NESTLÉ has slashed the value of its investment in infant formula maker Wyeth Nutritionals Ireland by €200m.
The Swiss multinational acquired the global formula business in 2012 from Pfizer for $11.8bn (€10.1bn).
The impairment pushed Nestle’s Irish arm to an almost €135m loss last year, newly filed accounts for the business show.
During the summer, Wyeth Nutritionals said that it was seeking an unspecified number of redundancies at its plant in Askeaton, Co Limerick.
About 600 workers are employed there. Half of them are involved in production and half in administration.
Excluding the Wyeth impairment, Nestlé Ireland posted an operating profit of just over €1m for 2019, which was down sharply on the €3.7m it generated in 2018.
The company’s primary activities are the importation, distribution and marketing of its well-known brands of confectionery, beverages, pet food and infant nutrition products.
It owns the likes of Smarties, KitKat, Cheerios, Nescafe and Purina.
Revenue at the Irish arm touched €97.2m last year, up from €94.7m in 2018.
The revenue figure does not include an additional €66.5m that the Irish unit received last year by way of a dividend from Wyeth Nutritionals Ireland.
That compared to a €35.4m dividend it received the year before. In 2016, the Wyeth unit paid a €141.6m dividend to Nestlé Ireland, and €1.01bn in 2017.
In 2017, Nestlé Ireland paid a €660m dividend to its shareholder, and paid €141.6m by way of a dividend in 2016.
The Irish Wyeth Nutritionals business was valued on Nestlé Ireland’s books at about €1.2bn following the acquisition of the firm.
The first impairment recorded by Nestlé Ireland on its investment in Wyeth Nutritionals Ireland was in 2017, when it recorded a €662.2m charge.
When Nestlé acquired Wyeth Nutritionals, it said the purchase would enhance the Swiss company’s position in global infant nutrition. At the time, the Wyeth Nutritionals business had global sales of $2.4bn, with 85pc of those sales generated in emerging markets.
The baby formula manufacturing plant in Limerick was established in 1974. It also includes a research and development unit.
Wyeth Nutritionals manufactures about 40,000 tonnes of formula products every year, with China being its main market.
The latest set of accounts for Wyeth Nutritionals Ireland show that the unit saw its turnover decline by €95m to €332.7m last year, despite volume sales to China rising.
“This reduction is attributable to a decrease in the volume sold year-on-year coupled with a change in the financial and supply flows,” the accounts note.
The company recorded a pre-tax profit of €14.5m last year, up from €11.6m in 2018.
During the summer, Wyeth Nutritionals launched a new high-end infant formula product in China called Belsol. It was the company’s first new product in nearly 10 years.
Releasing first-half results in July, Nestlé said that a contraction in Wyeth’s infant formula sales had moderated in the period.