Davy expects Glanbia to deliver, Kerry reports also

Business This Week: Economic data, Ires Reit and Kingspan results

As the Brexit stranglehold tightens on the business world, Glanbia’s full-year results  come in its shadow even if financial expectations are positive

As the Brexit stranglehold tightens on the business world, Glanbia’s full-year results come in its shadow even if financial expectations are positive

 

MONDAY

Results: Kia Motors, Reckitt Benckiser, Weibo.

TUESDAY

Results: Kerry Group, Medtronic, Danone, Heidelberg Cement, Walmart.

Indicators: Euro zone construction output (Dec), economic sentiment (Feb); UK labour productivity (Q4), unemployment (Dec), average earnings (Dec); German economic sentiment (Feb); US housing market index (Feb).

WEDNESDAY

Results: Glanbia, Lloyds Banking Group, Air France KLM, Avis Budget Group, Garmin, HP.

Indicators: UK industrial trends orders (Feb); German PPI (Jan).

Meetings: ECB non-monetary policy meeting; the Institute of International and European Affairs hosts Olivier Guersent, the European Commission director general for financial stability, for a lecture on sustainable and innovative financial systems (IIEA, North Great George’s Street, Dublin).

The Institute of International and European Affairs hosts Olivier Guersent, the European Commission director general for financial stability, for a lecture on sustainable and innovative financial systems.
The Institute of International and European Affairs hosts Olivier Guersent, the European Commission director general for financial stability, for a lecture on sustainable and innovative financial systems.

Glanbia’s full-year results

As the Brexit stranglehold tightens on the business world and its efforts to cope with the unpredictable, Glanbia’s full-year results on Wednesday come in its shadow even if financial expectations are positive.

Last month the chief executive of the Irish-listed food group, Siobhán Talbot, said her company was busily stockpiling products in the UK ahead of a dreaded no deal.

It is well rehearsed now that more than half of the cheese produced in Ireland is destined to cross the Irish Sea, and Glanbia’s fortunes are somewhat exposed.

Talbot said ongoing contingency efforts were “to plan for the worst but hoping for the best”.

Still, things look favourable for this week’s numbers at least. In a note ahead of the results, Davy said it expected Glanbia to reach 2018 targets. “2019 is set to continue in this fashion, underpinned by organic volume growth and a full-year contribution from SlimFast,” it said.

In response, Davy has increased its EPS forecasts by 1.3 per cent and 1.6 per cent for FY 2019 and FY 2020 respectively.

Meanwhile, there is plenty of optimism. Glanbia Ireland has announced its intention to build a €140 million continental cheese-manufacturing facility in Co Kilkenny with partners Royal A-ware, a global cheese and dairy producer based in the Netherlands.

THURSDAY

Results: Biomarin Pharmaceuticals, Saint-Gobain Group, Dropbox.

Indicators: Euro zone composite, manufacturing and services PMI (Feb); UK public sector net borrowing (Jan); German inflation (Jan), composite, manufacturing and services PMI (Feb); US composite, manufacturing and services PMI (Feb).

Meetings: Dublin Chamber’s Technology Forum (Mason Hayes & Curran, Barrow Street, Grand Canal Dock, Dublin); ESRI seminar on behavioural macroeconomics and their effect on business cycles (ESRI, Whitaker Square, Sir John Rogerson’s Quay, Dublin).

FRIDAY

Results: Ires Reit, Kingspan.

Indicators: Irish wholesale prices (Jan); euro zone inflation (Jan); German GDP (Q4), business climate, current conditions and expectations (Feb).

Rockwool reports

Recent warning signs in insulation company Rockwool’s 2018 earnings report need not be of concern to those looking at Kingspan, which releases its own numbers on Friday.

While predicting double-digit downgrades to Rockwool’s FY19 operating profit forecasts, Goodbody said the cost dynamics when comparing the two companies were entirely different.

“Kingspan is facing deflation in some of its cost elements, especially chemicals,” it said. “Overall we remain comfortable with our forecasts for Kingspan, which are broadly in line with guidance for FY18 and look for a more moderate pace of growth in FY19.”

There was a far stronger note of optimism from Davy, who described the insulation manufacturer as a “standout and a top pick” in the European building materials sector. It pointed out that this week’s results would confirm an eighth consecutive year of double-digit growth.

“The operational outlook for the group on balance remains reasonable, and there is also the potential to deploy a de-leveraging balance sheet,” it said. “Kingspan warrants a premium multiple and we are confident the stock can once again outperform.”

It set a price target of €45.50 with upside of over 20 per cent.

In a trading update for the nine months to September late last year, Kingspan said its sales were up by 18 per cent to €3.18 billion.

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