. He added that his company had made a "very, very strong recovery in 2009" and would be "back in profit for 2010".
Glencullen's sales for 2008 came in at almost €54m, well behind the €166m recorded in 2007 and the €241m enjoyed in boom-time 2006. The sales drop was entirely attributed to discontinued franchising revenue, which accounted for €118.7m of 2007's turnover, while sales from continuing operations were actually up 11pc in 2008. Even though sales held up in absolute terms, 2008's operating loss was €6.8m, more than three times the like-for-like figure for 2007, suggesting lower unit prices as well as an overall costbase that didn't shrink as fast as Glencullen's turnover.
In notes to the accounts, Glencullen's directors acknowledge the "adverse trading conditions" endured in 2008, blaming both the VRT changes and poor demand for cars.
"While 2009 has been a difficult trading year, the group has actively instigated a cost reduction programme that has seriously reduced its cost base," the directors add, as they make their case for the business's status as a "going concern" despite the heavy losses.
In their report, dated December 22 , they refer to an "aggressive marketing and price strategy", which indicates "significant growth in the brand in 2010". "These factors, combined with an expected recovery of the overall market in 2010 and 2011 should result in a return to profitability for the group," they add.
The directors also reveal that Glencullen was in the final stations of renegotiating its debt as the accounts were signed off -- the outcome of these discussions could not be confirmed yesterday. The accounts show Glencullen had bank loans of €19m at the end of 2008, but it is not clear how much of this debt remains on the books now.
Other highlights of the 2008 accounts included a €3m hit to Glencullen's pension fund, mirroring the stock and property market collapses of that year, and a 70pc fall in directors' fees, to €1.2m.
One of Ireland's most prominent businessmen, Mr Cullen bought the Renault franchise out of receivership for IR£1 in 1986. Even after the recent run of losses, Glencullen closed 2008 with accumulated earnings of €6.2m.