Microsoft’s main Irish unit posts 2021 profit of 2.8 billion euros
The main Irish branch of technology giant Microsoft recorded a profit of 3.1 billion dollars (2.8 billion euros) last year, thanks to the growth of its activity and cost control. It came as two separate Irish companies from Microsoft each paid a €30 billion dividend to their parents for the year.
Revenue at Microsoft Ireland Operations Ltd (MIOL) for the 12 months ended June 30, 2021 was $56.2 billion, up $9.5 billion from a year earlier. Microsoft said there were increases in all areas of the business: intelligent cloud, more personal computing, and productivity and business processes.
Pretax profit of $3.1 billion was up from $2.6 billion in 2020. The company’s corporate tax expense was $394.5 million for the year, versus a charge of $378.4 million in the prior 12 months.
The year saw operating profit increase by $662 million as the business grew to $3.1 billion.
Microsoft Ireland Operations is involved in the marketing, sales and distribution of hardware and software products and services for Europe, the Middle East and Africa, and the Asia-Pacific region.
The accounts illustrate the growing importance of services to Irish business. Services and other revenue accounted for more than half of revenue for the year, at $32.2 billion, with products accounting for $24 billion. In the previous year’s accounts, the receipts were divided equally between the two.
The figures also included revenue of $791 million from sales in Italy.
Work at home
While the coronavirus pandemic has hit some businesses particularly hard, the shift to working from home has accelerated companies’ transition to cloud-based computing and benefited companies such as Microsoft and Amazon, which have invested heavily in their cloud activity.
MIOL contained costs during the year, reducing distribution costs to $90.4 million and administrative costs to $1.87 billion from $101.2 million and $2 billion respectively l ‘last year.
However, it continued to expand, adding staff to its digital sales team. As of June 30, 2021, the company employed more than 2,000 people, more than half of them in commercial roles. This translated to a payroll of $278.5 million, with total personnel costs of just under $349 million, compared to $284 million the previous year.
Pension expense also increased to $11.65 million for the year, an increase from $10.3 million in 2020.
Total equity increased by $2.7 billion to $6.48 billion.
Separate accounts filed by Microsoft Ireland Research showed pre-tax profit of almost $19 billion, up from $17.8 billion a year earlier. Operating profit was $18.8 billion, up $4.84 billion year on year.
Microsoft Ireland Research licenses the rights to assets owned and developed by the company to other members of the group.
Revenue was $41.1 billion in the year to June 30, 2021, an increase of $7.68 billion due to increased royalty income from group companies.
Total equity increased by $5.4 billion to $104.1 billion. Microsoft Ireland Research paid a $30 billion dividend to its parent company, up from $13.6 billion the previous year.
Accounts have also been filed for holding company Microsoft Round Island One, which became tax resident in Ireland on January 1, 2021.
The Irish-registered subsidiary saw a significant decline in profits, from $314 billion in 2020 to $30.1 billion in 2021. However, the 2020 figures included a gain from surpluses and assets received from the liquidation of Microsoft Luxembourg USA Mobile Sarl and MACS Holdings Ltd.
Revenue rose to $30 billion from $13.6 billion a year earlier, due to increased income from investments in other group companies received during the year. Microsoft Round Island One paid $30.5 billion in dividends to its parent company, up from $24.6 billion the previous year.
Shareholders’ equity decreased by $346 million due to lower earnings.
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