Morning business news - May 1Thursday 01 May 2014 11.01
Pfizer today opens its €30m new product technology lab in Ringaskiddy in Co Cork. The new plant will see the manufacture of research and development products and therapies, before they go commercial. Pfizer says the site will produce products complex therapies to deal with some of the most devastating and difficult diseases to cure.
Dr Paul Duffy, Vice President of Pfizer Ireland, says the new plant will start production as early as later this month or early next month. The 20 new employees for the new lab have been recruited and trained. He says the lab will produce a wide variety of drugs, ranging from "orphan drugs" for rare diseases to drugs for cancer and cholesterol. On the proposed merger with Astra-Zeneca, Dr Duffy said that Pfizer had confirmed its interest in the bid and the negotiations process is continuing.
All three major US indices closed higher yesterday, with the Dow Jones finishing at a record high, at over 16,500 points. That was after the US Federal Reserve said it believes the US economy is strengthening. This came on the same day that official figures revealed the US economy grew at a slow annual rate of 0.1% during the first three months of 2014. But, the Fed said the low growth rate was mostly due to seasonal factors which have now passed.
Paul Sommerville, of Sommerville Advisory Markets, described the current situation in the financial markets as fascinating. He said the US GDP numbers were particularly bad yesterday, calling the 0.1% growth rate a "miserable number. The weather related incidences in the first three months of the year in the US were very stark, he noted. But markets shrugged off the economic numbers and focused on the forward looking indicators which are much better, he added.
Mr Sommerville said there is huge dichotomy on the markets with so much optimism and so much liquidity washing around. But he warned that something is going to have to give. He said the US economy is stagnating - as evident by the Q1 GDP numbers - and the markets are pricing in a huge recovery. Either the US growth rate will dramatically increase or the stock markets are going to have some problems later in the year, he warned.
The International Monetary Fund approved a $17.1 billion bailout for Ukraine to help the country's economy. The analyst said that this should go some way to calm the situation, adding that the markets have not taken the situation in Ukraine seriously. This is evident by the fact that the price of gold has gone down and oil prices have barely moved since the crisis began. He said the financial markets believe that the sanctions on Russia are not going to have any immediate effect.
On the banking inquiry, Mr Sommerville says that it will be a "total waste of time", adding that it will be used as a political football for the next few years. "I don't think anything new will come out of it, no sanctions will be made. No-one can lose their job, no-one can lose their pension - I think it's an utter waste of time," he stated.
MORNING BRIEFS - Building products group Kingspan says that overall it has had a strong start to the year, with tentative signs of a recovery in continental Europe and a buoyant UK market. In a statement ahead of its AGM in Dublin, the group says its sales so far this year are €561m, 8% ahead of last year.
*** Aer Lingus has reported a 6.6% higher operating loss in the first three months of the year of €48.5m. The loss was down to a later Easter and the negative effect of threatened industrial action on booking volumes in March.
*** Growth in the Irish manufacturing sector gained momentum in April with both output and new orders rising at faster rates during the month. According to Investec's monthly Purchasing Managers' Index, firms responded by increasing buying at a faster pace and continuing to take on extra staff.
*** About 400 acres of prime development land at Cherrywood in south Dublin, formerly owned by developer Liam Carroll, is to be put up for sale. The site is the biggest parcel of development land ever to come on the market. It is to be offered for sale at up to €300m after fast-track planning was approved. The site is part of a bigger area of land that has been designated as a fast-track zone.
*** The International Monetary Fund has approved a $17.1 billion bailout for Ukraine to help the country's economy. The loan is dependent on strict economic reforms, including raising taxes and energy prices, and comes as military and political tension grows between Ukraine and Russia. The head of the IMF, Christine Lagarde, said the IMF would check regularly to ensure the Ukrainian government followed through on its commitments.
*** Danske Bank has this morning reported first-quarter pretax profit above forecast and raised its full-year profit guidance thanks to cost cuts and lower writedowns on loans. Denmark's largest lender reported profit before tax of €570m while net profits for the three months came in at €376.5m.