This Week: Mincon results expected to deliver on revenue growth

Will June residential property prices show any sign of cooling down?

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MONDAY

Results: Mincon.

Indicators: Irish construction PMI (Jul); US consumer inflation expectations (Jul).

Meetings: Glenveagh Properties EGM (A&L Goodbody, IFSC, Dublin 1).

Expectations are high for Irish engineering company Mincon, which releases first half results on Monday. Kicking off a generally slow week on the earnings front, Mincon is expected to deliver on anticipated revenue growth and there will also be an update on its new Greenhammer technology.

The company has said that, following extensive testing since last year, it is ready to start converting the prototype into production. “Industry changing results have been achieved and a whole new world of hard rock drilling has become reality,” it said.

In a note ahead of results, Davy said its on-site testing of the product should be in progress for much of H2, with the potential for Greenhammer “to make a significant contribution to forecasts from 2019 if these tests are successful”.

It said, however, that the acquisition in March of Driconeq would be dilutive to margins and set its gross margin estimate for H1 2018, accordingly, at 3 per cent, 210bps below H1 2017.

Overall, Davy expects 19.6 per cent growth in revenue compared to H1 2017 (from €47m to €56.2m), with the acquisitions of Driconeq, Viqing and PPV driving about €7 million of the uplift.

At the end of April, the company reported a revenue and profit rise for the first quarter. Revenue was up six per cent with pre-tax profit of 12.4 per cent up from 10.8 per cent.

TUESDAY

Results: Geberit, IPL Plastics, Symrise, Home Depot.

Indicators: Irish residential property prices (Jun); Euro zone GDP (Q2), industrial production (Jun), economic sentiment index (Aug); UK unemployment (Jun), average earnings (Jun); German GDP flash (Q2), inflation (Jul), economic sentiment index (Aug), current conditions (Aug); US business optimism index (Jul), exports and imports (Jul).

June residential property prices, released on Tuesday, will complete the story for the first half of 2018 – a period in which rising values and short supply have been said to see property replace the health service as Ireland’s greatest political problem.

House prices jumped 12.4 per cent in the year to the end of May, although their actual rate of growth slowed on April.

In Dublin, prices increased by 10.7 per cent to May (house prices by 10.3 per cent and apartments by 13.5 per cent). In the rest of the country property grew 14.1 per cent over the five months.

While there is widespread frustration at the perceived return to the bad old days, Dublin residential prices are still 22.5 per cent lower than their 2007 peaks, and prices elsewhere 25.5 per cent lower.

“At least the Government has acknowledged that something dramatic needs to be done, and sooner rather than later,” Merrion Capital economist Alan McQuaid said last month.

“However, as we wait for [cooling] measures to come through, residential property prices will continue to rise, although anecdotal evidence suggests house price growth may have started to ease, especially in Dublin.”

One company with a keen eye on this week’s figures will be Glenveagh Properties which has an egm the previous day. Last month, it emerged the housebuilder had bought a 113-hectare site in Dublin for more than €65 million with the capacity for 1,250 residential units. The proposed listing of new shares – subject to shareholder approval – would boost the value of the company to near €1 billion.

WEDNESDAY

Indicators: Irish balance of trade (Jun); UK inflation (Jul), PPI core output and input (Jul), retail price index (Jul), inflation (Jul); US retail sales (Jul), industrial production (Jul), manufacturing production (Jul).

THURSDAY

Results: Wienerberger, Footlocker, Walmart.

Indicators: Euro zone balance of trade (Jun); UK retail sales (Jul).

FRIDAY

Results: Abbey, Revlon.

Indicators: Euro zone current account (Jun), inflation (Jul); German wholesale prices (Jul).

Meetings: Dublin Chamber’s Business Owners Network (Dublin Chamber, Clare Street, Dublin 2).

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