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ISEQ powers ahead on new optimism

Wednesday, February 13 17:35:44

The ISEQ rally continued this morning, helped by a strong showing on Irish exports in 2012 and as yesterday's S and P outlook upgrade for Ireland encouraged buyers.

By 12:45, the index was up 56.11 points to 3,682.56.

Goods imports and exports data just released by Ireland's Central Statistics Office show that a trade surplus of E43bn was recorded in 2012, 0.2pc above the outcome achieved in 2011. Exports (+0.9pc) and imports (+1.5pc) both registered increases over 2011. In recent months the focus has been particularly centred on the 'chemicals and related products' sector, given concerns about the potential impact of the patent-cliff. These concerns were elevated by industrial production data that revealed a very steep decline in that segment in September (-36.7pc m/m), but developments since then have been more reassuring, with production recovering by 40.1pc since then. In the month of December total chemical and related products exports were -10pc y/y and -40pc m/m, but we would not be inclined to read too much into one month's outturn given how volatile exports in this area can be (indeed, November's exports in this segment were +20pc m/m and -3pc y/y). Nonetheless, it is of note that total exports in this area have fallen on an annual basis for four consecutive months. For the full year 2012, total exports of 'chemicals and related products' were down 1.8pc y/y. Within that exports of organic chemicals were +0.8pc y/y at E20.1bn while exports of medical and pharmaceutical products declined 7.4pc y/y to E24.4bn.

Shares in CRH rose 54c to E16.31. Yesterday Martin Marietta reported Q4 earnings of $0.46, which was behind consensus of $0.53. As aggregate volumes were robust in the quarter (+5pc versus -4pc Q3, +3pc Q2 and +10pc Q1), the driver of the variance seems to be higher costs and /or lower than expected operating leverage. Indeed, we calculate that the incremental margin for the aggregate business in the fourth quarter was only circa 20pc. "CRH management has already guided FY12 EBITDA for US materials to be "slightly lower" than FY11. Our forecasts for FY13 incorporate 4pc volume growth in aggregates, reflecting the different state exposures and also a less optimistic view on how quick TIFIA can impact highway construction activity," said Goodbody's Robert Eason.