THE pandemic had a major impact on Element Six’s finances last year, according to newly filed accounts, writes Owen Ryan.
After-tax profits at the industrial diamond company fell from $19.8m in 2019 to $4.8m in 2020.
The Director’s Report accompanying the accounts references uncertainties in the market caused by the Covid-19 pandemic.
Revenue fell by 28% year on year, primarily driven by reduced demand as a result of Covid-19, while it also had to settle a patent infringement case.
Summing up the financial performance the document stated, “The profit on ordinary activities before taxation amounted to $5,224,000 (2019: $21,535,000). A profit after tax of $4,806,000 (2019: $19,805,000) was taken to reserves. There were no dividends paid or received in the financial year.”
It said that production had been able to continue throughout the pandemic.
“Covid-19 still presents uncertainties to future forecasts and budgets which may impact the company’s ability to continue as a going concern.
“However, throughout 2020 and into 2021 Element Six has been able to continue to operate despite lockdowns as it is classified as a supplier of essential services.”
The company settled a patent infringement case earlier this year.
“In November 2020, the Group was notified of a patent infringement litigation case against them in relation to polycrystalline diamond compacts, which are being imported and sold in the US.
“Despite the Group’s opinion that there was a strong case against this litigation, with there being no guarantee of a favourable outcome, in January 2021 the Group commenced settlement discussions.
“Final settlement terms were confirmed in March 2021 and the total settlement of $5million was recharged by another group company.
“This has been treated as an adjusting post balance sheet event, with the total cost recognised within ‘other admin expenses’ within the income statement.”
The report stated, “The directors have continued to focus on tight cost control and on operational excellence to help drive improvement in yield and in production processes.
“Various procurement, supply chain and working capital initiatives have been implemented during the year in order to help achieve key business objectives.
“The Element Six Group continues to significantly invest in research and development into new products and technologies and it is expected that these will yield increased market share and market growth in an ever increasing competitive environment.”
The company recently celebrated 60 years of operations in Shannon and CEO of the Shannon Chamber of Commerce Helen Downes paid tribute to it.
“Celebrating a sixty-year footprint in Shannon is an amazing achievement. It demonstrates, not just commitment to the area but the ability of the organisation to adapt to the changing circumstances it has encountered over this six-decade timespan,” she said.
“Over the past 60 years, Element Six has been a committed member of the Shannon business family, has provided employment for people in and outside this region and has manifested an interest in not just developing talent, but making its people part of the company’s success.
“As an active member of Shannon Chamber, and our Mid-West Lean Network, Element Six has opened its doors to give us and members of the network access to its facility for workshops and events and has shared its continuous improvement journey with so many companies attending network events hosted within the company’s expansive Shannon facility.
“Shannon Chamber board and executive extend their thanks to Walter Hühn, CEO at Element Six, and to current and past members of the Shannon management team, for the investment made in both facilities and people at Shannon, and for the provision of 500 jobs in this region.
“We look forward to supporting the company in its next-phase achievements and to seeing the company break yet more longevity records for business residency in Shannon,” Ms Downes concluded.