Today in the press

Thursday 14 February 2013 10.05
A look at some of today's business stories in the newspapers
A look at some of today's business stories in the newspapers

RAFT OF UPBEAT EARNINGS DATA BOOSTS HOPES OF ECONOMIC UPTURN - Irish companies ranging from Aer Lingus to DCC have beaten expectations as the earning season gains momentum, adding to the evidence of a broad economic recovery after years of decline, writes the Irish Independent. In a further boost for the economy, figures released by the Central Statistics Office yesterday show Irish exports are at their highest level in a decade. Analysis of the financial performance of companies listed on the stock exchange and smaller firms which publish their results in Companies Office suggest that 2013 will be the year that many companies turn the corner. This week, drug distribution company United Drug issued the most bullish forecasts in at least five years when it predicted that earnings will rise as much as 8% this year following a strong start to the year. "Recent new business wins, both in the UK and Ireland, should see this performance continue for the remainder of the financial year," the company added. Last week, Aer Lingus boss Christoph Mueller reported that the airline recently enjoyed the best sales day in its history. It added bookings are strong for the rest of the year - a sign that families and businesses are regaining confidence. Dublin-listed recruitment company CPL, another good barometer of how companies are doing, recently announced pre-tax profits rose 31% to €5.9m in the second-half of last year. A day earlier, shares in distribution company DCC rose to the highest levels since 2007 after it told the markets that third quarter revenue and operating profit were "well ahead" of the prior year.

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FAILURE TO REPOSSES HOMES 'CRAZY' - The failure to repossess people’s homes may be contributing to the duration of the economic crisis, a conference organised by the Central Bank heard yesterday says the Irish Times. A banking expert with the International Monetary Fund told the conference that those states in the US that have a record for quickly foreclosing on mortgages in arrears are recovering more quickly from the housing crisis. Michael Moore, speaking in a personal capacity to a conference called How to Fix Distressed Property Markets, held in Dublin yesterday, said the figures supported the view that faster foreclosures contributed to the quicker resolution of housing and mortgage crises. Another speaker, economist Anthony Murphy of the Federal Reserve Bank of Dallas, said the lack of repossession of houses in Ireland by the banks was “crazy and really strange”. A former academic with UCD, Mr Murphy said that while the level of foreclosures in the US might be too high, the level in Ireland - zero - was too low. Mr Moore said the rules in the US force banks to recognise deteriorating loans promptly and to take them off their books. This keeps the level of non-performing loans on the banks’ books at very low levels. It would be very unusual for the type of high levels seen in Ireland to exist in a US bank, he said. He said that one of the advantages of prompt repossession was that it removed the option of strategic default.

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ELAN CHIEF MARTIN TAKES 24% PAY CUT - Directors pay at Irish drug firm Elan fell by over $700,000 (€520,000) last year, with chief executive Kelly Martin taking a 24% pay cut. According to Elan’s just published annual report for 2012, nearly $3.21m was paid out to 12 non-executive directors, down by 18.5% on the previous year’s £3.94m tally says today's Irish Examiner. Mr Martin’s basic salary remained unchanged at $1m, but a $750,000 reduction in his annual bonus led to his total remuneration package falling by 24.3% last year. In all, his package came to just shy of $2.2m. While Mr Martin’s bonus took a hammering last year, he still pocketed a bonus of $1.12m in 2012. He was also the only executive director listed in the latest annual report, following the departure of former finance director, Shane Cooke. Nigel Clerkin, Elan’s current finance chief, is listed as ‘senior management’ rather than a director.

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SPAIN'S ‘BAD BANK' BUILDS CAPITAL - Sareb, Spain’s “bad bank” fund created to house the toxic property assets of the country’s nationalised lenders, has increased its capital as it prepares to absorb a further €15 billion of troubled loans this month, writes the Financial Times. Sareb, which was formed last year as a condition of Spain’s request for European funds to bail out its banks, said that after a third round of capital raising the total amount of private sector investment through equity and subordinated debt would stand at €2.6 billion, or 54% of its equity. In the latest fundraising, Iberdrola, the Spanish power utility, bought €2.5m of shares, with the small lender Banco Caminos injecting €800,000 - with the total amount of new equity amounting to just over 0.25% of its total equity. Sareb this year received equity investments from predominantly Spanish banks, with Santander, Spain’s largest bank by assets, purchasing €207.4m, and Caixabank, the country’s third-biggest lender, investing €149.3m. BBVA, Spain’s number two bank, declined to participate in the bad bank scheme after deciding it was an unattractive investment. By placing just under 55% of Sareb’s equity in the hands of mostly Spanish banks, the Spanish government is allowed by Eurostat, the European Comission’s statistical arm, to avoid consolidating it into the country’s accounts, avoiding further increasing its budget deficit.