Food multinational Nestlé has made a €10.2 million provision for the closure next year of its chocolate crumb manufacturing plant at Mallow, Co Cork.
Included in this sum was an undisclosed amount to be paid to Diarygold over Nestlé's decision last year to exit contracts for the purchase of milk from the co-op.
This provision was instrumental in the loss of €6.93 million in the latest accounts for Nestlé (Ireland) Ltd, recently filed in the Companies Office.
The Irish subsidiary of the Swiss-controlled group carries out wholesale and distribution activities for its parent, owner of food products such as Nescafé coffee, chocolate brands such as KitKat and Buitoni pasta.
While the €10.2 million provision is understood to include the cost of cutting 57 jobs and the cost of closing the Mallow plant, the accounts did not specify the sums involved in each case or in the cost of exiting the Dairygold contract.
The co-op went to the High Court last January, claiming that Nestlé had breached an agreement for the long-term purchase of milk for the purpose of making chocolate crumb at the Mallow plant.
Nestlé denied the claim, which arose from its decision to transfer the crumb-making business to Girvan, Scotland.
The action was settled in March, when Nestlé confirmed that it would keep the plant open until July 2006. In a statement issued at that time, Nestlé acknowledged that Dairygold made a very competitive bid for the ongoing business.
"However, the operational advantages of its bid were far outweighed by the lower cost of milk in Scotland," it said.
The board of Nestlé (Ireland) Ltd said its results for 2004 were satisfactory, excluding the €10.2 million provision. While annual turnover dipped slightly to €174 million in 2004 from €176.92 million in 2003, operating profits rose to €3.33 million from €1.72 million. No dividend was paid.
Directors' remuneration was reduced to €502,00 during the year from €913,000 in 2003. The current directors include Ciarán Joseph Sullivan, Stuart Irvine and Sharon Bennett, the latter two appointed during 2004. Three other directors who also served during the year are no longer on the board.
Sales generated in Ireland grew to €125.83 million from €124.75 million, while sales generated in Britain fell to €48.25 million from €52.17 million. The net loss of €6.93 million followed a tax credit €358,000 after the pretax loss of €7.28 million. The accounts also indicate that the company made a €4.99 million profit on the disposal in 2003 of certain lands.
