See Search Box
lower down this column for searches of Finfacts news pages. Where there may be
the odd special character missing from an older page, it's a problem that
developed when Interactive Tools upgraded to a new content management system.
Welcome
Finfacts is Ireland's leading business information site and
you are in its business news section.
We
provide access to live business television and business
related videos from: Bloomberg TV; The Wall Street Journal;
CNBC and the Financial Times. Click image:
Davos 2010: CEOs' confidence rebounds in recession's wake, Quick recovery in Emerging Economies; Developed Nations cautious
PricewaterhouseCoopers today issued its 13th Annual Global CEO Survey, to coincide with the opening of the 40th meeting of the World Economic forum, in Davos, Switzerland.
The survey shows rising confidence has translated into a planned boost in recruitment, with nearly 40% of CEOs expecting to increase their headcount this year. That contrasts with 25% of CEOs planning job cuts over the next year, down from nearly half who decreased headcount in the past 12 months.
In Asia Pacific and Canada about half of CEOs are looking to increase employment in 2010, and this figure leaps to over 60% in Brazil. Meanwhile, nearly a fifth of UK CEOs say they expect their headcount to rise by more than 8 per cent in 2010.
Overall, the survey found that 81% of CEOs worldwide are confident of their prospects for the next 12 months, while only 18% said they remained pessimistic. The results compare with 64% who said they were confident a year ago and 35% who were pessimistic. Thirty-one per cent of CEOs said they were now "very confident" of their short term prospects, up 10 percentage points from last year, a low point in CEO confidence since PwC began its tracking.
The survey revealed striking differences in confidence levels -- and by extension the impact of the global recession -- among CEOs in emerging economies and those in developed nations. In North America and Western Europe, for example, about 80% of CEOs said they were confident of growth in the next year. That compared with 91% in Latin America and in China/Hong Kong, and 97% in India.
1,198 interviews with CEOs were conducted in 52 countries during the last quarter of 2009.
Capital flows to Emerging Economies
The Institute of International Finance, the lobby group for global banks, on Tuesday forecast that net private capital flows to Emerging Economies are likely to total around $720 billion this year and rise further to about $798 billion in 2011. The IIF estimated that the comparative 2009 total was $435 billion, which is down from $667 billion in 2008 and from the record of over $1 trillion in 2007.
"We are starting to see what could be a substantial multi-year upswing in international capital flows to many emerging markets in response to their sound policy management, solid economic prospects, and significant returns relative to investments in mature economies,"said IIF Managing Director Charles Dallara."We had serious concerns about prospects for flows to emerging markets at the start of 2009, and indeed they were extraordinarily weak at the start of the year fell significantly below the 2008 level. Nevertheless, the situation could have been far worse had it not been for timely and effective actions by governments, multilateral financial institutions and the private sector."
UK numbers dragged lower by weakness in two sectors
Davy chief economist, Rossa White, comments:"At first glance, yesterday's UK Q4 GDP numbers were disappointing. Many may not read on past the headline of 0.1% quarter-on-quarter growth, which at least confirmed that the economy had emerged from recession. But the headline conceals a lot. First, these numbers are complied from output data, so are far from complete and subject to revision (likely to be upward). Second, two sectors — utilities and agriculture — had a bad quarter and brought down the average.
Many in the market were surprised at yesterday's provisional estimate. The consensus was that GDP expanded by 0.4% whereas the initial outturn showed growth of only 0.1%. Keep in mind, though, that the initial estimate for Q3 was -0.4%. That was subsequently revised up to -0.2%, albeit still decline and confirming the UK as a laggard in this recovery. At the time, the original stab for Q3 somewhat jarred with the trend in a broad range of indicators for the quarter. There is a sense of déjà vu with the Q4 numbers. Even though UK retail sales were not particularly vibrant in December, the general impression from the data is of an economy growing at more than 0.1% sequentially.
The UK's Q4 preliminary GDP data, compiled from statistics on output, pointed to growth in four of nine economic sectors (manufacturing, mining, distribution, hotels/restaurants and the public service). Output in three sectors (business services/finance, construction and transport) was unchanged. But two sectors remained mired in recession: utilities and agriculture. The arithmetic is important. Although those two sectors do not have a huge weight in GDP, declines were severe at -3.3% and -0.6% respectively. That compares with growth ranging from 0.2-0.4% in public services, distribution/hospitality and manufacturing. One inconsistent sector, utilities, had a big effect on the average whereas the impression is that the 'core' economy was at least returning to modest growth."
The economy is still not standing on its own and certain degrees of fiscal and monetary stimuli are needed, Axel Weber, ECB Governing Council member, told CNBC in Davos on Wednesday:
Economic View; Global recovery still strengthening
Goodody chief economist, Dermot O’Leary, comments:"The IMF is quick out of the blocks with its updated forecasts for the global economy. While its opening gambit of 2009 contained sizable downward revisions, its January 2010 version strikes an opposite tone. Global GDP is expected to grow by 3.9% this year, up 0.75% from its October projections. A more modest upward revision was also made to 2011, where growth is expected to come in at 4.3%. As has been the case in recent years though, there is quite a dichotomy between growth expectations in the developed and the developing economies.
The former group of companies is expected to see GDP growth of 2.1% in 2010, while the developing economies are expected to grow by 6%, with China (10%) and India (7.7%) leading the way. It is also notable that growth estimates for these countries made in January 2009 were too pessimistic, whereas the actual outturn for 2009 for the developed world was over 1% lower than the IMF’s estimates made a year ago. In its commentary on its revisions, the IMF is keen to point out that the rebound that we have seen over the past couple of quarters is very much policy-driven, but also warns once again on removing this stimulus too early, particularly for developed economies.
It is only when the recovery becomes self-sustained that the stimulus should be removed. It does not believe that this is the case just yet. Forecast revisions normally come in cycles, and this latest revision is the third in a row. Given the upward momentum in economic variables globally, one would think that the risk bias to forecasts is still on the upside too. Along with the maintenance of accommodative fiscal and monetary polices for the time being, the recent blips for risk assets might be just that."
SEE link to report on the IMF forecast, in Box below.
US markets
On Tuesday in New York, the Dow Jones fell 3 points to 10,104.
The Nasdaq dipped 0.32% and the S&P 500 lost 0.42%.
China’s economy will grow in 2010 at a similar rate to the previous year, but it is starting to see signs of inflation forming, People’s Bank of China Deputy Governor Zhu Min told CNBC in Davos Wednesday:
Asia
The MSCI Asia Pacific Index lost 1% on Wednesday -- its eight straight day of losses and its longest stretch of losses since May 2005.
Chinese banks have begun cutting back on lending, in response to pressure from regulators.
The Nikkei dropped 0.71% and the Shanghai Composite dipped 1.09%.
Japan’s exports rose 12.1% in December compared with the same month in 20098, while imports fell 5.5%, according to the Ministry of Finance in Tokyo today, signalling that export demand from Asia, is boosting the economic recovery. China surpassed the US as Japan’s largest export market for the first time on an annual basis, the report showed. Exports fell 33.1% in 2009 - - see link to report in box below.
In Europe, the Dow Jones Stoxx 600 is down 0.93% Wednesday.
In Dublin, the ISEQ is down 0.76%.
AIB is down 3.7% and CRH has dipped 1.57%.
Tullow Oil shares are down 5.3% in London this morning, after announcing plans to raise £1 billion in a placing with institutional investors.
Goodbody analyst Gerry Hennigan comments: Tullow Oi ; FY09 Trading statement – placing announced - - "As expected, in the absence of a final decision on Tullow’s efforts to pre-empt the Eni bid for Heritage’s interests in Uganda, much of the focus within the FY09 trading statement this morning is on drilling activity and operational detail. In tandem with the trading statement, however, Tullow has announced its intention to place up to 80.4m shares, representing c.10% of the existing share capital, with institutional investors. The additional capital is to be employed to complement its current debt facility ($2.25bn) and used to fund its diverse development (Ghana and Uganda) and exploration (WATM and South America) programmes. Reflecting the latter, capex guidance for the current year has increased markedly from the outturn in 2009, with Tullow guiding spend in 2010 of £990m (25% of which is discretionary) compared to our current estimate of £650m.
On the drilling front, with successful results recently unveiled in Ghana (Tweneboa-2) and Uganda (Kasamene-2), incremental newsflow is confined to prospects currently drilling - Likonde-1 in Tanzania, Skeikhan-1 in Pakistan - and an update on scheduled activity for the remainder of the year, which is extensive, particularly in Ghana and Uganda. From an operational perspective, average production of 58.3 kbopd (down 12.5% YoY) is in line with that outlined in the IMS in November and slightly ahead of our estimate of 57.8 kbopd. Capex spend for the year is given as £690m (forecast of £750m), with net debt in December of £720m compared to our expectation of £773m. Guidance on production for the current year is expected to be in the range of 55 - 57 kbopd. That compares to our current estimate of 54.7 kbopd, with the production target signifying a degree of confidence in the start date for Jubilee later in the year. The capex guidance while not wholly unexpected reflects the diversity in the portfolio and the costs associated with developing assets such as Uganda should the outcome of the approval process go in Tullow’s favour. The realised oil and UK gas prices for the year are given as $60/bbl and 39p/therm, compared to an actual average of $62/bbl and 31p/therm and our estimated realised price of 58/bbl and 43p/therm respectively. Revenue for the year is given as £570m compared to our forecast of £567m and consensus of £584m.
Aside from the above, points of note relate to a £20m impairment charge associated with the Bure field in the North Sea and the Chinguetti field offshore Mauritania. On the drilling front, results are due from the Likonde (risked contribution to NAV of 2.0p) and Skeikhan (risked contribution to NAV of less than 1p) wells next month, though both represent the tip of a more than 30 well drilling campaign scheduled for the year. On balance, the main talking point this morning is the placing to raise additional funds as Tullow pushes ahead with its development plans, which is directly reflected in the increase in capex."
McInerney
Housebuilder McInerney Holdings said today it continues to see challenging trading conditions in the UK and Irish housing markets as weak consumer sentiment and a lack of access to mortgage availability impacted demand.
In a trading statement, the builder said it completed a total of 756 homes in 2009 in its three markets - Ireland, the UK and Spain. This compares to a total of 1,359 units the previous year.
It said that total housing deposits on hand by the end of 2009 were 374, compared to 509 by the end of 2008. Total completions in the UK stood at 582 compared to 750 the previous year.
Shares in West African Diamonds were returned to trading on London's AIM market today following the proposed acquisition of Stellar Diamonds Limited.
The acquisition will constitute a reverse takeover of WAD and is subject to approval by the company’s existing shareholders. If passed it is expected that the enlarged company will be readmitted to the AIM and that trading in its shares will commence on the 22nd February, 2010.
West African Diamonds plc (WAD) has been formed as a demerged company from its original parent African Diamond. WAD is a diamond focused explorer with operations in Sierra Leone and Guinea.
WAD says it has has successfully completed the raising of £5million through a placing. This placing is conditional on the completion of the acquisition and the readmission of the enlarged company on the AIM.
John Teeling, chairman, who is a former UCD lecturer, commented, “This is a good deal for WAD shareholders and the board is pleased to support it. The enlarged group will be on a stronger financial footing due to the placing and the cashflow from two producing mines. The West African diamond mining industry is underdeveloped and fragmented. Stellar Diamonds will be well positioned to exploit opportunities in the area.”
Withdrawing economic stimuli and tightening monetary policy are very difficult future policy choices, but something has to be done because asset bubbles have started to take shape, Nouriel Roubini, chairman of Roubini Global Economics, told CNBC Wednesday:
Aer Lingus; Investor Day - Turbulence starting to clear
Goodbody analyst, Eamonn Hughes, commented:"Aer Lingus (AL) hosted an investor day yesterday. Management was confident, but pragmatic, and frank about the difficulties facing the airline. Attendees will have gained confidence from a CEO with a clear strategy and enhanced visibility on the delivery of the restructuring programme. There were nuances to the new strategy, but the core proposition is broadly unchanged.
While these figures have always been published, a targeted presentation on the airline’s gross cash and debt commitments should go some way to dismissing fears the airline is haemorrhaging cash. AL indicated gross cash of €825m at end December 2009 and lease debt of €493m. When unrestricted cash of €770m is reduced by lease debt outstanding it implies a net cash figure of c€270-280m at end FY09, in line with our estimates (or €332m including restricted cash). Our forecasts see net cash (unrestricted cash less lease debt) ease back modestly in FY10 to €250m before stabilising, so the cash burn looks to be dissipating.
We have recalibrated our model to update for guidance on capacity for FY10 (short haul (SH) flat, long haul (LH) down c.20%), fuel hedging (instigating a rolling hedge and 67% hedged for FY10), staff costs and timing of the cost saves (slower than we initially envisaged) and higher airport charges (due mainly to Dublin’s 40% hike due to Terminal 2). We are pencilling in broadly flat yields in SH, though a fuel surcharge may see LH in positive territory and we have ancillaries up low-mid single digit levels per pax. We are now pencilling in an operating loss of €36m in FY10, after a loss of €88m in FY09. We still value AERL on an NAV basis, awaiting traction on yields (possible from Q2 onwards, though we forecasting flat for the moment), but our €1.05 fair value still offers material upside for investors. We reiterate our Buy call. See company note to follow for further details."
Britvic Ireland
Britvic, owners of the Club Orange and Ballygowan brands, today reported total revenues of £242.7m for the 12 weeks to 20th December 2009, an increase of 11.0% on the prior year. Great Britain and International revenues grew by 15.2% during the period, representing GB carbonates growth of 20.1%, GB stills growth of 9.6%, and Britvic International growth of 5.1%. The contribution from Britvic Ireland of £48.4m for the 3 months to 31st December 2009 was down by 3.0% on the same period in the prior year, although underlying euro revenues were down by 10.1%.
Shoppers in Ireland have again focused on value in the latest quarter. Although volumes are flat in the ROI Grocery market, value is down by 12.8% as promotions and discounting are driven harder. Britvic Ireland has again broadly held share within ROI Grocery whilst significantly gaining share in a Licensed On-Premise market that remains under pressure. For Britvic Ireland, owned-brand volumes were down by 4.0% in the quarter.
