Company bosses paint a grim picture of Ireland's prospects
AN examination of the recent results statements from some of Ireland's leading firms reveals that, even where they are optimistic about their own company's future, most bosses are still extremely pessimistic about this country's economic outlook.
Myles Lee, chief executive of Ireland's largest industrial company CRH, had good news for his shareholders when the group published its full-year 2010 results on Tuesday. Despite reporting a 27 per cent fall in pre-tax profits last year, Lee told shareholders that demand across the group's businesses had stabilised in the final quarter of 2010.
"We believe that it is reasonable to look forward to like-for-like revenue growth for 2011 as a whole," he assured shareholders.
That was the good news. The bad news was that Lee described the outlook for CRH's Irish business in 2011 as "extremely challenging", managementspeak for bloody awful.
Grafton chairman Michael Chadwick also had slightly better news for shareholders when the builders' merchanting and DIY group reported its full-year results on Thursday. Group turnover was up in the first two months of 2011. However, this was driven exclusively by improved conditions in the UK where Grafton's like-for-like turnover was up 8 per cent in January and February 2011.
Unfortunately it was a different story on this side of the Irish Sea with Chadwick telling shareholders that there had been a "further stabilisation" of turnover, i.e. sales were still falling.
As if having to settle with Revenue for €32.5m wasn't bad enough, Aer Lingus chief executive Christoph Mueller
was also fretting about the health of the Irish economy when the airline reported its full-year results on Monday. "2011 will be challenging due to the muted demand in our primary Irish market," he said.
The country's two largest banks, Bank of Ireland and AIB, have yet to report their full-year 2010 results. However, Irish Life & Permanent, which owns mortgage bank Permanent TSB, published its results on Wednesday. They made grim reading for shareholders with IL&P losing €166m after the Permo wrote off a further €420m of bad loans last year. IL&P shareholders hoping for better times to come were disappointed with chief executive Kevin Murphy warning that: "Consolidation in the Irish banking sector is both inevitable and desirable".
While Murphy never explicitly stated that IL&P would dearly love to be shot of Permo, it is clear he sees little future for the group in the Irish banking sector.
Carl McCann, chairman of Balmoral International, the property company that was spun out of fruit distributor Fyffes, was also bemoaning the poor prospects for the Irish economy when the group reported its annual results on Monday. With Balmoral having written down the value of its assets by a further €30m in 2010, following a €90m write-down in 2009, Carl McCann had little comfort to offer his shareholders for 2011.
"The continuing difficult economic conditions resulted in further reductions in property values in 2010, particularly in Ireland," he said.
It's not all unmitigated bad news from companies operating in the Irish economy. Recruitment group CPL reported its half-year results for the six months to the end of December in late January. While chairman John Hennessy wasn't exactly laying on the optimism for the Irish economy's future prospects with a trowel, there was a definite sense that Anne Heraty's company has weathered the storm.
"The marketplace remains uncertain and highly competitive, and we continue to experience pressure on our margins. These challenges are being offset by growth in certain specialist areas", said Hennessy.
Unfortunately most of the Irish companies who expressed optimism about their future prospects pointedly failed to mention their views on the future of the Irish economy.
Kerry, Ireland's largest indigenous food company, reported its results on Tuesday of last week. Chief executive Stan McCarthy promised shareholders a 7.5 -12 per cent increase in earnings (after-tax profits) per share in 2011 but had nothing to say about the group's Irish operations.
On Wednesday of last week, it was Glanbia's turn to report its 2010 results. Chief executive John Moloney was upbeat about the Kilkenny-based group's prospects for 2011, promising shareholders an increase of between 11 per cent and 13 per cent in earnings per share this year. Unfortunately he too was silent on the outlook for his company's Irish operations.
Sunday Indo Business