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News : Irish Last Updated: Apr 3, 2013 - 11:24 AM


Wednesday Newspaper Review - Irish Business News and International Stories - - April 03, 2013
By Finfacts Team
Apr 3, 2013 - 7:23 AM

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The Irish Independent reports that Ireland's manufacturing sector contracted last month for the first time in more than a year, hurt by a fall in new orders for factories.

Across the eurozone the 17 member countries recorded the sharpest contraction in new export orders since August 2009, a survey showed.

NCB Stockbrokers' Irish purchasing managers index (PMI) came in at 48.6, the first contraction since February 2012, bringing Irish manufacturing in line with the rest of the eurozone.

The purchasing managers index (PMI) measures the overall health of the Irish manufacturing industry on a single figure scale, a number over 50 means the sector is expanding, under 50 means it is shrinking. It's based on an extensive survey of business managers.

Ireland had outperformed the European average for more than a year, reaching a 15-month high of 53.9 in July of last year.

The index is seen as a key indicator of overall economic health and is a closely watched statistic.

"This is a disappointing release, with declines observed on the output, new orders and employment fronts," said Philip O'Sullivan, chief economist at NCB Stockbrokers.

"We will closely watch April's release to see if any of these trends have persisted into Q2, paying particular attention to see if the elevated macroeconomic uncertainty of recent days and weeks weigh on survey findings."

Weakness

The drop in production in March was mainly due to a fall in new orders for the second time in three months. Prior to this, new orders had grown for 11 successive months.

Worryingly, new export orders fell at the steepest rate since August 2009. That is in contrast to growth in new export orders recorded for each of the preceding five months.

Lower new orders from the UK were reported by a number of the purchasing managers surveyed, likely due to sterling's weakness against the euro.

Manufacturers reported the sharpest drop in employment since October 2011 last month, the second month to show an employment decline so far this year. This is a marked change to the 10 consecutive months of jobs growth recorded between March and December 2012.

Input costs have now increased for eight successive months, though this increase wasn't as steep as preceding months.

However, output prices for manufactured products declined for the third time in five months, impacting profitability. Panellists said they reduced prices because of strong competition and a weaker pound. Stocks of finished goods fell during the month, suggesting firms are selling off existing stock as well as decreasing output.

Manufacturing contributes around one-quarter of Ireland's gross domestic product, according to World Bank figures.

The Irish Independent also reports that retired public servants have shared €1.362m for interviewing candidates for public service jobs over the past five years.

According to data released by the Public Appointments Service (PAS) in response to a Freedom of Information request, one retired public servant received €37,660 for conducting interviews and assessing applicants between 2010 and 2012.

The figures show that the PAS paid out €2.921m to individuals to carry out 25,792 interviews over the past five years.

Individuals from the private sector received €1.559m with retired public servants receiving the remaining €1.36m or 46.6pc of the total.

At any given time, according to the Minister for Public Expenditure Brendan Howlin, there are 60 retired public officials helping with recruitment.

The figures show that even after cuts of 42pc in daily pay rates in December 2011, the pay to conduct interviews for the PAS remains lucrative.

Following the cuts, retired secretary generals receive a daily rate of €400 for the first 60 days and €200 thereafter.

The Irish Times reports that the troika of international lenders has imposed a new requirement on the Government to report monthly on its efforts to rein in overspending in the health sector, an internal staff report prepared by the EU Commission has revealed.

The confidential report also states that the sharp increase in the number of distressed mortgages is a source of persistent concern and expresses anxiety about the continuing high level of unemployment in Ireland.

The report, which will be discussed by parliamentary financial committees in the Oireachtas and in the German Bundestag in the coming weeks, will be published ahead of the next troika mission to Ireland later this month.

The social welfare office on Bishop Street, Dublin. Irish youth unemployment dipped slightly last December but has returned to 30.8 per cent, just shy of where it was a year ago. Photograph: Frank MillerRecord euro area jobless rate sparks alarm

The Irish Times takes no responsibility for the content or availability of other websites.

The overall assessment of the report is positive but it points to slippage and policy failures in some sectors.

The report, which runs to nearly 50 pages, contends that target savings in the health sector earmarked since 2012 have “failed to materialise” and that not all of the corrective measures, including reductions in staff costs and professional fees, the move to generic drugs, new prescription charges, and a reduction in the number of medical cards, have materialised.

Improved supervision

The report indicates that promised savings for 2013 cannot be achieved unless there is constant and improved supervision and monitoring of the Department of Health and the HSE “to track the controls and spending plans”. The subtext is that the overrun of €360 million in 2012 cannot be repeated.

It discloses “enhanced reporting requirements” not only to the Cabinet sub-committee on health, but also to the troika itself, which will get monthly briefings.

“This should allow early detection of any slippage and timely corrective action,” it states. “This is a first step in the right direction and should improve the chances of consolidation measures.”

The report also asserts that the very high level of unemployment needs to be “addressed forcefully” and suggests that reforms and engagement by the Department of Social Protection has not been extensive enough.

On the issue of distressed loans and crisis mortgages, the report states that progress in resolving non-performing loans has been slow.

The “high level of loan defaults on banks’ balance sheet raises concerns about potential future losses. In particular, the high level of mortgages in default is a persistent source of concern.”

Contending that banks must be in a position to collect collateral on non-performing loans and mortgages, it also suggested that some indebted households were prioritising debt such as credit card debt ahead of mortgages.

‘Moral hazard’

“Specifically banks report that a significant number of consumers are prioritising unsecured debt over the repayment of their secured mortgage debt . . . It may also reflect the moral hazard generated by legal uncertainty about the banks’ ability to recover the collateral [following a 2011 High Court case that cast doubt over repossession orders issued after December 1st, 2009].

The report has also pointed to an ESRI analysis which showed that some measures in the 2013 budget were regressive, impacting more on the lowest-earning fifth of the population than the top-earning fifth.

While the overall assessment is positive, it does point to risks, including the continued uncertainty around the growth outlook and reform fatigue.

The Irish Times also reports that international packaging group Smurfit Kappa paid its chief executive Gary McGann almost €2.49 million last year, 2 per cent less than in 2011, figures published yesterday show.

The Irish company’s annual report, which was sent to shareholders yesterday, shows that Mr McGann’s pay packet totalled €2.488 million in 2012, slightly down from the €2.541 million he earned the previous year.

His basic salary was €1.262 million and he made a bonus of €567,000. The company paid €625,000 into his pension fund and he received benefits of €34,000.

Mr McGann also received a total of €137,000 in fees from healthcare services group, United Drug and Aon Ireland. He is a non-executive director of both companies.

Mr McGann held 375,792 shares in the group on December 31st, 50,000 more than 12 months earlier.

He also holds convertible shares that can convert to ordinary stock if performance targets agreed in 2007 are met.

Pay cut

Chief operating officer Tony Smurfit also took a small pay cut, earning €1.543 million last year compared with €1.582 million in 2011, a fall of 2.5 per cent. His basic pay was €874,000, his bonus was €392,000, the company paid €255,000 into his pension and he received €22,000 in benefits.

Mr Smurfit almost doubled his stake in the company, with his holding increasing from 572,621 shares to 1,030,568 in 2012.

Chief financial officer, Ian Curley, took a 1.3 per cent pay cut last year, earning €1.354 million as against €1.399 in 2011. His basic pay came to €746,000 and he made a bonus of 363,000, while the company paid €205,000 into his pension and his benefits came to €40,000.

Mr Curley marginally increased his stake in the group to 204,267 shares from 193,767.

All three executives received deferred share awards under a bonus scheme operated by the company, which according to its accounts, was worth a total of €3.964 million on December 31st.

The shares will actually vest in 2014 subject to the executives meeting performance targets for the 2011-2014 period. The report does not say what the targets are.

Chairman Liam O’Mahony earned fees of €300,000 last year and owned 19,830 shares on December 31st.

Smurfit Kappa was one of the better performers on the Irish market last year, and has doubled in value since last April. Last night it closed at €12.85 in Dublin, on April 2nd 2012, its closing price was €6.737.

It made profits of €331 million last year, more than 10 per cent ahead of the €299 million it earned in 2011. Earnings per share rose 20 per cent to 108.3 cent.

The Irish Examiner reports that Ireland South MEP Seán Kelly has criticised Norway’s “protectionist” import tariffs of up to 429% on some food products, despite its commitment to the single market.

Since Jan 1, European exporters of certain cheeses, lamb, and beef meat have faced duties of 277%, 429%, and 344% respectively in the Norwegian market. Irish exports to Norway in 2010 were worth around €11m, according to Bord Bia.

Mr Kelly has co-signed amendments at European Parliament level, calling on Norway to urgently withdraw the new tariffs, which he claims are in breach of the spirit of the single market. The EU ambassador to Norway, Janos Herman, also claimed that the Norwegian tariffs were in breach of the EEA trade agreement which came into effect in January.

“These measures are protectionist and prohibitive to trade and clearly breach the ethos of the EEA agreement which Norway is a party to, and go against the very spirit of the Single market,” said Mr Kelly. “The new tariffs were imposed without any consultation with the EU and I urgently call on the government to withdraw the measures.”

Mr Kelly also pointed to the public record of a letter from Mar 9, 2011, from the Norwegian trade and industry minister to the European commissioner for the internal market and services on the Single Market Act. The letter stated: “An efficient single market is a foundation for future growth and job creation and that the current crisis should not be used as an excuse to turn to protectionist and trade distorting measures.”

In Nov 2012, Norway expressed concerns over a new Russian live animal import system of permits subject to veterinary control, one of a number of new Russian measures that were criticised by the EU as “protectionist” and anti-competitive.

In a bid to protect its domestic economy, Russia last year also introduced a ban on imports of live animals from the EU and a recycling fee on imported vehicles.

The European Parliament had sought to enter into negotiations with Norway to achieve increased bilateral agricultural products trade. Sweden has been prominent among critics of Norway’s raised import tariffs on certain cheeses and beef.

“We see a movement from Norway towards more trade barriers. I hope the resolution can facilitate increased trade and be thought-provoking,” Swedish MEP Christofer Fjellner told agriculture newspaper Nationen.

“We need to sit down around the negotiating table and find solutions both stand to profit rather than imposing unilateral toll increases.”

Under Norway’s new import tariff scheme, each kilogramme will be subject to excess amounts based on the product’s purchase price. It replaces the current preset amount in kroner, and affects products such as steaks, fillets of beef, lamb, and hard cheeses — with the exception of some cheeses, such as Manchego and Parmesan. Soft cheeses such as brie are exempt from import tariff measures.

Norwegian dairy co-op Tine had previously called for increased duties on cheeses that directly compete with Jarlsberg and Norvegia. Reactions by consumers led to that proposal being dropped.

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© Copyright 2011 by Finfacts.com

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