Profits tumble by over 70 per cent at IKEA Ireland to €6.9m

Gordon Deegan

Pre-tax profits at the Irish arm of Swedish furnishing giant, IKEA,  tumbled by 70.5 per cent to €6.91 million in 2024 due to higher costs and lower revenues, new accounts show.

Accounts filed at the Companies Office show that pre-tax profits at IKEA Ireland Ltd decreased sharply as revenues dipped by 2.4 per cent from €252.4 million to €246.46 million in the 12 months to the end of August 2024 against the background of “a slowing home furnishing market”.

The firm’s profits plunged as its overall costs rose by 4 per cent from €230.71 million to €240.07 million in fiscal 2024 which coincided with the company opening its first distribution centre in Ireland at Rathcoole in April 2024 employing over 200 people.

The company paid dividends of €20 million in 2024 compared to a dividend payout of €11 million in the prior year.

The directors state that “in 2024, despite economic challenges and a slowing home furnishing market, IKEA Ireland remained committed to long-term, purpose-driven growth”.

They state that “rather than prioritising short-term profits, IKEA focused on increasing affordability, accessibility, and sustainability to improve everyday life for more people".

The directors state "that over €10 million was invested in lower prices while significant steps were made to expand access to products and services”.

Expanding on its investment in lower prices, the directors state that “standing with customers facing cost-of-living pressures, including those with the thinnest wallets, in FY24 we lowered prices across a third of our product range”.

They state that “while this investment impacted negatively our FY24 revenue, which decreased by 2.4 per cent, it was the right thing to do”.

The accounts show that sale of goods reduced by 3 per cent from €244.07 million to €237 million while sales of services increased from €8.3 million to €9.4 million.

The directors state that notwithstanding a decrease in revenue, “we continued to invest in our co-workers and implemented an increase in base pay for hourly coworkers (+10 per cent) and salaried co-workers (+5 per cent)".

The directors state despite significant inflationary pressures on all other operating costs, “our total administrative expenses increased by only 16.3 per cent vs FY23” where administrative expenses rose from €56.17 million to €70.1 million.

The directors state that overall, the company’s gross margin increased slightly from 30.9 per cent to 31 per cent despite the decrease in revenue.

The directors state that “this improvement was driven by better purchasing prices, optimisation of our fulfilment network and cost efficiencies”.

They state that notably, “we saw a 4 per cent rise in furniture click and collect orders through stores and mobile pick up points, off-setting a 4 per cent decline in truck delivery volumes”.

On the company’s future developments, the directors state that “we’re on an expansion journey in Ireland”.

They state that “we strongly believe that FY24 formed a strong base for the years to come in terms of increased co-worker engagement, improved customer satisfaction and growth in market share".

They state that “we made major strides in our journey to become more accessible, affordable and sustainable and we are in a strong position to build on these achievements in FY25 and the years to come”.

The business's operating profits decreased by 69 per cent from €22.44 million to €7 million.

After taking into account net interest payments of €99,682, the firm recorded the pre-tax profit of €6.91 million. A dividend received of €1 million in the prior year did not re-occur in 2024.

The company's gross interest payable bill for 2024 included €28,466 in "penalty interest payable to tax authorities".

The firm recorded post tax profits of €5.43 million after incurring a corporation tax charge of €1.47 million.

Numbers employed by IKEA Ireland increased by 12 from 732 to 744 as staff costs remained at €23.99 million.

Aggregate pay to directors increased from €271,466 to €342,284.

The profits take account of non-cash depreciation costs of €3.06 million while operating lease charges declined from €2.86 million to €2.38 million.

Shareholder funds totalled €32.57 million that included accumulated profits of €27.57 million. Cash funds decreased from €945,957 to €312,834.