Markets await big three’s results

THREE of Ireland’s largest publicly-quoted companies CRH, Kerry Group and Eircom are expected to announce bottom-line increases later this week.

CRH and Kerry both report next Tuesday. NCB analyst Stuart Draper expects CRH’s results for the 6 months to June 30 to deliver profit before tax and earnings per share (EPS) of €261 million and 45c and year-on-year increases of 62% and 55% respectively.

His colleague Paul Meade expects earnings growth of 8% at Kerry in the first half of 2004.

Meanwhile, Davy and Goodbody stockbrokers are both predicting a drop in eircom sales when results are posted on Friday, but they expect profits to increase by close to 2%.

Davy analyst Jack Gorman said the firm’s headline forecasts for eircom anticipate revenues of €402 million, earnings before interest tax, depreciation and amortisation (EBITDA) of €148 million, and pre-goodwill diluted EPS of 1c.

Goodbody analyst Neil Clifford forecast first quarter sales of €401 million, down 2% on the same period last year and EBITDA of €147 million, up 3%.

“While trends in Eircom’s revenue lines may be less identifiable on a quarter-to-quarter basis, the key things to watch for are: (1) Progress on roll-out of DSL (2) Extent of revenue decline in traditional services (3) Early indications on Wholesale Line Rental take-up,” he said in a note to clients yesterday.

“In relation to the roll-out of DSL, we will be focusing mainly on the growth in connections (retail and wholesale) rather than revenue growth.”

Davy is predicting Eircom will service just over 100,000 broadband customers by next March.

NCB’s Stuart Draper said that given the CRH management’s excellent track record of successful execution of its acquisitions and the NCB house view that the US dollar should start to strengthen versus the euro over the remainder of 2004, the current 12-month price target is €19.50.

CRH has so far this year has spent €366m on bolt-on acquisitions this year.

Meanwhile, analyst Paul Meade points out that Kerry has spent almost €750 million on acquisitions in the first half, the largest being Quest, a sale which was completed in April.

“The benefits of these acquisitions will become evident in H2 and 2005 delivering continuing margin expansion for the group,” Mr Meade said.

He added: “In addition, Kerry has indicated that it will recoup exceptional charges relating to the closure of 9 US surplus plants by year-end from disposal proceeds and tax credits.”

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