Dubai

The United Arab Emirates’ central bank today eased credit for lenders and said it “stands behind” the country’s local and foreign banks as they may have to accept losses Dubai World’s possible default.

Banks were told they will be able to borrow money from the regulator for half a percentage point above the three-month local benchmark interest rate, the central bank said.

The UAE markets limit trade on liquid stocks when they dip 10%. Emaar, a major developer in Dubai, fell 9.9% as soon as the Dubai market opened

Euro-area still on the mend

Goodbody economist Dermot O’Leary comments today:"Ahead of the ECB Governing Council’s last policy meeting of 2009 on Thursday, the latest confidence indicators continue to improve. The European Commission’s measure of sentiment, released on Friday, showed a further improvement in all the sectors surveyed - services, consumer, industrial, retail and construction. The headline economic sentiment indicator rose to 88.8 in November (from 86.1 in October). This represents the ninth consecutive improvement and takes the index back to levels last seen prior to the collapse of Lehman Brothers last September. All economic sectors, apart from construction, have now returned to close to the levels pertaining prior to the near implosion of the financial system last September.

This is a pretty important landmark that has been reached, and signifies that the ECB’s crisis management efforts have indeed worked. It is likely that this improvement in the economic landscape will indeed be recognised by the ECB on Thursday, but it is equally likely that it will not trigger a pronouncement that it will be removing some of the monetary stimuli that it has in place to the area. More weight is likely to be placed on the amount of spare capacity built up in the system during the crisis, which will take some time to work off. They wouldn’t be central bankers if they weren’t worried about something though, so we would expect some commentary around the recent moves in currencies (with the euro still hovering close to its recent highs) and developments in fiscal policy in the euro-area. Both of these, particularly the latter with the Budget to take place next week, are relevant to Ireland."

Aryzta and Origin

Aryzta, which was launched last year after the merger between Irish food and milling group IAWS and Swiss bakery group Hiestand, announced today that sales fell by 16% to close to €730m in the first three months of its financial year, to the end of October.

Earnings in its food division advanced by 2.2% to €51.1m, while earnings at Origin Enterprises - -  in which it holds a 70% stake - - plunged 40% to €12.7m.

Aryzta said that food revenues dipped 8.4%.

Goodbody analyst Liam Igoe commented:

"Aryzta has reported a sales decline of 8.4% in its food businesses in the 13 weeks to end October. This was significantly worse that the 1% fall we had forecast. Nearly all of the differential is due to the continued contraction in the UK and Ireland business over the period, where sales were down 25%. We had anticipated a decline of 10%. Elsewhere in Europe, lfl sales were flat. In North America, lfl sales were down 2.1%, in part due to difficult yoy comps. By contrast, however, margins were substantially higher in Q110, with the food division's EBIT margin some 130 bps higher at 12.5%. For the full-year we had forecast a 30bps increase in margin. The overall profit increase of 2.2% in Food in Q1 is similar to what we have forecast for FY10 as a whole in Aryzta Foods. The company is not changing its full-year guidance. Our own forecasts are at the top end of the range, but given the progress in the margins, we don’t expect to change them materially on the back of this announcement."

Origin Enterprises  Outlook unchanged in IMS update

"Origin remains comfortable with current market expectations, according to this morning’s IMS. In the first four months, lfl sales were down 17%, reflecting the fall in commodity prices and EBIT is down 40% to €12.7m. However, the headline sales and EBIT (earnings before interest & tax) for the first four months are heavily impacted by: (i) the high seasonality of the business; (ii) an increasing shift toward H2, due to its changing business mix; and (iii) the collapse in commodity prices (down nearly 50% yoy in the case of fertilisers) which is, essentially, all front loaded into H1 in FY10 (as prices had already fallen in H209). Also, the quarterly results from Origin are particularly impacted by the weather, in that the timing of crop spraying or fertilizer application can shift between quarters from one year to the next.

In agri-nutrition, revenues of €252.9m were 26% below last year (underlying -17.5%, with most of the balance due to currency translation). In addition to the commodity price effect (which is normally neutral from a profit standpoint), volumes were impacted by customers deferring purchase until the main application period in the Spring - in contrast to last year, when farmers in the UK had been stocking up on fertiliser supplies. Having seen prices fall so much, farmers are less inclined to buy in advance this year. Volumes should pick up in Q3 as a consequence. In the marine protein JV, progress is being made in the integrating of the Origin and Welcon operations, with a single management team already in situ. The larger operation, following the merger between the two companies has a greater natural seasonal bias into Q2 and Q3, as Welcon’s business focussed on the herring and industrial fishing, which is very quiet at this time of year.

Masstock looks set to have another good year, with winter plantings of wheat and oilseed rape in the UK up 10% yoy in FY10, which should benefit sales of crop protection products. The CSC acquisition last year is actually loss-making in H1, with the entire margin earned in H2. We expect that the fall in EBITA (earnings before interest, taxes, depreciation and amortization)in the first four months for Origin reflects the extent of the full-year decline that we have already factored into our forecasts (€8m), which look for flat overall yoy profits for the remaining (and seasonally far more important) eight months."

Aryzta results

Origin Enterprises trading statement

US consumers spent nearly 8% less per person this year over the black Friday shopping period, compared to last year, according to the NRF. "The good news is, even though shoppers were spending less, there were more people there," Natalie Berg from Planetretail told CNBC:

C&C buys UK cider assets of Constellation Brands

Irish drinks group C&C announced today that it has bought the UK cider assets of Constellation Brands for £45m.

The Gaymer Cider Company assets include a portfolio which includes the brands Blackthorn, Olde English and Gaymers and a range of value cider brands and own label brands for UK supermarkets. It also includes a cider production facility at in Somerset in England; and a distribution warehouse in Bristol.

Its total cider volumes for the year to February 2009 were about 1.5 million hectolitres, almost twice the size of Magner's current UK volumes. The business generated net sales of £64m and earnings of about £5.4m.

Davy's Barry Gallagher commented:"In 12 months, management has transformed the business from a niche play (a single premium brand) to a growing LAD business of significant scope and scale. We see significant opportunity to grow share in the UK LAD market. Synergies, strong cashflow and an undemanding valuation (10x P/E, FCF 11%, 3% dividend yield) underpins the investment case. We reiterate our 'outperform' rating."

Asia

The MSCI Asia Pacific Index rose 3.5% Monday in its biggest gain since Last April.

The Nikkei gained 2.91%; the Shanghai Composite rose 2.5% and India's BSE Sensex 30 advanced 2.1%.