Good Afternoon ,
The week that was , was not much of a week , little news , markets wak fr choice but remarkably resilient. 2 way push pull of mixed economic data , a bit of profit taking , and institutions with cash on the side and Fund managers under pressure to perform as we get ever closer to the start of the final quarter.
Time for the men to be separated from the boys in terms of performance and the pressure is building.
Ireland may hold some of the keys to offer performance opportunities in to the fourth quarter and the economic news which showed the Irish economy not as badly performing as expected has not quite been absorbed into the public consciousness yet.
Today was especially typical of the market . Wall street close down -0.4% last night , the Pre market futures indicated a stronger opening and yet immediately the cash markets opened across Europe stocks got marked down , but not by much…then at 08.20am , the markets reversed and some buyers emerged and the market began a short lived rally. The rally did take hold as at midday before peaking and falling straight back towards the lows.
The Eurostoxx index index traded in a really tight range today of between the index levels of 238 and 241. to highlight the tightness of the range..
The economic data today from the USA included Durable goods orders and New home sales in the USA , both of which came in lower than was expected. The Michigan Confidence index though did surprise on the upside but again between the various indicators failed to give a clear steer to the market and at 5pm Wall Street is down -0.14%.
Next week in Ireland we have Aryzta numbers on Monday / we are forecasting Group revenue of €3,178m equating to yoy growth of +1.4%. Group EBITA including JVs is expected to be €278.0m (+5.9%) and adjusted FY EPS of €2.16 (+6.7%). On outlook, we expect pricing pressure across the Foods businesses and particularly in the UK/ROI and Europe and the ability to drive further cost efficiencies throughout the business will be key for FY2010. Of particular interest will be the trajectory of demand in the North American and European food businesses. We expect top line declines in the UK and ROI and flat revenue in Europe for FY2010 with concerns that smaller retail customers are continuing to close or being absorbed by larger symbol groups. This is changing the power dynamics between Aryzta and its customers and as such we would expect prices and margins to come under pressure through 2010. To offset this expected decline the company will need to continue to drive operational efficiencies and any indication as to how much further savings are available to the business will be key to our outlook for 2010 earnings.
Origin Enterprises which is 71.8% owned by Aryzta will also report. We forecast adjusted EPS of 34.8c (+2.2% yoy) on a 3.0% revenue decline to €1,459m and EBITA of €71.6m (+1%). On outlook, we will be interested in commentary on demand trends for agronomy services as well as for feed and fertiliser in an environment where farm incomes within the ROI and the UK are continuing to come under pressure. Our focus for the results and the conference call will be on continuing demand for agronomy services and indications whether farmers in the UK are still willing to pay for the yield boosting services provided by Masstock as farm incomes come under greater pressure. We will also note with interest any commentary on the company's Polish and Ukrainian operations where we see opportunities for considerable growth into the medium term. Our expectation is that the current depressed income situation will lead to an acceleration in herd number reductions in both the UK and ROI and commentary in relation to this will be of import to next year's forecasts for feed and fertilizer demand.
I hope you have a lovely weekend , I am cycling to Wexford tomorrow as part of a charity cycle , A mere 140k , will keep my mind off the market for a few hours..
Have a good Evening
Liam
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Liam Boggan
Merrion Stockbrokers
Tel.: 353-1-2404171
Mob:353-87-2313505
www.merrion-capital.com
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Merrion Stockbrokers Limited (registration no. 307878) is a limited liability company whose registered office is at Block C, The Sweepstakes Centre, Ballsbridge, Dublin 4, Ireland.
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