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IKEA Ireland reports a profit increase of 96%

Shoppers at IKEA's Irish store in Dublin last year spent almost €2m per week on home furnishings, leading to the store almost doubling its pre-tax profits to €5.8m.

New accounts just filed by Ikea Ireland Ltd show that the Swedish flat-pack furniture firm boosted pre-tax profits 96pc to €5.8m in the 12 months to the end of last August.

Consumers' spend on best-selling IKEA items, such as Billy bookcases, Expedit storage units and Lack tables, resulted in revenues at the Ballymun store last year increasing marginally, from €102.6m to €103.98m.

The 2013 performance represents a turnaround in terms of the store's profitability after the business saw a steady decline in pre-tax profits from €11.4m in its first full year of operation in 2010, to €2.97m in 2012.

The Dublin outlet is equivalent in space to five and-a-half soccer pitches. It contains 9,000 home furnishings, a 550-seater restaurant, a food hall and creche, along with 1,850 car parking spaces.

According to the directors' report, they "are satisfied with the results of the company for the year.

"The directors anticipate that the level of activity and profitability in future years will continue to be in line with expectations."

The increase in pre-tax profits arose from lower cost of sales and lower interest charges, along with the increase in revenues.

Cost of sales fell from €71.7m to €70.5m, with bank interest payments reducing from €2m to €1.78m.

The store's operating profits jumped 19pc €7.6m.

Interest payments totalling €1.78m reduced the firm's profits to €5.8m.

The firm paid corporation tax of €957,172 to give a post-tax profit of €4.87m.

The profit takes account of non-cash depreciation costs last year of €3.84m – the accounts give a book value of €76.8m of IKEA's land and buildings at Ballymun.

On the firm's principal risk and uncertainties, the directors state that the principal risk "is the downturn in the Irish economy.

However, they said: "The directors remain confident that IKEA will continue to gain market share."

The directors add that downturn in the economy has adversely affected the Irish retail environment and trading of the group.

"However, these threats are not considered to be significant and it is the opinion of the directors that IKEA will continue to gain market share during this slow-down."

Ikea employs 412 and total staff costs are €9.6m.

The Irish unit's accumulated profits totalled €10.9m at the end of August last year, with €1.59m in cash.

Last year, IKEA recorded global revenues of €27.9bn.

It employs 135,000 staff members across 303 stores in 26 countries.

Gordon Deegan - Irish Independent

29 March 2014
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