Liams Last Post : Bond yields soar as Irish Sovereign fears rocket....CRH peers report inthe USA and INM re-assure with IMS

Good Afternoon

 

7.45% yield on Irish 10 year bond yields says it all about the markets faith in Ireland. The Failure of AIB to be able to find a buyer for its UK assets has led to an increased tension in bond markets. The markets took no notice of  the NAMA statement saying that it made a Eur6m profit in Q2 and that 29% of acquired loans are performing at the end of June.  The market was focussed on sovereign fears again as well as the news that the Government tax take is down -5.4% in the yearand that with the resignation of a TD a general election looms ever nearer as consunmer sentiment continues to fall. The winter is here , the evenings have gotten dark and there looks to be no good news anywhere on the Horizon.   

 

Vulcan Materials reported earnings last night which the market reacted positively to today with the stock up +9.7%. Vulcan were confident about the prospectd of a recovery and said that trailing aggregates shipments have been increasing since February despite the strike in Illinois which saw the headline shipment rate decrease.  Vulcan pointed out that Highway awards in their states outpaced other states.

 

Martin Marietta reported Q3 results today with the company declaring themselves pleased to report their second consecutive quarter of aggregates volume growth.

 

Martin Marietta commnents were reasonably optimistic in tone saying heritage aggregates product line pricing decreased 3.1%. Previously reported pricing trends continued in the third quarter. First, a higher percentage of shipments of base stone, which is used in both road  construction and energy sector activity and has a lower average selling price compared with clean stone, contributed to negative period-to-period comparison of selling price. Second, pricing on Stimulus-related projects was 10% lower than our company average. MLM estimate that the impact of these factors negatively affected aggregate pricing by 160 basis points and expect this pricing pressure to ease as end-markets continue to either recover or reach levels of sustained stability. However, competitive pricing pressure exists and opportunities to increase pricing will return one product and one

region at a time.

 

From a CRH perspective … the market took fright that CRH aggregate volumes continued to decline when their sector peers recovered last quarter. A second quarter of sector wide recovery now puts more and more pressure on CRH with their IMS due next week.

 

This afternoon INM released an Interim management statement. The stock has been quite weak of late so the news was definitely re-assuring. That being said the market reaction was muted and the stock still closed down -0.3%

 

INM said that for the year-to-date  to end  of October 2010,  INM's year-on-year  underlying revenue trends are marginally  better than those for  the six months to  30th June 2010. The continuing  sluggishness in  property  and recruitment advertising  is as  expected, though  both have  shown a  marginal improvement on  first half  trends.  Display and  Retail advertising  -  which account for over 60% of publishing advertising - continue to follow first-half trends. Newsprint prices have  increased by c. 10%  since July 1st in  European markets and INM's South African operations have experienced inflationary  cost increases, however operating costs remain control and year-to-date operating  costs, in like-for-like terms, are in line with 2009.  Group Operating Profit Before Exceptional Items continues to be well ahead (>20%) of last year,  and the  underlying year-to-date  like-for-like* Operating  Profit Before Exceptional Items is approx. 10% ahead of the same period in 2009.INM re-affirmed their expectation for the full year results to be within the range of Market consensus forecasts for 2010 which is in the range €220 million  to €225 million.

 

Have a good Evening

 

 

Liam  

 

 

 

 

___________________________________________

Liam Boggan

　

Merrion Stockbrokers

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