Most Irish companies see earnings meet or beat expectations

Almost 88 per cent of Ireland’s publicly-quoted companies reported earnings in recent months that either met or beat markets expectations, despite initial fears following the Brexit referendum that some companies would disappoint investors.

However, a Merrion Capital review of earnings season across 33 Irish companies highlighted that baked goods producer Aryzta, Ryanair, Tullow Oil and financial services company IFG Group posted results that missed expectations.

On average, companies analysed delivered 8 per cent earnings per share growth despite a slump in sterling against the euro impacting many companies.

CRH, Kerry Group, Grafton, Greencore, Cairn Homes and FBD Holdings were among 16 quoted companies whose EPS beat forecasts as most groups reported full-year results.

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The Iseq index reached a 15-month high of 6,750.78 points last week, some 6 per cent above where the gauge was immediately before the Brexit referendum last June, which triggered a 17 per cent slump in Irish shares over the course of a few days.

Domestic consumption

"The Irish economy continues to deliver robust economic growth led by domestic consumption and higher employment in the first quarter of 2017," said David Holohan, chief investment officer at Merrion Capital, in a report issued to clients last week.

“Despite the above-average gross domestic product growth, the Iseq has underperformed other European markets given investor concerns about a knock-on effect to Brexit.”

Irish Continental Group, which posted a 11 per cent surge in operating earnings to a record €83.5 million last year to meet analysts' expectations, is the top performing stock in the Iseq 10 index of the country's largest public companies so far this year. Shares in the Brexit-sensitive company have surged 17 per cent since the end of December, to recover some of the ground lost after the UK referendum on EU membership.

Agri-services group Origin Enterprises, food companies Glanbia and Kerry Group, and insurer FBD round off the list of top five performers on the index, gaining between 15.7 per cent and 16.8 per cent each.

Aryzta, which issued a profit warning in January and has since seen its top executives depart, has fared the worst on the market, with its shares having declined by 27.2 per cent, almost twice the pace of the decline seen at Permanent TSB.

Cider and beer maker C&C Group, building materials giant CRH, bookmaker Paddy Power and commercial property firm Green Reit have lost between 0.9 per cent and 4.3 per cent of their value so far in 2017.