Monday 23 October 2017

Top dogs paint a picture of slow and mixed recovery

For some of the country's key companies, life has stabilised while others are still finding conditions tough, says Nick Webb

OVER the past three weeks, the bosses of Ireland's top quoted companies have been out telling investors how their businesses are doing and the outlook for future trading. This gives us a broad snapshot of how key parts of the domestic economy are performing.

Grafton Group

Retail, construction and consumer confidence are all rolled into one at Michael Chadwick's building-materials supplier Grafton Group.

"The rate of decline in turnover in Ireland moderated to 2.6 per cent, which included growth of 4.6 per cent in the Irish retailing business," according to the company. "Trading conditions in Ireland were challenging due to weak demand in the residential market and low levels of activity in the new-build markets."

Paddy Power

Betting is the ultimate sign of discretionary spending. "Irish retail has been impacted by poor sporting results but remains well positioned to grow market share," according to Patrick Kennedy's bookie.

However, crunching through the figures reveals that the average amounts bet in Ireland fell one per cent on last year. Hardly a sign of confidence but not a drastic fall.

Bank of Ireland

"While trading conditions in the first quarter of 2011 continue to remain challenging, we believe that the Irish economy has begun to stabilise," Richie Boucher's Bank of Ireland told investors last week in its interim management statement.

However, with credit and new finance the life blood of any functioning economy, it was worrying to hear that "demand for new lending remains muted".

IL&P

"While we believe the worst of the recession appears to be over in Ireland, the recovery in 2011 is expected to be modest, with continued weakness in domestic demand and consumer sentiment being partially offset by a strong export sector performance," according to Irish Life boss Kevin Murphy.

Residential property prices continue to decline, the country's key mortgage lender noted. "Arrears on the Irish residential book continue to increase while new-mortgage demand has been very subdued on the year to date," he said.

Glanbia

Most of Glanbia's business is now abroad but it still has major exposure to the Irish dairy and food industry.

"Dairy Ireland is also expected to be ahead in the first half of 2011 compared to the prior year. Current global dairy market conditions and higher milk volumes support a good performance in Dairy Ingredients Ireland in the year to date; although there has been some weakening in market outlook in recent weeks," John Moloney's company warned.

But retail sales remain under pressure and food inflation is hardly helping.

"The trading environment for Consumer Products remains difficult and input cost pressures remain high," Glanbia said.

ICG

Eamonn Rothwell's ferry group provides a barometer for international trade and tourism performance.

"Underlying passenger and car business is in line with 2010," the ferry group noted. "In the roll-on roll-off freight market, while the overall market is weaker than expected, Irish Ferries carried 70,900 units, an increase of 11.7 per cent compared with the same period in 2010."

This is certainly a positive sign.

FBD

It's a case of things aren't getting much worse at Andrew Langford's insurance and hotel firm. Irish domestic demand will continue to decline further in 2011, albeit at a diminishing rate.

While the insurance market is getting squeezed big time, FBD noted: "In the first three months of 2011, FBD's policy volume was flat -- the first quarter without a fall in policy volumes since quarter two of 2008".

The hotel part of the business was looking far less peaky. "The Irish hotel market recorded increases in average room rates charged in the quarter relative to the prior year. This, together with marketing and cost initiatives. . . contributed to an improved performance in the group's Irish hotels."

IFG

"Trading conditions in Ireland remain very difficult," IFG boss Mark Bourke told investors last week.

"Our strategy of building an Irish business which mirrors that of our UK operation is progressing well with solid performances from our Group Pensions and Individual Advisory businesses."

Kerry

Global food company Kerry saw a "stable" performance in Ireland for its brands including Denny sausages, Charleville cheese, Dairygold and the quite horrible Cheesestrings.

"The group's consumer foods' business performed satisfactorily with good brand development in the UK market and a stable brand performance in the Irish market, which continues to be driven by heavy market promotional activity," the company said.

DCC

Tommy Breen's conglomerate deals in everything from artificial hips to Batman DVDs or Jaffa Cakes. This is ground zero when it comes to the health of the retail market. But it is also hooked into energy, healthcare and recycling and waste.

"At this very early stage the group anticipates that operating profit and adjusted earnings per share, both on a constant-currency basis, will be broadly in line with the prior year."

Aer Lingus

Both incoming tourist bucks and the strength of consumer confidence -- or the need to escape it all -- are highlighted by Aer Lingus's trading outlook.

"While we still expect that Aer Lingus will be profitable in 2011, we expect that the level of profitability will be much lower than in 2010," according to Christoph Mueller's announcements earlier in the month.

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