Morning business news - March 10

Monday 10 March 2014 11.00
Morning business news with Brian Finn
Morning business news with Brian Finn

Construction activity grew again in February led by growth in new orders, according to the latest Ulster Bank Construction Purchasing Managers Index. That report coincides with a survey from the Society of Chartered Surveyors of Ireland which shows that construction tender prices increased by 2.2% in the second half of last year. This has resulted in an annual growth rate of just over 3%.

Micheál O'Connor, President of the Society, said tender prices had increased by 8% over the last number of years.
"This was the fifth half of increases since the low of early 2011. Tender prices are still 28% below the peak of 2008," he said. He agreed that the peak prices were unsustainable but said there was considerable room for growth as there was evidence that contractors were tendering 10-20% below cost.

Micheál O'Connor pointed to the society's latest construction report which showed an expected growth in construction of 30% up to 2018, with an increase of 30,000 jobs directly in the industry. "We see that coming in both the commercial and residential spheres. But even that would leave us with a construction sector that accounts for 7.4% of GNP. The European average is around 12%."

The Society called on the Government to implement the public capital programme. "It's down significantly on where it was. It's at €3 billion down from €9 billion in 2008. There are also difficulties around finance. There's a lack of development and mortgage finance and as the sector grows there's a shortage of skilled professionals," he concluded.

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MORNING BRIEFS - Fruit companies Fyffes and Chiquita have announced that they are to merge. The company will be called ChiquitaFyffes plc and will be listed on the New York Stock Exchange and domiciled in Ireland with Ed Lonergan as Chairman and David McCann as CEO. Fyffes shareholders will receive 0.1567 Chiquita shares for every Fyffes share; Chiquita shareholders will own 50.7% of the company with Fyffes shareholders on 49.3%. The companies have a combined annual revenue of €4.6 billion.

*** Earlier, Fyffes said its total revenue for last year rose by €64m, or 6.3%, to €1.1 billion. Earning per share were up over 3% to 8.8 cent. Its total dividend of 2.17 cent was up 4.8%. 
 
*** Baked goods group Aryzta has reported an increase in group revenue to €2.1 billion for the six months ended January 31 -  up 1.7% on last year. Underlying net profit was up nearly 5% to €135.6m. That was helped by a particularly strong performance in Europe but revenue and earnings in North America and rest of world were down on last year.

*** Just over a fifth of Ireland's electricity demand was provided by wind in February. That contributed to a 5% reduction in energy prices in the month, according to the Bord Gáis Energy index. A fall in wholesale gas prices also contributed to the fall. UK gas stocks are described as robust following a mild winter and it is likely that an overcapacity resulted in reduced energy prices. The situation in Ukraine did not impact on gas prices in February but it could be reflected in next month's figures.

*** In its latest credit watch, the Irish Small and Medium Enterprises Association reported an increase in the rate at which banks are refusing credit to small and medium businesses. It said 54% of requests for credit from SMEs were turned down by the banks, an increase of 4% on the previous three month period. ISME said the increase in refusals coincides with the ending of the Government requirement on the main pillar banks to sanction €8 billion euro in lending to SMEs each year.