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ISEQ closes flat despite ESM verdict

Wednesday, September 12 17:36:15

The ISEQ failed to get the hoped for lift from today's decision by the German Constitutional Court to clear the ESM permanent bailout fund.

The index closed up 0.94 of a point to 3,250.44.

The court ruling effectively decides that Germany can participate in the ESM, that was set up to support countries in financial trouble and which cannot function without German involvement. While the judges have cleared the way for the ESM to become law, they have also applied conditions. The judgment has stipulated that if the German contribution to the fund exceeds E190 billion, the German parliament must approve it.

Shares in Smurfit Kappa rose 15c to E7.20. German independent containerboard producers confirm that increases of E40-50/tonne in recycled containerboard prices have been achieved already in September. This is supported by rising OCC prices. Further increases in containerboard prices will be determined by the direction of OCC prices between now and the end of the year. Davy said that its analysts have spent the last few days in continental Europe meeting private, independent containerboard producers as well as companies operating in the recovered paper market. "A number of facts are worth noting: The producers have confirmed that recycled containerboard price increases of E40-50/tonne have already been successfully implemented in September."

Shares in independent News and Media fell 1c to E0.17. Following INM's interim results, issued August 31st, Davy have revised their forecasts and rating to reflect what it says is greater uncertainty and continued limited visibility and volatility in advertising expenditure. "We have downgraded our 2012 and 2013 EBIT forecasts by 12.4pc and 15.6pc respectively. We now expect 2012 EBIT to come it at E56.0m, from E63.9m previously. Based on reduced profitability, restructuring-related exceptional charges and reduced dividend income from APN, we now forecast 2012 free cash-flow of E7.6m, increasing to E11.0m in 2013. We are lowering our rating on the stock to 'Neutral'."