Good Afternoon
For those of you who remain at your desks , I get the feeling that a huge swathe of people have rushed lemming like into their cars to avoid the traffic created in
We spoke with Grafton following this mornings update. Management agree with our approach to 2010 numbers flat group sales but better margin as a result of incremental impact of cost savings and reduced above the line restructuring costs. We confirm that we are leaving earnings forecasts unchanged EPS of 4.6c in 2009 and 15.6c in 2010.
Merrion Forecasts were ahead of consensu by some way but in the law of small numbers sall changes make a big differene at these levels. However like CRH yesterday , the consensus number has begun to rise for this year and next and unlike CRH Grafton share price reacted positively but did slip back as the afternoon set in.
Glanbia also had a trading update this morning . Guidance for FY2009 remains at 30-31c (our forecasts are for 30.2c) in line with the reduced range provided in the IMS on 18 November. For 2010 the company has provided guidance for 2010 of earnings growth in the 6-8% range (our forecasts 32.9c equates to 7.9% growth from the mid point of the FY2009 guidance and is broadly in line with consensus expectations) which includes the benefit of a new 15m cost cutting programme. Talking to the analyst who had a follow up conversation with the management of Glanbia , he got the impression that their guidance was conservative and that the 6% to 8% growth rate was the bottom end of their expectations. Unfortunately there are many moving parts in Glanbia inlcuding their difficult to fully square off relationship with their powerful farmer shareholders who are also suppliers of milk so the two way tension of the price they pay to that group vs maximising returns for the plc continues to be a judgement and a political call as much as anything for the Glanbioa management. That being said Commodity prices are definitely improving though there are intervention stocks of dairy products which are likely to be released into EU markets which will keep a lid on prices.
The Weather in the UK has been horrendous which has sparked interest in DCC as it is a major supplier of home heating fuel in the UK , and the other play in Europe , K+S has rallied sharply as ther is a scramble for Salt stocks to de-ice the frozen continent as all of Europe freezes at this time.
There is a resurence of interest in the irish Banks , it is noteworthy. Maybe the fact that the scaremongers who were whispering loudly in the run up to christmas that AIB would be ationalised by December 31 have been proved to be thus far wrong and it has taken some time for the comments from Minister Brian Lenihan in his speech which was primarily about his health but he did mention about the amount of state ownership being resolved by the end of the first quarter. This may have sparked some buying interest.
With regard to Brian Lenihan , I wish him well in his journey ahead and think it is courageous of him to stay in office and try and finish the job he started.
Have a good evening , Safe home
Liam
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