Kellogg's, the world's dominant cereal brand, increased the pretax profit in its Irish unit by 28 per cent last year to more than €12 million.
At the same time, the group's new European headquarters in Dublin incurred a deficit of €23.19 million before tax in respect of start-up costs in the six months after its incorporation in June 2004.
Accounts filed for the two subsidiaries run in Ireland by the Michigan-based food giant show that it restructured its operations here last January. The group produces corn flakes and numerous other ready-to-eat cereals.
A note with the accounts for the Irish trading unit, the Kellogg Company of Ireland Ltd, said this restructuring will result in a reduction in its profits. According to this note, the licence under which this company used Kellogg's brand names and other intangibles lapsed on January 2nd.
The company went on to negotiate a new contract with its sister company, Kellogg Europe Trading Ltd, the entity registered last year to manage the new European headquarters in Swords, Co Dublin.
After the restructuring, the Irish trading unit acts as a distributor for goods supplied by the European headquarters.
"The directors expect that Kellogg Company of Ireland Ltd's future profitability will reduce as a result of these changes, but should become less volatile," said the note with the accounts.
"There are no other matters material for an appreciation of the state of the company's affairs by its members."
Neither of the Irish subsidiaries paid dividends last year.
A note with the accounts for Kellogg Europe Trading Ltd said that it has traded profitably since trading started on January 2nd. The unit is the main hub for Kellogg's in a vast market that covers Europe, the Middle East and Africa.
This operation now employs about 80 people. The pretax loss was recorded after an operating loss of €19.1 million and interest payments of €4.09 million.
When Kellogg's chose Dublin for the European headquarters, it said the Irish market was important to it because Irish people were the biggest consumers per head of cereal in the world. Irish people eat on average seven bowls of cereal per week, the group says.
The Kellogg Company of Ireland, which employs 37, reported that its turnover rose €75.82 million in 2004 from €74.62 million. This represents the overall value of its cereal sales to wholesalers throughout the Republic.
The company's profitability was helped by a reduction in the cost of sales to €46.06 million from €48.71 million.
While administrative costs rose to €18.07 million from €16.67 million, the operating profit increased to €11.68 million from €9.25 million.
The company paid tax last year of €1.63 million, bringing its post-tax profit for the year to €10.33 million.
It had €28.28 million in retained profits at the end of the year. Of this company's three board members - J McNeill, G Plosch and N Hegarty - only two received pay from a €298,000 directors' remuneration package.
