Markets: Greencore reports jump in revenues following 2011 UK acquisition; Vodafone hit by European woes
By Finfacts Team
May 22, 2012 - 9:54 AM

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Greencore, the food group that mainly operates in the UK and US markets, today reported a 49.9% jump in revenues, mostly a result of a British acquisition last year.

Revenues rose to £567.7m sterling from £378.6m and pre-tax profits of £15.8m compared with £2.1m last year. However in 2011, there was a write-off mainly related to a planned failed merger with Northern Foods

In 2011, Greencore moved its main listing from Dublin to the London Stock Exchange so it reports its figures in sterling.

The company said the 50% rise in revenues is partly due to Greencore's acquisition of Uniq last year.  Uniq is a UK company which makes ready meals and the deal cost £113m. Stripping out the purchase of Uniq, revenues at Greencore's underlying business were  up 9%.

Greencore has announced an interim dividend of 1.75 pence. It said it will increase the total dividend distribution for the financial year in line with the growth in adjusted earnings per share.

Results detail

Vodafone Group, the world's biggest mobile operator by revenue, today posted a drop in net profit, hurt by write-offs of £4bn related to its businesses in southern Europe, and it warned the economic outlook in Europe - - its biggest market -- will remain difficult.

Vodafone reported a 13% dip in net profit to £6.96bn for the year ended March 31, from £7.97bn a year earlier. The year-earlier result included a £6.15bnn charge because of the economic woes in southern Europe but also included contributions from sales of business units.

Earnings before interest, tax, depreciation and amortization (EBITDA) fell 1.3% to £14.48bn from £14.67bn while annual revenue rose 1.2% to £46.42bn down from £45.88bn a year earlier.

Results detail

Economic View: Q2 Health Check – In search of calmer waters: Dermot O'Leary, chief economist at Goodbody, comments - - "Short-term risks around the Irish economy predominately relate to the external environment in the euro area. At the beginning of the year, we set out our expectations for growth of 0.7% GDP growth in 2012. Five months into the year we remain of this view with all of the growth coming from net exports.

In our Q2 Health Check released this morning, we also take stock of the six issues we identified as key to the debate around the Irish economy this year. At the beginning of the year, it was uncertain as to whether a referendum would be required to ratify the Fiscal Treaty agreed at European level in December. That referendum takes place next week, and while the Yes side has a clear lead at the current time, the result is not guaranteed as yet. We believe a ratification of the Treaty is vital for Ireland as the European Stability Mechanism (ESM) provides the only viable source of funding in the likely event that Ireland will require further official funding in a post-2013 world.

One area where Ireland continues to distinguish itself from other troubled euro area sovereigns is with regard to its improving competitive position and re-emergence of a current account surplus. Over the 2009-2012 period Irish unit labour costs are forecast to fall by 16%, relative to a 7% increase in the euro area as a whole.

Also on a positive note, we are now forecasting that Ireland will beat its budget deficit forecasts in 2012, following a similar outcome in 2011. While we still have concerns about hitting budget deficit targets over the medium-term, credibility continues to be gained from the successful implementation of Troika fiscal targets."

Greencore: Upgrade post strong interims: Liam Igoe of Goodbody comments - - "Greencore’s H1 results were ahead of our forecast on every line (see table). Operating profits (+5% ahead vs forecasts) were boosted by strong lfl growth in Convenience Foods. EPS growth benefited by a substantially lower tax charge and interest costs. Underlying growth in Convenience Foods was 9.7%, mainly due to extra volumes from new business. Sales increased faster than the market (6.1% in the same period), with Food to Go driving much of the growth, at +12.4%.

Elsewhere, Prepared Meals saw lfl +8%, though Quiche was slower (market +3%), Grocery & Frozen +9.0%, while Cakes & Desserts were up by 12.7%. The Uniq integration is “progressing well”. Greencore is on schedule to make £7m of the £10m planned savings from the acquisition in FY12. Following these strong H1 results we will upgrade our forecasts likely reflecting the level of outperformance in H1."

Banks 1: Central Bank to speak to bank boards about rising mortgage arrears; Eamonn Hughes and Colm Foley of Goodbody comment - - "The Central Bank is set to meet the boards of AIB, BOI and PTSB over the next two months, according to the Irish Times, to ensure they “take a direct and personal interest” in following plans to tackle troubled mortgages.

The regulator is not comfortable with the level of mortgage arrears and wants the banks to do more, indicating that “the scale of the problem has overwhelmed the banks”. Under the new plans, lenders are being forced to identify mortgage borrowers who are unlikely to be able to repay their mortgage and to push for agreed sales of properties and repayment of shortfalls. The banks must identify which loans can be modified for borrowers that can afford them, but require short term forbearance, but also the loans that customers will never be able to repay.

The proposals also incorporate action on the buy to let space, where arrears trends have been particularly weak.

Q1 mortgage arrears data is due soon and the commentary of rising arrears is picking up ahead of publication. We expect a further deterioration on the quarterly figures and are happy to sit on the adverse PCAR loan loss assumptions for all the banks. The risk bias is also to the higher end."

Banks 2: AIB to begin redundancy scheme from tomorrow - - Eamonn Hughes and Colm Foley add: "Press reports this morning (Irish Times) indicate that AIB is to start accepting voluntary redundancy and early retirement applications from staff tomorrow. The scheme entitles the staff to severance pay of three weeks salary for each year of service plus the statutory minimum of two weeks or four weeks inclusive of statutory, whichever is greater. The scheme is capped at €225,000 or two years salary, whichever is lower.

The redundancy programme is likely to lead to upheaval in the coming month. While there is no indication what business units are to be targeted, given the preference of the CEO to introduce more customer focussed technology, we can assume it will be directed at the administration and back office roles."

Focus on UK economy: David McNamara, economist at Davy comments  - - "This week sees the release of a number of important data points in the UK. Retail sales for March are likely to have softened when data are released tomorrow (May 23rd), while the second estimate of Q1 GDP on Thursday is unlikely to yield any respite for the government with the Q1 number likely to be revised down rather than up. Today sees the release of public sector spending estimates and consumer price inflation (CPI) for April. With the financial year running from April to March, this is the first out-turn of the New Year for the government since the budget.

Due to a transfer of assets from The Royal Mail of £25bn, the headline figure is likely to be flattered in April. Stripping out this anomaly, the underlying borrowing requirement of the government is unlikely to have changed on April 2011, coming in at £8-8.5bn. The estimate for the year-end cumulative borrowing requirement of government by the Office of Budget Responsibility is currently £120bn (ex-Royal Mail transfer), well down on last year's borrowing of £127bn.

Today's CPI release should yield the decline in inflation that the Bank of England has been forecasting. The disappointing upturn in the index in March is likely to be undone in April, with the headline rate likely to fall from 3.5% to 3%. A fall in food and energy prices in recent weeks will likely account for the bulk of the decline, with the index on track to hit the Bank of England's 2% target by early 2013. We forecast inflation falling back to 2.8% in 2012 and 1.9% in 2013.

In the eurozone, the EU Commission consumer confidence measure is likely to have suffered from Greek woes in April with the tentative recovery in the index recently expected to have been undone with the index falling back below -20 from -19.9 in April."

US Markets

In New York Monday, the Dow rose 135 points or 1.09% to 12,504.

The S&P 500 rose 1.50% and the Nasdaq gained 2.46%.

Facebook shares, which began trading Friday at $38 fell 11% Monday to close on the Nasdaq exchange at $34.03.

Asia Markets

The MSCI Asia Pacific Index climbed 1.40% Tuesday - - after its biggest drop since November last Friday, erasing the year's gains.

Japan's Nikkei 225 rose 1.10%; China's Shanghai Composite Index added 1.06%; Korea's KOSPI gained 1.64%; Australia's S&P/ASX 200 advanced 1.16% and in Mumbai, the Bombay Stock Exchange's Sensex 30 Index dipped 0.25%.

Asia benchmarks

Europe Markets

In Europe, the Dow Jones Stoxx Europe 600 is up 0.69% in early trading Tuesday.

The ISEQ has risen 0.76% in Dublin.

Ryanair is down 0.99%.

European Benchmarks

Irish Share Prices

Key Index Performance Statistics

Euribor Rates

AIB Daily Report

Bank of Ireland Daily Report


The euro is trading at $1.2800 and at £0.8083.

For live currency updates, check the right-hand column of the Finfacts home page.

The US dollar fell to $1.6038 per euro on Tuesday, July 15, 2008 - an-all time record.


The Baltic Dry Index, a measure of shipping costs for dry commodities, hit an all-time High of 11,771 on the 21st of May, 2008. From that time it reversed and on the 5th of December, 2008 it hit a low of 663 - - close to a 1986 low.

On Thursday, July 15, 2010, the index fell for the 35th straight session, by 9 points, or 0.537%, to 1,700 points, Bloomberg report.

On Friday last week, the BDI closed up 4 points or 0.35% at 1,141  - -  the BDI plunged a full 70% from its recent mid-October peak of 2,173 to an all-time low of 647 on February 3. London's Baltic Exchange was closed on Friday and Monday.

Freighter Oversupply Weighs on Shipowners and Banks - - Jan 26, 2012: The New York Times says vessels bought during the global commodity boom are only now being delivered, putting pressure on the European banks that financed the purchases.

The skyscrapers and immaculate beaches of Singapore's seaport look out on one of the world’s largest parking lots: mile after mile of empty cargo ships, as far as the eye can see.

Similar fleets bob at anchor, with empty cargo holds, off the coasts of southeast Malaysia and Hong Kong. And dozens of newly built ships float empty near the giant shipyards of South Korea and China, their owners from all over the world reluctant to accept delivery during one of the worst markets ever for the global shipping industry.

As recently as six weeks ago large freighters that can carry bulk commodities like iron ore or grain were fetching charter rates of $15,000 a day. Now, brokers and owners say, the going rate is $6,000 a day. If any customers can even be found.

Crude oil for June 2012 delivery is currently trading on the Chicago York Mercantile Exchange (CME/Nymex) at $92.60, up 3 cents from Monday's close. In London, Brent for June delivery is trading on the International Commodities Exchange at $109.09. The North Sea benchmark accounts for two-thirds of the global market.

The margin between the US benchmark WTI (West Texas Intermediate) used on the New York Mercantile Exchange and Brent is over $16 - - The Globe and Mail says that for the past 10 months, Canadian producers - - whose prices are tied to WTI - - have been taking steep discounts for their oil compared with international crude prices that are benchmarked against North Sea Brent, which can be shipped more readily. In the past, WTI tended to trade at a small premium to Brent, because it is easier to refine.

That spread hit a peak of $28.08 (US) on Oct. 14, but has fallen dramatically since then. After plans for more pipeline capacity at Cushing, Oklahoma, the differential narrowed.

Gold spot price

The spot price of an oz of gold is trading in New York at $1,583.60, down $8.80 from Monday's close in New York.

Gold had hit a record high of $1,921.05 a troy ounce on Sept 6.

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