Monday 26 September 2016

Aryzta data due in big week for boss Killian

Published 30/05/2016 | 02:30

Aryzta boss Owen Killian
Aryzta boss Owen Killian

It's going to be a big week for Aryzta boss Owen Killian, with the company due to bring forward a third quarter trading update on Wednesday.

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The last 18 months or so have been pretty punishing for the Swiss-Irish frozen bakery company, with shares plummeting after its decision to buy a 49pc stake in a French food retailer.

Its first half results were pretty uninspiring with underlying revenue growth of just 0.2pc, and things weren't helped when Killian sold off a large chunk of shares because of a margin call.

The stock is worth less than half of what it was two years ago and investors will want to see indications that things are getting better. Otherwise, Killian will come under more and more pressure.

All eyes will also be on the exchequer returns and unemployment figures this week to see how the Irish recovery is progressing.

Last month's exchequer figures showed the tax take running around €500m ahead of profile, while spending was €180m below profile. Commentators will be most interested in whether the momentum in tax receipts continued.

As for unemployment, CSO figures for April but the seasonally adjusted number of unemployed people at 183,700 - a rate of 8.4pc - down from 187,400 in March.

This could be the month where the number ticks below 180,000.

Next week will provide investors with clues as to how far the US Federal Reserve is from its next interest rate hike and whether the European Central Bank (ECB) will see out the year without easing its monetary policy again.

Friday's US jobs data will be the highlight of the week after some members of the Fed's Federal Open Market Committee suggested a rate increase could come as early as June if the US economy recovered from a weak first quarter.

A Fed rate hike could send shockwaves across the world at a time when the global economy is slowing, emerging markets remain fragile and Britain's EU membership referendum on June 23 is on a knife-edge.

The week will also see the ECB hold its policy meeting on Thursday after the publication of inflation and lending data earlier in the week.

The Eurozone's central bank is expected to keep interest rates on hold and reaffirm its focus on implementing the stimulus package announced in March.

This included purchases of corporate bonds due to kick off in June.

The ECB will likely have a rare opportunity to raise some of its inflation forecasts for this year and the next thanks to a rebound in oil prices, giving it some breathing space to allow its measures to work their way into the economy.

"The combined economics departments of the Eurosystem central banks must be sighing in relief over this round of forecasts," Anatoli Annenkov, an economist at Societe Generale, said.

"With the Corporate Sector Purchase Programme...and higher headline inflation in the pipeline, the ECB will be in no hurry to launch any new measures."

Despite the bounce in oil prices and a continued, albeit modest, recovery in lending, inflation was expected to have remained negative in May.

With price growth likely to remain below the ECB's target of almost 2pc until as late as 2018, some economists are still betting on more ECB action before the end of the year.

(Additional reporting Reuters)

Irish Independent

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