Buyer Beware – Philip Boucher Hayes

See http://eirmoney.com

I just caught this new RTE program for the first time. How times have changed. Tonight’s show was about Irish investing in property in Florida. Some of these people were signing up to multiple properties. And the house of cards has come tumbling down.

I think it’s possible that we are as naive a race financially as you could come across. We’ve spent hundreds of years on the outskirts of civilisation, downtrodden, oppressed, wet. Then we discovered a niche. The EU as a single economic entity became a behemoth, and we became the likely geographical gateway. This all led to huge increases in incomes and quality of life. Thing is, many middle income people, lacking true independent professional advice, didn’t really know what to do with this new found affluence. We were led by agents and marketing campaigns. Concepts like asset diversification were and are alien. It’s property property property. 

Hopefully we’ll take away some good lessons from the current crisis when the dust settles - probably not sooner now that 2011. And hopefully as the Buyer Beware series progresses over the coming years, it might turn more upbeat and bring us some stories of financial innovation and success.

Strike! What Have We Got To Lose

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Market Decline

Wow, what a difference a day makes. The primary European markets, including the ISEQ, were way down today. Presumably, had it not been for the U.S. thanksgiving holiday, the NASDAQ and co. would have plunged also. Stocks that I have previously expressed an interest in were hit hard.  For example, Aviva was off over 6% at 370p. Speymill Deutsche was very volatile and finished at 0.275p, down 12.7%. Across the board, banks were hit hard.

So what happened? All of a sudden the severity of the global recession has been thrust to the forefront again. Some major debt noises coming out of Dubai – rumours of multi-billions of Euro of indebtedness to investors and banks – have spooked the markets. The Arab states are supposed to be immune from monetary problems! Looks like this current squeeze is all pervasive. Closer to home, flagship travel agent Budget Travel has shut down. And news of several other companies losing jobs (Aviva Investors, Talk Talk, Option Wireless).

Tomorrow is dubbed Black Friday in the U.S. and it is traditionally the busiest shopping day of the year. When the dust settles next week and we know how many Yanks actually went out shopping, we’ll have a much clearer picture of consumer confidence, an extremely important economic indicator.

Public Sector Strike Action

Tuesday this week saw over 200,000 workers take to the streets to protest at possible public sectors cuts. As I sailed into work on the bus – due to the lack of traffic - I spotted several small groups. And my god they were the best dressed protesters I’ve seen in a long time. What made my blood really boil though was the announcement that there would be a follow up strike. As if this country doesn’t have enough to be dealing with than floods, empty government coffers, economic contraction, and now striking masses.

More than another individual group these people seem hell bent on blaming everyone but themselves for their own financial circumstances. “I took out a big mortgage therefore I can’t take a pay cut” just riles me. I did the exact same thing, but I am willing to live with the consequences of my own decisions. Nobody but nobody put a gun to my head.

ISEQ and Company Update, 20-Nov-2009

See: http://eirmoney.com

ISEQ Week Open: 2982.52, Week Close: 2875.92

Kingspan, Interim Management Statement

• Kingspan says overall trading has been more steady over recent months and it is expected that operating profit for the year as a whole will be in the region of €60m (after amoritisation).
• The Group’s cost reduction programme, which commenced late 2007, has yielded annualised fixed cost savings of approximately €60m.
• In general it is anticipated that the building environment will remain challenging during 2010. High rise is expected to weaken, and low rise commercial is expected to remain weak but stable, whilst residential is showing some signs of recovery.
• Source: www.kingspan.ie/kingspangroup/media/releases/pr2009/2009-11-16/

Greencore

• Agrees to sell its bottled water business to Highland Spring Limited. Greencore will receive up to £17.5m.
• The board confirms that it has, in the recent past, received a number of unsolicited approaches in respect of its Malt business from international ingredients companies with large-scale malting businesses. These approaches are being explored.
• Source: www.greencore.ie/content.asp

Independent News & Media

• Announced the complete reorganisation of its print and production assets on the island of Ireland. The group’s three leading print and production facilities, at Citywest in Dublin, Newry and Belfast are to be managed as a single, combined entity.
• Source: www.inmplc.com/investor-relations/news/island-of-ireland-print-strategy-announced/

AIB

• Dan O’Connor, currently Non-Executive Chairman of AIB, is to take on the role of Executive Chairman on a temporary basis in order to oversee the Group’s work on the completion of the key tasks of capital raising, the implementation of NAMA and the EU restructuring plan.
• Colm Doherty, formerly Managing Director, AIB Capital Markets, has been appointed AIB Group Managing Director. Mr. Doherty will take up his new role as Group Managing Director with immediate effect. Mr Doherty will be responsible for the day to day running of the Group. He has agreed to take up his new role for a salary of €500k. His contractual remuneration package will therefore be considerably lower than applied in the past to the Chief Executive Officer role, or indeed to Mr. Doherty’s previous role in AIB, reflecting his personal commitment to the Bank and its future.
• AIB Group Chief Executive, Eugene Sheehy, is to retire on 30 November.
• Source: www.aib.ie/servlet/ContentServer

Aer Lingus

• Board meets to review progress on its objective of delivering €97m of cost savings required as part of its Transformation Plan. Compulsory redundancies not ruled out.
• Source: www.aerlingus.com/cgi-bin/obel01im1/Corporate/display_news.jsp

United Drug, Preliminary Announcement of Results Year ended 30 September 2009

• Good revenue growth in a difficult trading environment. Revenue 2% ahead of 2008 and 5% ahead on a constant currency basis.
• Operating profit growth of 5% in the year (before sterling adjustment).
• Dividend maintained
• Source: www.united-drug.ie/download/prelim_09.pdf

Glanbia, Interim Management Statement

• Persistently weak consumer sentiment is driving an increasingly competitive retail market for consumer products. So earnings per share are forecast to be between 30 and 31 cents.
• Debt expected to not exceed €470m in 2009 (was €452.1 in 2008)
• Source: www.glanbia.com/static/cms/2/2/9/4/9/6/6/8/0/1/binary/5118510476/8073058.pdf

Kenmare Resources, Interim Management Statement

• Production performance at the Company’s Moma Titanium Minerals Mine in Mozambique has continued to improve quarter on quarter.
• Shipping volumes for the third quarter were 131,000 tonnes, a 38% increase in tonnages shipped in quarter two.
• Source: www.kenmareresources.com/news/press/2009/18_11.asp

Kerry Group, Interim Management Statement

• Revenues 6% below the same period of 2008 due to currency movements, lower pricing and elimination of non-core activities.
• Group confident of increasing earnings for the full year in the range of 160 to 165 cent (2008: 153.9 cent).
• Source: www.kerrygroup.com/news_index.asp

FBD, Interim Management Statement

• Group confident of having operating earnings per share ahead of the current mean expectation of broker forecasts (between 63 cent and 104 cent per share).
• FDB will focus on profitable growth, maintaining underwriting discipline. Will continue to implement its plans to increase penetration of key urban markets.
• Source: www.fbdgroup.com/media/FBDGroup/files/InterimManagementStatement-dec09.pdf

Datalex, Interim Results

• Transaction revenue in the first half of 2009 is up 40% on the same period last year.
• EBITDA increased by 30% to $0.8m in the period.
• Total revenue in H1 was $14.4m, down 11% on 2008 (3% when currency adjusted).
• Cash reserves at 30 June were $11.1m, down from $14.8m at 31 December 2008.
• Source: www.datalex.com/pdf/Datalex_Interim%20Report_2009.pdf