Morning business news - February 25Monday 25 February 2013 11.46
KINGSPAN UPBEAT ON IRISH PROSPECTS IN THE LONG TERM - Buildings materials group Kingspan has said the trading environment for the company was relatively tough in places in 2012. The company reported a 12.5% increase in trading profits to €107.7m for last year. Revenues for the year rose by 5% to €1.63 billion while basic earnings per share were 18% higher at 43.8 cent.
Gene Murtagh, chief executive of the Kingspan Group, says activity in the UK building and renovation markets now account for nearly 40% of the company's sales. He adds that business in mainland Europe, North America and Australia grew significantly, but Ireland now accounts for just 4% of the company's activity. "It's not a shrinking business in absolute terms but it is proportional to our business because of its relativity to our international expansion. Ireland is bumping along the bottom at present and the rate of construction is unsustainably low so we'd be looking positively at Ireland long term,'' he states.
Gene Murtagh says the domestic market was quite flat or down in a lot of markets. "Where we've seen growth is on the commercial industrial side where our products are increasing in penetration across Western Europe and North America,'' he says. The company says it is also seeing an improvement in the refurbishment markets. ''There is quite a shift to upgrading existing homes. That at this stage is probably 30% of our business," he adds.
UK DOWNGRADE TO HIT IRISH EXPORTERS - Currency markets are being very closely watched today with sterling in particular under the microscope. After a downgrade to the UK's credit rating by the agency Moody's on Friday, the euro is strengthening once more against the pound. All of this is of concern to Irish exporters as the UK is a key market for Irish goods and a weaker sterling makes Irish exports more expensive for British consumers.
John Whelan, CEO of the Irish Exporters Association, says sterling had already fallen by 5% against the euro since the start of the year and the downgrade will make a bad situation worse. "The exchange rate ideally is 0.787. When we go past 0.8 it is very difficult to sell competitively into the UK," John Whelan said. He says that over 50% of our food exports go into the UK. ''In total, you are looking at €30 billion going there. If that 5% drop in sterling continues, you would see a €1.5 billion knocked off our export profits into the UK,'' he states.
Mr Whelan also points out that such a position can affect our employment market. "A strong euro makes it difficult to maintain employment and you see companies moving their operations to the UK. We need a competitive currency and we're not getting it,'' he states.
MORNING BRIEFS - €200m of exchequer funding in tandem with €100m of industry contributions is to be invested in seven scientific research centres here over the next six years. The projects to benefit include advanced food research looking specifically at beneficial microbes and probiotics, marine renewable energy, nanotechnology and photonics - which is the science of the manipulation and utilisation of light in different systems.
*** Ireland's merger and acquisition market performed steadily last year, despite the euro zone slipping back into recession. New figures from William Fry show that a total of 82 deals - down three on the 2011 figure - with an aggregate value of €17.1 billion were recorded. That amount was up 18% on the €14.5 billion recorded in 2011 - despite there being fewer deals.