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ISEQ hit by puzzling GDP fall

Thursday, March 13 17:36:58

The ISEQ fell sharply today after latest GDP figures showing a shock fall in Irish headline growth in the fourth quarter and over 2013.

The index was down 35.76 points to 4,965.52.

Analysts and commentators this morning sought to make sense of the latest headline GDP figures showing a shock 2.3pc decline in the fourth quarter from the previous three months as imports surged and consumer spending fell. At a headline level, GDP disappointed, decreasing by 0.3pc in 2013, while GNP rose by 3.4pc - a divergence which, according to Investec's Philip O'Sullivan, hints at the extent to which Irish national accounts data can be skewed by sector-specific issues in the large multinational sector. "On this point, it is important to note that were it not for the drag from a fall in aircraft purchases (which we estimate shaved c. 1pc from GDP) and 'patent cliff' pressures in the pharma sector GDP would have increased last year. In Q4 2013 GDP fell 2.3pc q/q in volume terms while GNP expanded by 0.2pc q/q," he said. The big surprise within this release is that the data show no improvement in personal consumption over 2013, with a 1.1pc decline recorded for the full year and declines of 0.6pc q/q and 1.1pc y/y recorded in Q4. Retail sales data had pointed to an improvement (for 2013 as a whole retail sales volumes rose 0.7pc y/y and by 0.8pc y/y if the volatile motor trade component is excluded), particularly in the second half of the year, Mr O'Sullivan noted.

Independent News and Media's full year results came in ahead of analyst expectations after it reported operating profits of E32.7m for the year to the end of December. That is in line with 2012's performance and was achieved despite a 6.6pc fall in revenue to just over E322m. The company said it reduced its net debt by E327m to E95.3m after a massive restructuring operation, which included the sale of Independent News & Media South Africa, a restructuring of its Irish defined benefit pension schemes and a share placing last December. "This is both a reassuring and encouraging set of results from Independent News & Media (INM). The group delivered on its objectives and expectations during 2013, and the current signs of improvement in the Irish economy are slowly starting to manifest themselves in INM's operations. The current rate of advertising revenue decline is ahead of our forecasts for 2014. Mindful that we are only a little more than two months into the year and noting the company's comments with regard to visibility, we are unlikely to fully book the current run rates for advertising revenue into our numbers just yet," said Davy. Shares in INM rose 2c to E0.17.