Aramark grows sales but interest bill pushes it into the red

Aramark, the US-owned food services multinational that employs more than 4,000 staff in Ireland, grew its sales and operating profits strongly here last year as more businesses tendered for outside caterers to feed their staff.

Aramark’s sales in Ireland grew by 4.5 per cent in 2014, to €233 million. Donal O’Brien, the president of the company, attributed the increase to a number of new contract wins. Its operating profits rose by almost 17 per cent to €6 million, as the business also kept a lid on its costs.

But the gains were wiped out by a hike in its interest payments, together with the costs of a restructuring programme. The group made an overall loss of €1.7 million, after restructuring costs of €1.9 million and more than €5 million in interest repayments.

“The underlying performance of the company is very strong ... We have been relentless in realigning and reducing cost from our business while investing in technologies and systems to improve our performance,” said Mr O’Brien.

‘Performed well’

“In our business, the key performance indicators are operating profit, revenue and retention rate. In all three of these, we performed well,” he said.

Retention rate refers to the proportion of client contracts the business rolls over, with Aramark retaining more than 96 per cent of its business from the previous year.

On cost control, the company’s directors said it reduced operating expenses as a percentage of revenues from 13.4 per cent to 12.7 per cent. “Further benefit from the restructuring programme is expected in subsequent years,” they said.

The company noted that pricing and gross margins had come under pressure, however: “Gross margin has decreased from 15.6 per cent to 15.2 per cent. The continued depressed economic climate and cost reductions sought by clients, combined with competitive pressures, has impacted ...”

Croke Park contract

Mr O’Brien hailed the impact of Aramark winning the contract for Croke Park, as well as multi-site contracts across Europe. He said the business had also created an extra 200 “front line” jobs during the year.

The company has also moved heavily into the facilities management area, acquiring the business and assets of Sligo-based Lotus FM during the year.

Revenues from facilities and property management contracts rose to €92 million.

“Lotus FM has proven to be an excellent fit and additional jobs were created in our workplace solutions division as a result of the business growth achieved from the acquisition,” said Mr O’Brien.

The group’s long-term debts rose to €139 million from €30 million, due to the opening of a new revolving credit facility. It also paid about €1.8 million in corporation tax.

Overall, the group is sitting on retained losses of almost €29 million.

Despite making a net loss, Aramark paid a dividend of €3 million to its US parent. The group, which is listed on the stock exchange in New York, employs more than 270,000 globally.