Thursday, February 14 12:45:02
The ISEQ's impressive four-day rally ran out of steam this morning as investors fretted over the eurozone's deepening recession.
By 12:30, the index was down 14.53 points to 3,668.03.
The euro and shares fell today after data showed the euro zone's two biggest economies shrank even more than expected late last year, throwing a first quarter recovery into doubt. The German economy contracted 0.6 percent in the final quarter of 2012, marking its worst performance since the global financial crisis was raging in 2009. Exports, normally the motor of its economy, did most of the damage. Overall the euro zone's 17-country economy shrank 0.6 percent, with France's 0.3 percent fall slightly worse than forecast.
Shares in drinks group C and C fell 6c to E4.87. Heineken released FY12 results this morning reporting revenue growth of 7.4pc which represents 3.9pc organic growth (1.5pc volumes and 2.4pc pricing). The European market proved to be challenging, with total beer volumes down 2pc in 2012. For the year ahead, the high growth regions of Africa and Asia Pacific should more than offset the weakness expected in Europe as the continued economic uncertainty affect volumes. Heineken will continue to push for more positive pricing and sales mix in the region to counteract this weakness.
"C and C released Q3 results last month with guidance for FY12 reiterated at the lower end of the E112 - E118m range (Goodbody E113.9m). Similar to Heineken, the UK market remains difficult for C and C although we should see stabilisation in FY14. We remain positive on C and C, particularly its international business as US cider holds out prospects for positive newsflow in the coming quarters," said Goodbody brokers.
The latest FOEX data shows that over the last week European OCC prices declined by E0.27/tonne to E108.60/tonne as export demand temporarily came off due to the beginning of the Chinese New Year. FOEX notes that demand in Europe remains relatively strong and a further increase is expected with the start-up of Stora Enso's new testliner mill in March. "Given the apparent cost pressures on containerboard producers in Europe already we believe that any significant increase in OCC prices will be followed quickly by further testliner price hikes (E40/tonne has already gone through) which should underpin more robust corrugated pricing and thus improved profitability for both Smurfit Kappa and DS Smith," said Goodbody's. Shares in SKG fell 20c to E11.31.