Friday 17 January 2020

Cuisine de France owner Aryzta proved the biggest drag on the Iseq index

Cuisine de France products
Cuisine de France products

Gavin McLoughlin

Cuisine de France owner Aryzta proved the biggest drag on the Iseq index of Irish shares in the first half of the year, losing almost two-thirds of its value amid shrinking profits and a heavy debt burden which it is trying to reduce.

State-owned AIB was the second biggest weight on the Iseq, losing more than 13pc on the Irish stock exchange and heading back towards its IPO price of €4.40 a share. Despite an Irish economy that appears to be in good shape, the financial sector remains exposed to geopolitical events which pose a risk of external shocks to Ireland.

The Iseq closed the half-year down 0.79pc on the start of the year. That means €1,000 invested in the Iseq as a whole would have turned into €992. It finished at 6982.83, having started at 7038.28.

The index hit a high of 7235.11 in late January and got close to that again into the summer, but has fallen back in recent weeks with concerns over a global trade war escalating.

The biggest boost for the index came from Smurfit Kappa, which was up more than a quarter in the period as US rival International Paper circled with a potential takeover.

That deal is not going to proceed, for now at least, and that saw Smurfit shares fall back to €34.70 each at the end of the period. They had been trading above €36 at one point.

Insulation maker Kingspan was the second-biggest boost to the index. Its financial performance has been strong, despite concerns it might be impacted by Brexit.

The shares have continued to perform well despite founder and chairman Eugene Murtagh selling €40m of shares last month.

However, CEO Gene Murtagh, Eugene Murtagh's son, warned at the company's agm that Kingspan had a sluggish start to its financial year, having been hit by a prolonged winter. He said its order book indicated a strong second quarter however.

Each company on the Iseq is weighted so that rises and falls in bigger companies mean more for the overall index than smaller one.

In pure percentage return terms, the best company to have invested in was VR Education, the newly-floated Waterford company making virtual reality products for educators.

It was up 55pc in the period having floated in March. In second place was Ormonde Mining, up 40pc, which is working towards building a tungsten mine in Spain.

Aryzta was also the biggest loser in financial terms, down more than 62pc, with Great Western Mining losing more than 52pc.

IFG Group was down almost 30pc in what was a very newsworthy period. The company put its wealth management business Saunderson House on the block before ultimately abandoning a sale.

The most heavily weighted stock on the index,CRH, was up 3pc in the period.

The AIB share fall saw the value of the State's 71pc holding slip substantially, raising the prospect that the recovery of taxpayers' bailout money could take longer as markets face into a turbulent period.

Finance Minister Paschal Donohoe said earlier this year that in order for a stake sale to go ahead he would "need to be satisfied that the market was prepared to put a fair and reasonable value on the bank's equity, bearing in mind its current performance, future prospects and the outlook for the economy".

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