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ISEQ slips as profit taking dominates

Wednesday, February 20 17:37:43

The ISEQ slipped in to negative territory this afternoon as investors concentrated on profit taking and Aryzta shares declined.

The index fell 9.03 points to 3,680.06.

European shares dipped today, consolidating after a steep rally in the previous session as investors were confronted with news of weak earnings, though some expected further near-term gains.

Britain's biggest business insurer RSA was the standout faller on the FTSEurofirst 300, off more than 14 percent in brisk trade, after it slashed its 2012 dividend by a fifth and flagged a further cut this year.

Shares in Irish-Swiss baker, Aryzta, fell 76c to E42.69. The company has announced the acquisition of a German par-bake company, Klemme, this morning for a cost of E280m. With sales of E229m, we estimate its EBIT at E30m while ARYZTA has said it will add 15c to EPS in a full year, though the impact in FY13, assuming approval from the German Federal Cartel Office, will be modest. The company has seven well invested facilities producing some 2,500 bakery products, 60pc of which is destined for the German market and the balance for export. The company supplies many of the German supermarket chains, including the discounters.

CRH's stocks fell 3c to E16.07. Lafarge has reported Q4 EBITDA of E856m which compares to Bloomberg consensus of E826m (4pc ahead). This reflected lfl growth of 5pc (versus 6pc Q1, 4pc Q2 and 2pc Q3) on sales that were down 1pc on an underlying basis (5pc Q1, 3pc Q2 and 1pc Q3). As sales were slightly weaker than expected the variance is due to lower costs. "Both the results and outlook from Lafarge are consistent with our forecasts for CRH and therefore see no reason to change our cautious stance ahead of results on 26 February. For example, we are expecting US aggregate volumes to be up 4pc while we have sales declining in Poland by high single digits," said Goodbody's Robert Eason.