Industrial diamond manufacturer Element Six reported an operating profit of $1.45 million last year, a decline of 95 per cent on 2011 when the company booked a once-off gain of €21 million when it restructured its pension scheme.

The move by the firm to wind-up the defined benefit scheme is the subject of High Court proceedings by 124 members of the scheme against the scheme’s trustees, with the members claiming they are owed between €40 million and €50 million.

The sharp drop in profits follows revenues at the Shannon-based firm dropping by $44.4 million or 13 per cent from $329.6 million to $285.2 million in the 12 months to the end of December last. The figures show that the number the firm employs declined from 332 to 323, with staff costs down from $29.7 million to $28 million.

Indemnity
A note attached to the 2012 accounts states that "whilst the company is not party to this [pension] litigation, Element Six Ltd has provided an indemnity to the trustees, which may cover this claim and any award of damages or costs which may be made by the courts should this claim be proven".

The filings show that the firm recorded an operating profit of $5.1 million last year. However, interest payable and other finance expenses totalling $3.6 million resulted in the pre-tax profit of $1.45 million.

According to the directors’ report, “the main challenges of 2012 were maintaining revenues and margins in light of market uncertainty and managing the impact of foreign currency fluctuations on our business”.

The report continues: “The company continues to invest in research and development into new products and technologies, and it is hoped these will yield increased market share and market growth.”

The directors’ report lists the principal risks to the company as low-cost competition coming from eastern European and Asian suppliers, and fluctuating currency exchange rates.