Dollar dive hits Irish firms

DOLLAR weakness is beginning to impact on the profit outlook for Irish businesses as two leading food companies face a cut in earnings for the year.

Kerry Group and Glanbia have high exposure to the dollar and Goodbody Stockbrokers yesterday revised downwards its forecasts for both groups.

Goodbody’s food analyst Liam Igoe said he was downgrading the forecasts based on a dollar average of $1.25 for this year. That implies a growth of 9% for the Kilkenny-based group against the 12.5% presently assumed.

On that basis alone Mr Igoe said he has cut the earnings forecast from 21.4c per share to 20.6c implying an EPS growth of 8.2%.

However, the broker is quite bullish on Glanbia and has included it on its buy list of Irish shares.

Mr Igoe expects the group to produce EPS of over 12% in the years ahead, provided its focus and considerable investment in the nutritional ingredients area yields the desired results.

In Glanbia’s case the revision is essentially due to the dollar outlook and in general terms the forecasts for 2005 onwards have been bumped up slightly.

Despite revising Kerry’s earnings forecast down from 10% to between 6-7%, Goodbody’s has the stock as a buy at the current price of €14.50.

Again the Kerry revision is due to the assumption of dollar weakness and an average euro/dollar exchange rate of $1.15 for the year. Kerry is forecast to deliver growth of 6%-7% in 2004 compared with previous forecasts of 10% based on a $1.12 exchange rate.

The reductions do not change our positive view on the stock,” Mr Igoe said.