|Glanbia's global operations |
Justin Doyle, Investec Bank Ireland, said today:
- Abenomics seems to be kicking at last in as overnight data showed that
Japanese GDP for Q1 came in higher than expected at 3.5% vs. 2.7%. The good
news didn’t knock on to the equity markets as the Nikkei had a rare down,
day closing small in the red;
- It was a different story in the U.S. however as the benchmark S&P index
closed back up close to its all time highs of 1,662 after a late evening
sell off. It is still a bit of head scratch for us FX beasts to look on at
very perky equity markets and a perky dollar skip happily down a sun
drenched beach as we have spent most of the last 5 or 6 years watching them
move in different directions;
- Having said all that the dollar upswing has taken a bit of a breather
overnight, with most dollar crosses remaining in tight ranges with the
exception of maybe the Australian dollar which is really beginning to look
like one way traffic;
- A fortnight ago you wouldn’t have been wrong in saying that an AUD/USD
rate of 1.0000 would have been a super level to buy AUD, now almost 600
points later as it languishes close to 0.9800, that psychological level of
1.0000 most definitely feels like a decent sell area;
- Most of the important economic data is coming out of the US later this
afternoon with the headliners being CPI. Philly Fed survey and initial
jobless claims due. There is the final April EZ CPI reading also which
should give the ECB some food for thought.
Irish Economy: ESRI in grim outlook; Revises down
previous GNP estimates
ESRI's FitzGerald says Irish GNP and Current Account
Japan reports strong first quarter growth
Glanbia, the food group, said today that the group is performing to
expectations so far this year.
In an interim management statement
(IMS), the company confirmed its outlook for
this year of 8% to 10% growth in adjusted earnings per share. However, it
expects its first half earnings growth to be stronger than the second half due
mainly due to the timing of market price movements.
Glanbia said that its Dairy Ireland revenues for the first four months of the
year grew by about 2% with volumes 2% higher while price increases contributed
over 4%. But the sale of the Yoplait Ireland franchise last year had a negative
impact on revenues.
The company said that the retail environment in Ireland remains ''very
challenging'' and its consumer products division had a difficult start to the
Liam Igoe of Goodbody comments -- "Glanbia FY13 guidance maintained
post Q1 IMS: In Glanbia's IMS this morning it re-iterated it's FY13 guidance of
8-10% growth in underlying EPS. Performance Nutrition has seen over 10% revenue growth, a good part of
which we except was volume driven. The building of its new $45m Chicago facility has
started and it will be commissioned in Q113. The Ingredient Technologies (whey manufacture)
business saw slightly weaker pricing as anticipated. This business will benefit from the
inclusion of Asceptic Solutions this year, but despite this and higher volumes, profits are
expected to be lower in FY13 (close to our expectations). Glanbia's Pre-Mix Ingredients has
seen flat volumes so far in 2013 but is expected to deliver growth for the full year,
mainly in H2.
Finally, Glanbia's US cheese business has seen higher prices and volumes
though profits look unlikely to be higher than last year due to higher milk input costs.
Glanbia's Irish Consumer Foods business is set to show "significantly lower
performance" this year. This is due to the increase in milk costs (the key raw material) which
will only be partially recovered this year through product price increases. Associates
meanwhile are expected to show a similar performance (adjusted for GIIL) to FY12 in FY13.
Higher Southwest Cheese profits will be offset by reduced profits elsewhere.
We would not be inclined to adjust overall forecasts or price target on the
back of this IMS though we may review this further after next Thursday's investor day in London."
UTV Media said today in
an IMS that its first-quarter revenue fell 5%, hurt mainly by a weak
performance at its British radio business, which includes the sports radio
Gavin Kelleher of Goodbody comments
-- "UTV Media Q1 IMS
highlights weaker performance expected in H1, more encouraging H2 outlook: UTV
released its Q113 trading statement this morning reporting group revenue -5% yoy
to £28.1m. On outlook, management states that forecasts from media agencies
suggest that the GB radio market will see a return to growth in H213. However,
given the challenging conditions, management remains cautious about the outcome
for the year and has therefore implemented additional cost saving measures. In terms of Radio GB, revenue was -7% yoy (talkSPORT -10% and Local Radio -3%).
The group noted that the UK radio market is weak and talkSPORT will be impacted
in H1 by the tough comps with Euro 2012 last year. Radio Ireland revenue was -8% on a reported basis and is expected to be down -6%
in Q2. In Television, Q1 revenue was down 3% (London NAR +5% and Irish NAR
-12%). Total NAR in Q2 is expected to be down -11% yoy, largely due to Euro 2012
comps but Irish NAR is expected to be +1% in Q2. New Media revenue was up by +9%
in Q1 and Q2 revenue is expected to be up +3%. On the balance sheet, net debt
was £47.1m at the end of March (£51.7m March 2012). Overall, given the group’s performance in Q1 and guidance for Q2, H1 looks like
it will come in down 6-7% yoy versus our forecast of -4% yoy. Commentary around
a return to growth for the radio GB market in H2 is encouraging, and the group
will have easier yoy comps which should support growth in H2. We expect to lower
our FY13 EBIT by c.4% from £22.8m currently. The Q1 performance and Q2 outlook
are disappointing, but the group
Economic View: ESRI upgrades Irish economic forecasts sharply; Dermot
O'Leary of Goodbody comments - - "It is rare that economists are in general
agreement but this is where we find ourselves this morning in relation to the
new forecasts published by the Economic and Research Institute (ESRI). The
independent think-tank is forecasting that Irish GDP will grow by 1.8% in 2013
and by 2.7% in 2014. As reference, we are forecasting GDP growth of 1.6% and
2.6% in these years. These represent significant upgrades from the 1.3% and 2.3%
forecasts published in January. In light of forecast downgrades at a European
and global level, some might see the latest upgrade as somewhat of a surprise.
Going into the detail of the forecasts, the ESRI’s upgrades are for similar
reasons to our own upgrades at the turn of the year. Export growth forecasts
have been reduced for 2013 (from 4% to 3%) but import growth forecasts have been
reduced sharply (from 4% to 2%) while there are modest tweaks to the components
of domestic demand forecasts in 2013. For 2014 though, the ESRI is more
confident about both consumption (forecast going from -0.5% to 0.4%) and
investment (from 3.6% to 5.5%), owing to a combination of better labour market
trends and an expectation of a continued inflow of FDI. On the public finances, deficit forecasts have been reduced in light of the deal
on promissory notes, with the deficit forecast for 2013 in line with our own
estimate of 7.2% of GDP. Debt is expected to peak at 121% of GDP in 2013, again
similar to our own estimates.
Forecasts for the Irish economy are now in a pretty tight range of 1%-2%,
with the ESRI at the upper end of this range. Being bang in the middle of
consensus can often be a dangerous position. The big swing variable for the
Irish economy continues to be the euro area economy. Continued recession may put
downward pressure on forecasts for 2014 in particular."
KBC Bank Ireland
today reported a first quarter after-tax loss of €77m compared
with a loss of €148m the same time last year as the bank continued to suffer
from high bad debt charges.
Banks: KBC results show higher QoQ impairment charge in Q1 in Ireland;
Eamonn Hughes and Colm Kelleher of Goodbody comment - - "KBC Group released Q113
results this morning and we have looked at their comments in relation to their
Irish operation. Ireland is reported within the International Markets Business
Unit (IMBU division) and recorded a loss of €77m in Q1, which compares to an
average quarterly loss of €101m in the prior four quarters.
Total income was €32m in the quarter, with net interest income stable
sequentially, and costs were €21m, driving a 65% cost income ratio (49% for FY12
though 71% in Q412). The credit charge in Q113 was €99m, equivalent to 2.47% of
loans and up from the €87m recorded in Q412 and €195m in Q112. The average FY12
credit charge was 334bps. Compared with Q412, there were lower specific loan
loss provisions for mortgages and corporate lending, but increased
portfolio-based loan loss provisions for mortgages. The statement reiterated its
previous guidance on potential loan losses in Ireland “where impairment charges
of €300-400m are expected to be recorded for the full year”. Non-performing
loans were 24% of the loan book (up 70bps in the quarter, from +150bps in the
previous quarter), with 48% provisions coverage. The IMBU loan book was down 1%
quarter on quarter (mainly due to Ireland) whilst deposits were up 4% QoQ and
18% yoy (again, mainly due to Ireland which was up 12% QoQ and +89% yoy).
Whilst up slightly on the Q412 level, the Q1 credit charge in KBC’s Irish
operations looks to reside within the overall full year impairment charge
guidance from the bank. Recent IMS updates from both AIB and BOI indicated lower
impairment charges as likely this year relative to last year, with those
directional trends reflected in our estimates."
Bank of Ireland: BOI to entry MSCI indices;
Eamonn Hughes of Goodbody
comments - -"MSCI has indicated overnight that re-weighting changes will
see Bank of Ireland enter its Global Standard indices, for inclusion at close of business on May 31. Estimates
on potential share volumes required to be purchased is pitched anywhere from 9-16 days of
average daily volumes, equivalent to c.1-1.2bn shares.
The news has been well flagged but is undoubtedly a technical positive for
the name. The estimates of potential shares to be purchased is equivalent to c.3-4%
of the share count, but given the relatively tight shareholder structure, possibly
closer to 6-7% of the actively traded free float (and c.20%+ of the trading in the name over the past 3 months). This should continue to be supportive for the stock in
the coming weeks."
AIB Group Filing updates indicate bank is poised to continue market
issuance: Eamonn Hughes added - - "AIB has filed updated bond
prospectus documents with the Central Bank and Companies Office in recent weeks (according to the Irish Independent). The papers were
filed with the Companies Office in early May and allow the bank to now move quickly on any
issuance, incorporating the updated FY12 documentation. AIB has raised two covered bonds
in the last six months totalling €1bn (Goodbody was co-manager on both €500m
transactions). In a recent note on the bank, we indicated that we anticipated further issuance from the company, highlighting ample ACS capacity at the bank. We estimated a basic covered bond issuance potential of around €4-5bn on top of which there is potential to retire some existing self-issuance bonds and future maturities. Insurance: Aviva Q1 IMS shows large drop in Irish premiums; Eamonn
Hughes and Colm Kelleher of Goodbody comment - - Aviva released a Q1 IMS this
morning. Of interest to us is the performance of the Irish business and more
specifically the general insurance arm. Net Written Premiums (NWP) in Q113 were £71m v £82m in Q112 (-12% yoy) and -7%
qoq. The combined operating ratio for the general insurance business of 108%
compares to 104% for the same period in 2012. The company indicates that the
performance is “unsatisfactory” and remains a work in progress, including taking
out costs and leveraging from its UK underwriting expertise."
The Dow rose 60 points or
0.40% Wednesday to 15,275.
The S&P 500 added 0.51% and
the Nasdaq advanced 0.26%.
The MSCI Asia Pacific slid
0.4% in Tokyo Thursday.
The Japanese Nikkei 225
fell 0.39% and Shanghai Composite Index gained 1.22%; Kospi 200 index rose
0.79%; Australia's ASX/S&P 200 added 0.50%; in Mumbai, the Bombay Stock Exchange
the S&P BSE India Sensex Index climbed 0.17.
In Europe, the
Dow Jones Stoxx Europe 600 is down 0.16% in early afternoon trading Thursday.
In Dublin, the
ISEQ is down 0.o4%.
off 0.64%; No trade in UTV Media..
Key Index Performance
Bank of Ireland Daily Report
The euro is
trading at $1.2899 and at £0.8449.
For live currency updates, check the right-hand
column of the Finfacts home
The US dollar
fell to $1.6038 per euro on Tuesday, July 15, 2008 - an-all time record.
The Baltic Dry
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,
On Wednesday the
BDI fell 11 points or 1.26% to 861.
Crude oil for June 2013 delivery is currently
trading on the
Chicago York Mercantile Exchange (CME/Nymex)
at $94.24 down 6 cents from Wednesday's close. In London, Brent for June delivery
is trading on the
International Commodities Exchange at
$103.89. The North Sea
benchmark accounts for two-thirds of the global market.
reports that for the
first year since the futures were created, Brent crude is poised to overtake
West Texas Intermediate (WTI) oil as the world’s most-traded commodity.
in Brent jumped 14% to average 567,000 contracts in the year to November 20
compared with all of 2011, while WTI fell 17% to 575,000, according to data from
the ICE Futures Europe exchange in London and New York Mercantile Exchange
compiled by Bloomberg. The number of Brent futures changing hands has exceeded
those for WTI every month from April through October,
the longest streak since at least 1995.
Brent, produced in the
North Sea, is gaining favour among traders because of its role as the benchmark
for energy prices from Saudi Arabia to Russia. Prices have climbed 34% in the
past two years, reflecting everything from war in Libya to the embargo on Iran.
WTI, the main grade in the US, has risen 9% as the nation, which prohibits crude
exports, has struggled to clear a glut at Cushing, Oklahoma, the delivery point
for Nymex futures.
Gold spot price
The spot price
of an oz of gold is trading on the
CME in Chicago at $1,374.30 down $22.20 from Wednesday's closing.
Gold had hit a
record high of $1,921.05 a troy ounce on Sept 06, 2011.
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