Morning business news - August 26Tuesday 26 August 2014 10.21
Profit before tax for the first six months of the year at insurer FBD has fallen from over €19m last year to €3.2m.
The company says this is down to an increased cost of severe and persistent weather and increased frequency of car insurance claims.
The cost of the bad weather in the first half of this year is the highest in the group's history.
“The first six weeks of the year in particular were a very tough period for our customers, 9,000 of our customers were impacted and the cost to them was €44m,” said FBD chief executive Andrew Langford.
However he said these increased costs to the company should not lead to an increase in the amount paid by customers in the future.
“I don’t think the weather costs is going to lead to a substantial increase – or any increase at all – in property premiums for example in home insurance,” he said.
“As an insurer that’s our job and we’re able to take a longer-term view to events like this, and we take those risks on our customers behalf so they don’t have to worry about them.
“We would build those types of events into the rates we charge and in some years, when there are no events it would be a good contribution to our profits but when those events do occur we have to bear the brunt of it.”
Mr Langford also said the company’s profit was hit by a rise in car insurance claims, which he said was due to increased activity on Irish roads as the country’s economy improved.
“There’s been quite an increase in economic activity and there no doubt in the medium term that that will be good for Irish companies like FBD, but in the short term it’s proving a little bit of a head-wind,” he said.
Results for the first six months of the year from Kingspan show its revenue was 4% higher at €889.3m, and earnings were up 17%.
Its statement says the global economic recovery remains weak, but that its order book has strong momentum because of continued demand for low energy buildings.
The company cited improved conditions in Britain and the US, but said other countries were still struggling to return to consistent growth.
“It’s a very mixed bag as we head through the mid-year,” said Kingspan chief executive Gene Murtagh.
“It was a very strong start all around, but western Europe - particularly Germany and France - have weakened in recent months. But thankfully as a business we’re more exposed to the UK and US, which are both very positive recently.”
Mr Murtagh cited a deal the company had struck to buy Pactiv’s US building insulation business, which would give it a stronger presence in the residential market there, as a signal of intent from the company for the North American region.
“We’ve been for the last five years or so very present in the non-residential end with some success, but thermal regulations in the US are on the move, there’s an increasing awareness of energy efficiency and this gives us a full-on exposure to the residential side which we’ve lacked there,” he said.
He also suggested some reason for optimism around the Irish market, but said it was still too early to suggest that things had stabilised here.
“Coming from the lows that we were coming from it’s quite a positive picture, both in terms of residential and non-res,” he said. “So far it has to be said it’s quite Dublin-centric, we’d be hoping that that spreads to the regions but so far it has not.”
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A new housing report published by the Society of Chartered Surveyors Ireland, has found that cash buys accounted for about 35% of transactions in the second three months of the year.
The finding, in the society's first Housing Market Report, suggests the level of cash transactions is beginning to moderate, as earlier figures had had put the figure for the first three months of the year at about 50%.