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A €55m scheme to provide interest-free cash flow supports to dairy and grain farmers with Glanbia Co-op has been confirmed as part of a move to combat volatility.

Glanbia confirmed the advance payment scheme will offer farmers who are members of their co-op the chance to draw down the loans when the market prices for milk and grain fall below certain levels or ‘price triggers’ set by the board of the co-op.
The interest free repayments to the scheme will then follow when market prices move above certain levels.

The Glanbia Co-op moved this morning to notify the Irish Stock Exchange that it intended to raise €100m by issuing a five year exchangeable bond against Glanbia plc shares that it owns.
The majority of the funds will be used for the volatility tool and the remainder for other business interests.

The Glanbia Advance Payment (GAP) Scheme will run from May 2016 to December 2020.
Earlier this year Glanbia launched a €100M fund linked to the milk price for dairy farmers. The MilkFlex fund was designed to provide loans from €25,000 up to €300,000 to dairy giant Glanbia’s 4,800 milk suppliers, with key triggers that can adjust the repayment terms in times of low milk price.

The investment funds came from the partners Rabobank, the Ireland Strategic Investment Fund, Finance Ireland and €6m from Glanbia Co-operative Society.
Those MilkFlex loan repayments were to be automatically deducted from the suppliers’ milk cheques by Glanbia Ingredients Ireland.

It was also based on trigger which meant if the GII manufacturing milk price fell below 28 cent a litre including VAT for three consecutive months the repayments would be halved for the following six months. If it drops below 26 cents a litre for three consecutive months the repayments will be suspended for six months.

Article Source: http://tinyurl.com/kbwqb42

Government policies need to change to make the economic recovery more “inclusive” but spending also has to be controlled to mitigate the risk of a new downturn, according to a new report in the Irish economy.

Cutting taxes risks overheating the economy, it said.
The Organisation for Economic Cooperation and Development (OECD) released its global economic outlook yesterday, forecasting economic growth in Ireland to remain strong for the remainder of this year and into 2017 – with the significant caveat that the economy will be at major risk should the UK vote for Brexit later this month.

Even before votes are cast, uncertainty about the outcome is seen as a key contributor to the slowdown in manufacturing in Ireland and in Britain revealed in separate figures published yesterday.
Growth in the Irish manufacturing industry slowed to a near three-year low in May. The latest Investec Manufacturing Purchasing Managers’ Index (PMI) shows headline growth here at 51.5 in May, the worst since July 2013.

The index measures growth on a scale either side of 50 – where a score above 50 is positive.
May marked the end of a 34-month run of expansion for new export orders, and jobs growth slowed.

Investec Ireland chief economist Philip O’Sullivan said there is some evidence that Irish firms are responding to a softer demand with the rate of employment easing for a second month in a row.
“In last month’s manufacturing PMI report we cautioned that the second quarter is likely to prove to be a tricky period for many Irish manufacturing firms ahead of the June 23 EU referendum in the UK.”

In Britain, manufacturing activity barely grew last month, adding to signs that the economy is slowing in the run-up to a referendum on European Union membership.
Meanwhile, in its report the OECD said wages will continue to rise across the country, but said for inclusion a greater focus should be made on getting people back to work than on lifting pay. The economy is currently experiencing strong growth, in part, due to “temporary” factors in the multinational sector which have boosted investment.

The Government is warned that further tax giveaways risk overheating in the economy, while the lack of housing is raised as a concern.
Alan McQuaid, chief economist at Merrion Capital, said the report reflects the positive sentiment surrounding Ireland at the moment, but that cautionary noises must be heeded.

“The OECD are saying that growth is robust; and in fairness, we are doing better than most countries. But at the same time, there is an overall message in there saying ‘You have to be careful’.
“There is a need for the Government to build the type of solid foundations that we can rely on into the future,” he said.

Article Source: http://tinyurl.com/kbwqb42

Financial services firm EY is to create 270 new jobs and open two new offices in Dublin and Galway as part of a major expansion in Ireland.

EY is committing to recruiting 220 new experiences hires as well as increasing its annual graduate intake from 200 to 250 across its seven offices.
The average salaries for the experienced hires are to average in excess of €50,000 per year.

The company said high demand for services such as data analytics, fraud investigation, and disruption services is driving its Irish growth.
The new jobs, which will add to the company’s total headcount of 1,800, are based across the areas of accounting, finance, engineering, IT, consultancy and business.

EY managing partner Mike McKerr said the firm needs to find the right mix of talent to meet its clients’ demands.
“We are recruiting professionals at all levels, from graduates through to directors and partners, with the type of sector specific experience which will allow us to provide clients with the insight and advice they need to protect and grow their businesses and customer base”.

Jobs minister Mary Mitchell O’Connor said EY’s announcement was a “true mark of confidence in the Irish economy”.
“The fact that these jobs will be spread across EY’s offices in Dublin, Cork, Limerick, Waterford and Galway is very welcome news as one of my priorities as Minister is to ensure employment growth across the regions. Only a strong economy supporting people at work can pay for services needed to create a fair society.”

The new hires will be based across EY’s seven offices in Ireland, including its new and now fully operational offices, located in the Station Building, Harcourt Street, Dublin 2 and Eyre Square in Galway city.

In addition to hiring 25 people for its new Galway office, EY will also increase its footprint in Limerick, where it currently employs over 50 people, having just signed the lease on a new office space in the city which can accommodate up to 100 people.

Article Source: http://tinyurl.com/kbwqb42

A global ranking highlighting a marked improvement in Ireland’s competitiveness shouldn’t distract from outstanding problems, the head of the State’s competitiveness watchdog has warned.

The National Competitiveness Council, headed by UCD economist Professor Peter Clinch, welcomed Ireland’s ranking rise.
But Prof Clinch sounded a note of caution, saying: “While we should be pleased that Ireland’s improving competitiveness is recognised globally, we cannot afford to become complacent about our performance or relax our efforts to drive improvements.

“Amongst all the good news in the IMD figures, a number of urgent challenges are also evident.”
Ireland has surged from 16th place last year to seventh, according to the latest analysis from the Swiss-based IMD World Competitiveness Center.

But the competitiveness council said issues such as unemployment – particularly youth and long-term unemployment – plus capital investment and improving access to credit for businesses, especially non-bank finance, must be addressed.
It argued that the State’s enterprise base needs to be diversified and needs to expand into new markets and sectors.

More needs to be done to tackle the residential property problem, and to maximise the impact of investment in R&D, the council said.
The watchdog urged the Government to maintain vigilance in the public finances, and ensure a pro-business friendly tax regime is in place.

Prof Clinch said the council would be raising these issues in its upcoming competitiveness scorecard.
In April the council published a damning report highlighting a number of problems that risked derailing Ireland’s competitiveness, including the fact that businesses here are paying 80pc more for loans than the Eurozone average.

It comes as a separate report found that the worsening skills shortage in the construction industry means the cost of building in Dublin is now increasing at the fifth fastest rate in the world.
The survey from construction consultancy Turner & Townsend found that construction costs in Dublin rose 6pc in 2015, That was the fifth fastest rate out of 38 regions surveyed by the firm, and was ahead of the likes of London, New York, San Francisco and Hong Kong.

The report now categorises the Dublin market as “hot” alongside Kuala Lumpur, London and San Francisco. That is one notch below Turner & Townsend’s categorisation of “over heating”. While the property market has recovered sharply in Dublin in recent months, the survey finds the skills shortage is so acute now that it accounts for a large proportion of the increase in costs.
Turner & Townsend believe costs will continue to rise.

“Construction activity will mainly be driven by a raft of large projects in Dublin, with demand uneven in other parts of the country.
“Construction prices look set to increase by 6pc and the industry will continue to face resourcing challenges to meet demand,” it said.

Company global managing director for real estate Steve McGuckin warned the “endemic” skills shortage “risks driving up construction costs even in markets with weak demand”.

Article Source: http://tinyurl.com/kbwqb42

Growth in the Irish manufacturing industry slowed to a near three-month-low in May, new figures have shown.

According to the latest Investec Manufacturing Purchasing Managers’ Index (PMI), the headline figure of growth slowed to 51.5, its lowest since July 2013.
The drop in growth is as a result of general weakening in demand with the new orders index slowing to a 30-month low, recording a very modest increase.

The 34-month sequence of expansion for new export orders has drawn to a close, however, the overall decline recorded here was small with many panellists reporting no change to the level of orders.
Investec Ireland chief economist Philip O’Sullivan said there is some evidence that Irish firms are responding to a softer demand with the rate of employment moderating for a second month in a row.

“In last month’s Manufacturing PMI report we cautioned that “Q2 is likely to prove to be a tricky period for many Irish manufacturing firms ahead of the June 23 EU referendum in the UK (the destination for roughly one-seventh of Irish merchandise exports)”.
“We expect that at least some of the weakness outlined above relates to that event and other international uncertainties. With momentum appearing to be building behind the ‘Remain’ campaign, sterling has recently begun to strengthen against the single currency, which augurs well for the near-term outlook for many Irish exporters.

“So, assuming that our base case that UK voters choose to remain in the EU comes to pass, we suspect that conditions for Irish manufacturing firms should pick up in Q3 and beyond,” Mr O’Sullivan said.

Article Source: http://tinyurl.com/kbwqb42

Latest official figures points to annual decrease of 38,300 or 1.8 per cent

Unemployment has fallen to a new post-crash low of 7.8 per cent as conditions in the jobs market continue to improve.

The latest official figures show the number of workers classified as unemployed fell by 1,500 to 169,700 in May.

This equated to an annual decrease of 38,300 or 1.8 per cent.

The State’s headline rate of unemployment now stands at an eight-year low of 7.8 per cent, a level not seen since October, 2008.

The figures also show that youth unemployment, which stood at 20.8 per cent just 12 months ago, has fallen to 15 per cent.

Article Source: http://tinyurl.com/kbwqb42

Prime rents for shops on Henry Street in central Dublin have increased 14pc on the past year, as the retail market continues to show signs of improvement.

Property agent CBRE say the outlook for the retail sector is steadily getting better, and that is feeding through to demand for shops in strong locations around the country.
CBRE said the level of companies looking to rent more space has been getting consistently stronger in the perceived best retail locations across Ireland over the last six months.

“This trend first materialised in Dublin but during the last year has become evident in other prime high streets and shopping centres around the country,” CBRE said.
Occupier demand is coming from both indigenous occupiers and new entrants to the market although CBRE admitted that the number of retailers looking to expand in provincial locations is not as diverse as those focusing on securing stores in Dublin.

Given that increase in demand, it seems retail has become the latest sector where there is a coming shortage of suitable space.
CBRE said the lack of availability of retail units on prime high streets, shopping centres and retail schemes throughout the country is now the biggest challenge facing the sector.

This has led to further increases in prime retail rents in key locations over recent months.
Prime Zone A rents on Dublin’s Grafton Street – which first began to rise in 2015 – have increased 4pc year-on-year to €5,700 per square metre.

On Henry Street, prime zone A rents increased for the first time since 2013 in Q1 2016, to €4,000 per square metre – an annual increase of some 14.3pc.
CBRE Ireland’s senior director for office agency, Bernadine Hogan, said it was “encouraging to see improving occupancy on many of the high streets, demonstrating the extent to which Ireland’s retail recovery is now starting to filter down to locations outside of the capital”.

Article Source: http://tinyurl.com/kbwqb42

Ireland has shot up a global ranking measuring competitiveness.

The country has surged from 16th place last year, to seventh now, according to the latest analysis from the Swiss-based IMD World Competitiveness Center.
Ireland is considerably ahead of the UK in 18th place, which flies in the face of criticisms made by businesses that Britain is a more competitive business environment, particularly around the tax offering.

But the IMD study takes into consideration a broad range of factors that include not only the tax environment, but also the health of the economy, regulation, petrol prices and electricity costs. It lists, as improvements on last year, the improvement in GDP and the government finances, finance and banking regulation and credit.
Issues of concern include exchange rate flexibility, the personal income tax rate, total expenditure on R&D, spending on education, and the number of women with degrees. IMD said it uses a mix of hard data, including information from global bodies such as the World Bank, OECD, and Irish authorities, and soft data, which is comprised of interviews with around 100 executives on average based in each country.

The executives were asked, from a list of 15 indicators, to list the five perceived as being the key attractiveness indicators for business.
At the top was the competitive tax regime, followed by the perceived high education level, the skilled workforce, business friendly environment and the dynamism of the economy.

But evidently businesses care very little about the competency of the government (as long as it’s pro-business) as that ranks near the bottom of the list.
Professor Arturo Bris, director of the IMD World Competitiveness Center, said Ireland’s ranking marks one of the best improvements in Europe.

“Ireland and the Netherlands have recorded the biggest jumps of any economy, while Sweden, Belgium, Spain and Italy are among those that also continue to improve,” he said.
But he said Eastern European countries are also seeing strong improvements. The economies of Latvia, the Slovak Republic and Slovenia are among the fastest-improving in the world.

Each has bettered its 2015 position by six places – a rise beaten only by Ireland and the Netherlands – with Latvia moving to 37th, the Slovak Republic to 40th and Slovenia to 43rd.
By way of context, France occupies 32nd position, Spain 34th and Italy 35th.

“The common pattern among all of the countries in the top 20 is their focus on business-friendly regulation, physical and intangible infrastructure and inclusive institutions,” Prof Bris said.
“These are qualities that many Eastern European economies are increasingly recognising and embracing, and a breakthrough into the top 20 might not be too far away.”

The USA has surrendered its status as the world’s most competitive economy after being overtaken by China Hong Kong and Switzerland. The IMD World Competitiveness Center, a research group within IMD business school, has published the ranking each year since 1989. The study reveals a marked decline in Asia’s overall competitiveness since last year’s ranking, with Hong Kong and Singapore bucking a wider trend of deterioration.
The likes of Taiwan, Malaysia, Korea Republic and Indonesia have all suffered significant falls from their 2015 positions, while mainland China only just managed to stay in the top 25.

Article Source: http://tinyurl.com/kbwqb42

The latest recession in the oil sector has thrown up some truly remarkable business paradoxes.

Imagine, if you can, a company which suffers a $200bn plunge in revenues and sees its operating profits collapse by 93pc.
Imagine that company surviving such a life-threatening trauma but being resilient enough to get stuck into the acquisition of a serious competitor.

Well, that’s been the precise up-to-date experience of Royal Dutch Shell (Shell). And the rival it picked up amidst all its woes is BG plc. But then oil companies are a law unto themselves and some can afford to ship revenue and profitability damage, which would be fatal for most other corporations.
Royal Dutch Shell has come through a fair number of trade wars over the years.

It earned a share of notoriety as one of the famous ‘Seven Sisters’, a shadowy oil cartel that pretty much controlled the Middle Eastern oil production after World War II and whose dominance was broken up by the OPEC ‘oil shock’ in the 1970s.
Today, Shell is involved in all aspects of technical development and commercial activity. Through its subsidiaries it explores for oil, refines it, produces petroleum and operates filling stations worldwide.

Investors take some solace in the experience that unlike its competitors, Shell resisted the sell-off of its refining assets. This part of the business now accounts for most of its profits.
The Anglo-Dutch company, valued at £100bn, operates in over 70 countries, has an interest in 23 oil refineries worldwide and employs 90,000 people but is planning a headcount reduction of 12,500.

The company is famous in all parts of Ireland, trading continuously for over a century until it sold its business to Topaz.
However, it is perhaps best known in the West, as the operator of the endlessly controversial Corrib Gas project; but as its long history around the world has shown, controversy is no stranger.

Last February, Shell announced it had acquired the UK- quoted gas and oil operator BG for £47bn. Some analysts think it’s a game changer, acquiring good assets in a down cycle. BG’s Liquefied Natural Gas (LNG) assets in both Australia and Brazil support Shell’s rationale for the merger. As a result, Shell is now the largest producer globally of LNG. The acquisition also increases its oil reserves by 25pc.
An added attraction of BG is that it less reliant on oil revenues and its performance in the face of plunging oil prices has held up. However, some have criticized the takeover, accusing Shell of over paying.

Investors are happy that Shell’s capital discipline and cost savings have helped it retain its dividend payments but some analysts worry should the oil price slump continue into 2017 dividends costing $15bn per annum could be under pressure.
In truth, Shell has an unsurpassed payout history. It hasn’t missed a dividend since 1942. That’s my sort of company. Consequently, the well-supported stock trades at £18, which is some way off its 10-year high of £22 in mid-2014. The decimation of the oil industry is shown in Shell’s pre-tax profits (it reports in dollars) which plunged to $2bn last year – some considerable distance from $33bn five years earlier. The profits came mainly from its downstream business, helped by favourable exchange rates and lower costs.

Last year, it reduced its operating cost and capital expenditure but analysts are of the opinion more cuts will follow and should consider exiting 10 to 15 countries, concentrating on its core competency. Debt levels remain manageable but Shell recently had its debt rating lowered – its first since Standard and Poor’s started in 1990 – and it is not alone. The world’s biggest oil company, Exxon, was also downgraded.
The question for investors is whether oil prices have reached the bottom of the brutal slump. Shell’s projections for this year is $67 a barrel, $75 next year and $95 in 2018.

So does the adventurous investor believe that Shell is best poised to lead the recovery? I believe it is.

Nothing in this section should be taken as a recommendation, either explicit or implicit to buy any of the shares mentioned.

Article Source: http://tinyurl.com/kbwqb42

Tech giant Amazon is to create 500 new jobs in Dublin over the next two years as the firm bids to up its European headcount.

Amazon, which is headed up by Silicon Valley chief Jeff Bezos, is looking to add data centre technicians, software engineers, and customer support staff.
The announcement is part of the company’s larger intentions to create thousands of jobs across Europe this year.

Amazon came to Ireland 12 years ago and currently employs 1,700 here after adding a further 300 people in 2014.
The new roles will be based in its online retail arm and its data storage unit, Amazon Web Services, both of which will be based in Dublin.

The company also has another base in Cork.

Article Source: http://tinyurl.com/kbwqb42