The Irish arm of global food giant Nestle saw losses surge in 2023 following the closure of its infant formula manufacturing plant in West Limerick.
Following a pre-tax profit of €2.4m in 2022, the company posted a pre-tax loss of €290m last year, driven by the impairment of the investment in Wyeth Nutrition that was recognised in the 12 months.
The site’s closure, which manufactured infant products exclusively for Asian markets, was announced in October last year and resulted in the loss of more than 540 jobs.
At the time, the company said that “external trends” impacted demand for infant nutrition products across China and surrounding territories, noting that the number of newborn babies in China has declined sharply.
“The market, which had previously been reliant on imported infant formula products, is also seeing rapid growth in locally-produced products,” the company said.
Despite the closure, Nestle Ireland’s turnover increased by almost 16% to €144m, up from €124m in the previous year. The company’s cost of sales also rose, increasing to €117m from €99m in 2022.
According to latest accounts, director’s remuneration rose from €426,000, up from €410,000 in 2022.
Speaking on future developments, Nestle’s Irish arm said that the external environment remain “extremely challenging,” with inflationary pressures, increased costs, climate change, supply chain complexities and geopolitical uncertainties continuing to put pressure on the company.
It added that the implications of the war in Ukraine, the global economy and potential escalations remain difficult to predict or quantify.
“Increasing commodity costs and inflation were and will be key challenges for the whole industry, and consumers will expect manufacturers and retailers to help manage these pressures,” the company said.
“It is critical that we remain competitive and continue to win externally whilst balancing the impact of inflation, particularly in raw materials and logistic services.”
Last week, it’s parent company said it will trim costs by €2.65bn by 2027 and carve out its water and premium drinks businesses into a standalone global unit as it looks to drive growth.
Owner of brands including Nescafe, KitKat and Milo, Nestle said it forecasts medium-term organic sales growth to be more than 4% in a normal operating environment, and an underlying trading operation profit margin of 17%.