Monday 9 December 2019

Iseq 20 remain defiant despite shock Brexit share collapse

Stocks badly hit, but many firms say UK vote won't have a material impact on operations

'Many of this country's largest indigenous businesses said the UK's decision would have little effect on their operations.' Photo: Bloomberg
'Many of this country's largest indigenous businesses said the UK's decision would have little effect on their operations.' Photo: Bloomberg
Gavin McLoughlin

Gavin McLoughlin

A number of Ireland's biggest companies are defiant about the impact of Brexit on their businesses, despite the ISEQ having its worst day since the height of the financial crisis on Friday.

The shock vote to leave the European Union (EU) caused market chaos - after a broad expectation that the UK would vote to stay. The decision forces Irish companies to grapple with the prospect of extended volatility.

But many of this country's largest indigenous businesses said the UK's decision would have little effect on their operations.

Paper and packaging company Smurfit Kappa, whose share price dropped 11.4pc in Dublin on Friday, said it did not expect "any material impact on our day-to-day business".

It said it operates an integrated business in the UK with local sourcing of raw materials, and that the impact would be determined by European growth levels and exchange rates, given that it reports results in euro. "The UK is a relatively small part of the business accounting for approx. 7pc-9pc of Group turnover," it added.

A spokesman for Kerry Group said the result would be "relatively immaterial" for the food giant, saying the effects of currency volatility would be largely balanced, with the company having relatively small export businesses in both the UK and Ireland. Kerry lost just over half of one percent on Friday.

Glanbia, which lost 2.4pc on Friday, said the UK "is not a major market for our wholly-owned business, accounting for around 3pc of revenues last year." It said there would be no material impact on earnings.

Ryanair, which vigorously campaigned for 'Remain', took a light-hearted view. "It's a good job we're better at running an airline than political campaigns. Britons are booking our £9.99 seats in record numbers in what will be the last big seat sale of its kind, as they look to flee a country which will be run by Boris, Gove and Farage," a spokesman said. Its shares lost almost 10pc in Dublin on Friday.

Greencore boss Patrick Coveney said London-listed Greencore manufactures food in the UK for the UK market, with relatively little exposure to currency volatility because of that.

He said the company is focused on trends unrelated to the EU, such as the move towards snacking and convenience food. "I think our business will be fine but it would have been better if Britain had stayed in the EU".

Irish Continental Group (ICG) boss Eamonn Rothwell declined to comment, but has previously said that Brexit was a matter for politicians to deal with, adding that it was impossible to anticipate what the final settlement between the UK and the EU would be. ICG shares dropped almost 11.5pc on Friday.

Aryzta declined to comment, but this newspaper understands that insiders believe its main issue to be the translation of UK profits into its reporting currency. Dalata, which operates a number of hotels in the UK, declined to comment for this story, but chief executive Pat McCann told the Irish Independent that the company would "run our business and will look at where we can take advantage.

"In business, there are certain things you can control and certain things you can't. This is one of those things you can't," he added.

FBD chief executive Fiona Muldoon said the result "introduces significant business and trading uncertainty for all indigenous Irish businesses." FBD lost 7.57pc on Friday.

"I do not believe FBD will be materially affected in the near term by currency exposures or trade flows. The risks are more pronounced for farmers and the agricultural industry, which trades widely with the UK... as this is a key customer base of ours we will be doing our utmost to work with them through those difficulties".

Kingspan, a market leader in the UK, which lost the most on the ISEQ on Friday at 21.1pc, declined to comment. Fyffes, Grafton, DCC, Paddy Power Betfair, CRH and Origin Enterprises did not comment.

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