Pension shortfall leaves Irish arm of Jacobs with €2m loss

A pension shortfall left the Irish arm of engineering giant Jacobs with a €2 million loss in its last financial year, but its accounts show that its business in the Republic grew revenues and profits.

Jacobs Engineering Ireland, which designs and builds plants for the pharmaceutical, biotech and energy industries, grew revenues by close to 80 per cent in the 12 months ended September 30th, 2016, to €372.7 million from €207.7 million in 2015.

Operating profit more than doubled to €18 million from €8.5 million, while its pre-tax surplus increased to €17.3 million from €7.7 million, on the back of strong growth in the industries that it services around the Republic.

However, the company’s figures show that a liability of more than €19 million tied to its defined benefit pension scheme left it with a €2 million deficit on September 30th last year. It has since agreed changes to its retirement scheme with workers.

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Excellent

Ken Gilmartin, group senior vice-president life sciences, consumer goods and manufacturing, said that Jacobs was happy with the Irish division's results. "It was an excellent performance," he said.

US-based Jacobs Engineering employs 54,000 people in 230 locations around the world and last year earned revenues of almost $11 billion. The company has been in the Republic since the 1970s and has 400 staff here.

Multinational players in industries such as biotechnology and pharmaceuticals drove a lot of the growth in its Irish business last year. “I would say that the life sciences sector has always been hugely important for us here,” Mr Gilmartin noted.

In recent years Jacobs has won contracts from multinationals such as Bristol Myers Squib and Pfizer, as well as State body, Transport Infrastructure Ireland, which hired the engineering group to provide consultancy services on projects worth an estimated €3 million.

Jacobs Engineering’s core business here is linked to the multinational sector’s continued growth.

Mr Gilmartin, a Sligo native who is now based in Philadelphia and leads a division of the group that includes its Irish arm and employs 4,000, does not believe that US president Donald Trump's policies or Brexit, pose serious risks to the sector.

Reputation

However, he warned that the Republic’s 12.5 per cent corporate tax rate was critical to success in luring investment here. At the same time, he acknowledged that the country had the skills – and a reputation – for building production facilities on time and on budget that played a big part in anchoring multinationals in the State.

"If you look at Ireland generally, it has a good reputation for project delivery, engineering and design," he said, adding that stretched beyond the Republic. "We do projects all across Europe and you often see Irish contractors doing work on all these different sites."

He also pointed out that there had never been a product recalled from any Irish-based biotech or pharmaceutical manufacturing plant.

Mr Gilmartin suggested that any risks could come from within the industry itself, depending on how the current boom in biotechnology developed. The sector requires big investment, bringing a new drug to the market can cost $8 billion and take eight to 12 years.