Good Afternoon ,
Markets in a straightforward downhill tumble driven by increased liquidity concerns and the re-emergence of a global Liquidity crunch with rumours this time surrounding the potential cash requirements of
Irish Life and Bank of Ireland bore the brunt of the market falls in Ireland with both down in excess of -7.5% , AIB fared a tad better and fell only -5.5%.
CRH is scheduled to release an IMS tomorrow. Our current forecast for 2010 EPS is €1.12, with profit before tax forecast at €1,015m. We expect CRH will also comment on the difficult weather related start to the year in both Europe and the
Martin Marietta reported Q1 EPS loss of $0.54 comparec to Bloomberg consensus of a loss per share of $0.338. Like Vulcan and Cemex, Martin Marietta also notes the impact of adverse weather in January and February. Q1 heritage aggregates volumes declined 12% in Q1, but March showed a volume increase of 9% yoy with the yoy increase in April in the double digit % range. The volume increase in March/April is being driven by stimulus related infrastructure projects. In Q1, aggregates pricing declined 3% compared with Q109 and varied widely by market. Martin Marietta notes that it is seeing "pricing pressure in a growing number of geographic areas" for aggregates "consistent with its view of a more challenging pricing environment in 2010". For 2010, the company expects infrastructural driven demand to drive aggregates' volumes, with residential demand to increase moderately and non-residential volumes expected to decline. Overall, the company has not changed its guidance for aggregates volume growth (+2-4%) nor pricing growth (flat-+2%). If commercial demand is weaker than the company currently expects, volumes may be flat with the previous year. Vulcan reduced its expectation for aggregates' price increases in its earnings release last night from +2-3% to flat-+2%.
Martin Marietta was down -6.4% at the Close of European trading with Vulcan -5.2%. CRH was down -6.5%.
The negativity was spread throughout the market with the other building and construction stocks also falling , Kingspan -1.9% and Grafton -1.9% .
Volume was light today and in the food stocks Greencore gave up some of the recovery stage after the Investor day last Thursday. Glanbia was -4.8% on the back of a media survey saying that only 30% of Cop members are in favour of the deal to acquire the Dairy business from the PLC. It has been a win win in terms of market perception and so it is interesting to see the various elements of real politik coming into play as the voting approaches. The stock is unlikely to perform against this background of uncertainty and may drift pending clarity of the vote outcome itself.
We met Aer Lingus management this afternoon , I have to say I was impressed with Christophe Mueller and his sense of focus on profitability at these levels of demand and the focus on cost and his success at managing the Unions and also the implementation of a new yield management focus so far. The stock looks cheap. The company embarks on a roadshow now after their IMS , I think the team will be well received as they do the rounds..
Smurfit gave up some of its recent strong gains and closed -4.8% …The markets have a good track record of sweeping away concerns these days….this looks like it is going to be a continued drag for a while.
With Wall street is down -2%
So we look forward to tomorrow and IMS from CRH in the morning and a further IMS from Kerry at lunchtime. We meet the management of Petroneft tomorrow too. A busy day in store.
Have a good evening
Liam
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Liam Boggan
Merrion Stockbrokers
Tel.: 353-1-2404171
Mob:353-87-2313505
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