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ISEQ rebounds after Kenny's German trip

Thursday, November 01 17:37:34

The ISEQ rebounded from three days of weak trading today after the Taoiseach's German visit prompted Chancellor Merkel to say that Ireland's problems are still on the agenda.

The index rose 33.71 points to 3,2'82.20.

The global markets are likely to share German Chancellor Angela Merkel's view of Ireland as a "shining example" and applaud our manufacturing performance and could-be-a-lot-worse jobless figures.

That's according to Owen Callan, Senior Dealer at Danske Markets, who added that "externally, today will be viewed as another positive day for Ireland".

"Our manufacturing sector has expanded for the ninth month in a row, while unemployment figures for October held steady at 14.8pc - both gauges are at odds with Eurozone statistics, where unemployment is continually rising and manufacturing declining. These figures are bolstered by Chancellor Merkel's comments in Berlin where she seemed to indicate that the German Government is becoming publically supportive of the Ireland's attempts to gain some form of relief on the cost of rescuing our banking system," he said.

Shares in CRH rose 29c to E14.65. MDU Resources, the fifth-largest aggregates producer in the US, overnight reported strong Q3 results from its construction materials and contracting business. The unit saw sales and earnings improve 6pc and 36pc respectively versus Q3 2011. Meanwhile, Boral, Australia's largest building materials provider and a leading brick producer in the US, issued a weaker than expected trading update.

DCC has announced (November 1st) the completion of the Benegas acquisition. DCC announced yesterday that the OFT had accepted hold separate undertakings by DCC in relation to the acquisition of BP's UK LPG distribution business. Shares in DCC climbed 27c to E22.31.

Since the acquisition of Otis Spunkmeyer in 2006 for $560m, Aryzta Food Group has deployed a further E1bn-plus on acquisitions, predominantly in the US. The capital invested in acquisitions has led to a significant expansion of the asset base in North America. Davy said that it is fair to say that returns on capital have lagged, although we recognise that the time-frame we are considering is relatively short. Management recognises the need to increase returns and has set about implementing an extensive transformation programme (ATI) costing E400m. "Harnessing greater value from the existing asset base (both intangible and fixed) via the ATI is a critical development for ARYZTA. The group has set an ambitious target of 15pc return on investment (ROI) by 2015. Any incremental advance in returns should feed into a higher rating for the shares. The shares have little priced in by way of success for ATI. Our derived valuation for the food division implies an EV/CE of 1.21x, which reflects historic returns within the food group but lags other names in the ingredients sector," said analyst, Cathal Kenny. Shares in the group jumped 100c to E38.50.