Grassroot growth is on firm foundations
For the first time in half a decade, the year began on a confident note.
Recovery in the US and Britain was supported by stabilising conditions in Europe, China, and Japan. The Irish economy showed a growing optimism, with jobs again being created, house prices stabilising, and the highest level of consumer confidence for more than six years. IMF figures predicted the global economy to accelerate by 3.6% in 2014, up from 2.9% in 2013.
Building activity began to rise rapidly, buoyed by the economic recovery. The vast majority of builders believing the recovery in construction will grow as the year goes on, according to the Ulster Bank Construction Purchasing Managers’ Index, which posted 58.3 — well above growth level. Dublin was selected as the second most attractive market in Europe for property investors in 2014, according to the Urban Land Institute and PwC. The city’s real estate market has been transformed from a ‘no-go’ location among investors two years ago to one of the hottest markets in Europe.
Finance Minister Michael Noonan ruled out reintroducing bonuses for top bankers until performance improves.
AIB, which needed a €21bn taxpayer bailout, approached the Government about setting up an incentive plan to retain top executives before the Government starts selling the lender, according to sources.
“The answer is ‘sorry guys, much better performance required before we’ll even consider bonuses’,” Mr Noonan said.
U2’s management firm was loss-making for the fourth year in a row, with figures showing profits fell €1.9m. Paul McGuinness stepped down as manager of U2 after more than 30 years following the sale of Principle Management to international music giant Live Nation. The sale was part of a reported €22.2m deal that also included Live Nation purchasing Madonna’s entertainment company, Maverick.
Twitter posted better-than-expected fourth-quarter revenue of €178m in its first results as a public company, despite investors focusing on the stalled user growth, and a severe decline in timeline views.
The company, which held an initial public offering in November 2013 at $26, saw shares race ahead to $66 by mid-February.
Shannon Airport exceeded expectations to record a profit in its first year of operation. Having formally separated from the Dublin Airport Authority in January 2013, it recorded a marginal increase in passenger numbers to 1.4m after five years of passenger decline.
The 25th anniversary of the world wide web was celebrated around the globe. British computer scientist Tim Berners-Lee first submitted his idea in 1989 while working at Swiss physics laboratory, Cern. The response from his boss was the brief: “Vague, but exciting.” Lee went on to develop an invention that has revolutionised the globe, with two out of five people in the world now connected. In 1993, there were 500 known web servers. Two decades later there are an estimated 630m websites online.
Irish people are among the most dissatisfied in the world with their banks. A survey on confidence in the banking industry by Ernst & Young found half of all Irish customers are not happy with how their banks performed. Ireland, Denmark, and Spain were the three countries with among the highest reported incidence of problems, and also among the lowest percentage of customers who are very satisfied with their problem resolution.
Irish drinks group C&C further strengthened its presence in Scotland by acquiring outright ownership of the country’s largest wine and spirits wholesaler. The move to buy out the remaining 50% of Irvine-based Wallaces Express builds upon C&C’s strategy of developing a multi-beverage platform in the Scottish drinks market.
The Economic and Social Research Institute predicted that economic growth should remain strong for the remainder of this year and throughout 2015. It forecast a 3.5% growth in the gross national product for 2014, and 3.7% in 2015, which would mark the greatest improvement since the days of the Celtic Tiger. The continuation of these trends should lead to growth in output, with over 50,000 extra jobs, and the unemployment rate dropping to an average of 10% of the labour force in 2015.
More than 90% of Cork-based businesses are confident of the future on the back of positive increases in turnover, net profitability and employment levels, according to Cork Chamber’s quarterly economic trends survey. The survey also showed that 31% of firms still lack of adequate levels of working capital, while over 40% reported delays in payments from debtors.
The days of global corporations exploiting Irish tax agreements to minimise their tax bills may be coming to an end, according the KPMG Corporate and Indirect Tax Rate Survey, which found that Ireland had the fourth lowest corporation tax at 12.5%, along with Cyprus and Liechtenstein. The survey warned that, due to increasing pressure from the OECD and EU, these taxation practices will have to end. “Do not become complacent: This issue is not going away,” it stated.
Bord Bia research showed that 94% of Irish shoppers now purchase online. Mobile and social commerce are also growing, facilitated by portable, handheld devices and speedier networks. By 2015, nine out of 10 consumers in Ireland will own a smartphone, with tablet ownership projected to reach 50%. Over 50% of all internet sales globally are expected to take place via social media by 2015. “It is widely recognised that technology is one of the key drivers of change in terms of consumer buying behaviour,” said Bord Bia chief executive Aidan Cotter.
The Government hopes to make Dublin a hub for a eurozone non-bank lending market, according to the secretary general of the Department of Finance, John Moran. In the wake of the financial crisis, companies were far too reliant on traditional bank funding, and consequently the flow of credit became massively constrained. With new regulatory capital requirements in Basel III making bank lending more financially prohibitive, the eurozone needs to develop non-bank lending models, including a securitisation market for SMEs; a corporate bond market; and private equity.
A shortage of suitable sites and a complex planning system is slowing the delivery of new houses, and contributing to the rapid rise in property prices. The AIB Residential Property Outlook report found that first-time buyers had more than €350,000 to spend, and 75% of them wanting to buy in 2014.
A new company, Innovate Limerick, will drive the Limerick 2030 economic plan for the city. With a price tag of €250m, the strategy is a ‘once-in-a-lifetime’ plan to guide the economic, social, physical revival of the inner city. Key aims of the 2030 plan include: Transforming the city’s three main thoroughfares, O’Connell St, Catherine St, and Henry St; a new University of Limerick campus in the city centre; and renewing the Georgian quarter. Innovate Limerick was described as ‘a special purpose vehicle’ to move on the Limerick 2030 project.
Wind energy fulfilled a record 50% of Ireland’s electricity needs at various times over the past six months, according to the Irish Wind Energy Association. This year is expected to see a very significant increase in the sector’s potential output, with approximately 350MW of additional capacity coming on stream, adding enough new wind energy to power more than 225,000 additional houses, and coming on top of the existing Irish wind capacity of over 2,000MW.
Digital currency bitcoin is on course to revolutionise global trading in the same way email, MP3s, and digital photography previously changed lifestyles. Key players in the world of online payments gathered in Dublin to debate why and when people will start moving to the virtual payment system. Bitcoin went from $10 in January 2013 to more than $1,100 late in the year before collapsing to $400 in April.
July
Forecasts of technology start-ups contributing €200m a year to the Dublin economy by 2020 and creating 2,800 jobs were described as ‘conservative’ and could be doubled. The Activating Dublin report from Dublin Chamber of Commerce and Dublin City Council suggested the capital could become the number-one tech start-up city in Europe by 2020, with the sector contributing €200m to the local economy on a yearly basis.
Dublin-headquartered aircraft leasing company, SMBC Aviation Capital, signed a deal worth more than €8.5bn with an order for 115 Airbus aircraft in the largest single-aisle aircraft order ever placed by a lessor. The deal by the world’s third-largest aircraft lessor includes the order of 110 A320neo aircraft and five A320ceo, and the option to convert the majority of the aircraft to bigger models if desired. Clare-born entrepreneur Dómhnal Slattery sold International Aviation Management to RBS in 2001 for an estimated €36m.
The long-delayed €3.4bn Corrib gas project moved a step closer with tests confirming that all five wells are ready to flow. It followed Shell E&P Ireland Ltd flaring gas for a 24-hour period at the Ocean Guardian drilling rig, and coincided with the firm confirming that it has provided a fresh cash injection of €100m to help complete the project. The three Corrib Gas Partners expect to invest €300m in the project during 2014, with just under 1,000 people employed.
Three times as many weather-related claims were made by customers of RSA Insurance’s Irish business in the first half of the year than in the same period last year. Abnormally poor weather in the first quarter of the year contributed to a tough first half of 2014 for the insurer which reported interim underwriting losses for its Irish business of €80.6m.
Dairygold Food Ingredients won the Kerrygold Trophy for the best Irish cheddar at the Nantwich Cheese Show in England. It was Dairygold’s best performance at the show, winning 12 other awards, with six gold, two silver, three bronze, and two ‘highly commended’ awards. Nantwich Cheese Show is the biggest event of its kind in the world and attracted a record 4,443 entries this year.
The Irish economy is making a broad-based recovery, with increased investment and domestic consumption combining with robust exports to accelerate growth. Ulster Bank upgraded the 2014 GDP growth figure from 2% to 3.1% with the economy forecast to grow by 3.2% in 2015.
A strong level of new work orders for building firms spurred the construction industry to a full-year of continuous growth, according to Ulster Bank’s Construction purchasing managers’ index, which showed a reading of 61.4 points for August. Despite being slightly down on the 62.6 point reading for July, it was still well above the neutral 50-point mark which separates an industry in growth mode from one in decline.
A Waterford-based mobile software company was bought by US open source software giant, Red Hat, in a deal worth €63.5m. FeedHenry, which specialises in enterprise-focused mobile app platforms, has agreed a deal with the US firm which it expects to close next year. FeedHenry, which employs 60 people across the UK, Ireland, and the US, is a leading developer of cloud mobile application platforms for large companies.
The Government is targeting the creation of 93,000 jobs by start-up firms over the next five years. The new National Policy on Entrepreneurship in Ireland has a key target of doubling the jobs currently linked to start-up companies. This will be done by increasing the number of start-ups by 25% — seeing 3,000 more companies being formed per annum, in the coming five years — and increasing the survival rate of these firms in their first five years by the same percentage, which would mean 1,800 more survivors per year.
Up to 475 jobs could be created by a Donegal-based medical diagnostics company as part of a major €25m investment over the next six years. Randox Teoranta plans to up its workforce from 66 to 540 by 2020. The company, founded in 2008, is involved in cutting-edge research into conditions such as Alzheimer’s and kidney and liver disease. The volumes of retail sales increased for the 11th month in a row in September, up 5.9% for the year, according to the CSO. The value of retail sales fell 0.2% in September from August, but was up 3.8% year on year. If motor trades are excluded, there was a monthly decrease of 1.1% in the value of retail sales and an annual increase of 1%.
Ryanair saw its share price jump by over 10% on the back of a strong set of first half results. After-tax profits, for the six months to the end of September were up by 32% year-on-year to €795m, with revenue rising by 9% to €3.54bn, and basic earnings per share ahead by 36% at 57.44c. First-half passenger numbers were up by 4% to 51.3m people.
Just under half of small businesses are now stable and growing, the highest level since 2008, according to InterTradeIreland’s Business Monitor.
Nine out of 10 businesses are either stable, 43%, or growing, 45% — the highest percentage in growth mode since the recession began and almost double the number of firms in growth mode compared to this time last year. The construction sector is the most optimistic, with 35% of firms indicating they are less cautious about investment than a year ago.
The eurozone’s fragile economy combined with investors’ hunt for higher returns poses a renewed threat to the region’s financial system, according to the ECB. “The economic recovery remains weak, fragile and uneven — and could potentially reinforce financial stability risks against a backdrop of a global search for yield.”
Christmas shoppers are expected to spend close to €4bn this month — the best festive spend in five years.
Retail Ireland said that rising employment, increased disposable income, and rising consumer confidence, would see retailers on course to record their best Christmas season since 2009. The monitor predicts €3.96bn will be spent in shops this month — up from €3.88bn last year. It shows households will spend an extra €650 to €750 over the next three weeks compared to other months.
One of the biggest stories of the year has been the drop of 40% in the dollar price of oil. This has occurred despite turmoil in Libya, the rise of Isis and conflict in the Ukraine which has pitted Russia against the West, culminating in an economic face down. Transport and tourist related stocks have been forging ahead, with Ryanair a big winner.
Texan oil industry veteran T Boone Pickens has predicted a return in the price of oil to $100 a barrel within the next 12 to 18 months.
Proving that rising property prices are not happening everywhere, another golf course on the market is expected to fetch only a fraction of what was paid for it during the property boom.
A total of 236 acres of land, including an 18-hole golf course and agricultural land, is for sale in Beaufort, Co Kerry, with a €2m guide price.
The property was sold for a reported €12m in 2006.
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