Profits plummet at the Galway arm of Hewlett Packard as revenues top $413m
Pre-tax profits at the Galway-based unit of computer giant Hewlett Packard (HP) plummeted last year in spite of revenues topping $413m.
New figures show that Hewlett Packard Galway recorded an 85pc drop in pre-tax profits, going from $12.16m to $1.79m. But revenues increased by 32pc to $413.79m in the 12 months to the end of October last.
The drop in profits arose from the firm's cost of sales increasing at a faster rate than revenues with cost of sales totalling $402.7m compared to $293.2m in 2013.
As a result of the high cost of sales and resulting low level of pre-tax profits, the firm's corporate tax bill for the year totalled $1.45m compared to $2.1m in 2013. Numbers employed by the firm increased from 455 to 487 with staff costs rising by 13.65pc from $39.33m to $44.7m.
The figures show that Research and Development (R&D) spend at the company last year increased from $29m to $30m.
In April of this year, Taoiseach, Enda Kenny opened HP's new 87,000 sq ft innovation centre at Ballybrit, Galway.
HP has stated that the facility confirms Galway's status as a "centre of excellence within HP globally". HP has been in Ireland for the past 44 years with the firm investing over $1bn here over the past 20 years.
According to the directors' report for HP Galway: "The company has continued to develop from its manufacturing heritage to be a campus for software business lines with strategic planning and continuous innovation by the site management team and employees driving new business offerings to replace those that have matured naturally and declined."
On the risks and uncertainties facing the firm, the directors point to "the challenge of maintaining competitiveness in the face of rising energy and labour costs, especially in the context of comparison with other locations around the globe".
Remuneration for directors last year increased from $441,113 to $487,906.
The accounts show that in 2014, the firm operating a workforce programme that resulted in a number of redundancies and the total payment in relation to the redundancies amounted to $1.7m. This followed a spend of $1.2m under the same heading in 2013.
At the end of October last, the firm had shareholder funds totalling $36.6m that included cash of $19.15m.
Profits take into account a non-cash depreciation cost of $417,835.
HP employs around 4,000 people in Ireland with most of them located at the firm's Irish headquarters in Leixlip.