Business ear in review part 2: August to December

John Daly takes us through the highlights form the second half of the business year.

Business ear in review part 2: August to December

AUGUST

A month on from Greece’s rejection of proposals put forward by its creditors, Alexis Tsipras’ government announced that it had struck a deal with those same creditors aimed at securing €86bn in funding. The finalisation of the deal came after Tsipras performed a spectacular U-turn just days after the referendum result under pressure from creditors. The prime minister defended the deal, which he described as a bad deal but the best available under the circumstances. The parliament later approved the package of measures.

Kerry Group indicated that it was set to spend over €500m on acquisitions in 2015, with chief executive Stan McCarthy saying the group was very busy in the takeover market. The group said it had completed four purchases up to August and had five agreed but awaiting completion. He said management was eyeing up more deals worldwide to bolster Kerry’s taste and nutrition offering, and the total year’s spend should top €500m. Kerry generated group revenues of €3bn in the first six months of the year; almost 5% up on the corresponding period last year, its financial update said. A strong 3% rise in business volumes was driven by good performances in the Americas and Europe, Middle-East and Africa region, which contributes to half of Kerry’s annual revenues.

Irish travel software firm Datalex continued on an upward curve after new customers drove revenue growth in the first half of the year. The firm specialises in providing e-commerce and retail software solutions to a number of the world’s biggest airlines, and delivered revenues of €18.25m for the first six months of the year. The 3% revenue growth was achieved despite foreign-exchange movements which acted as a drag on growth. Platform revenue — the company’s key value driver — climbed 11% in the period, ahead of analyst projections. A number of new customers, including jetBlue, Abacus, and Edelweiss, had come on board since January, helping to drive growth over the subsequent months.

SEPTEMBER

Ryanair reiterated that it was looking to develop services out of Cork Airport and was in talks with the airport and its owner, the DAA, over landing charges. The airline’s chief marketing manager, Kenny Jacobs, said charges for existing services at Cork were not an issue for the airline and claimed Ryanair was still planning new routes and expansion at the airport.

Confidence levels among the country’s services-related companies was on the rise, despite growth in the sector easing to a three-month low. The latest Services Purchasing Managers’ Index from Investec showed a reading of 62.1 points for the previous month . Growth in new business levels remained strong, with new orders having risen over 37 consecutive months, and new export orders increased at a faster pace than in July. The rate of job creation within the sector was among the fastest on record and employment within the services industry had been expansion mode for three years, the figures showed. Overall sentiment among companies reached a three-month high in August, with nearly 20 times as many firms indicating that they expect to see a rise in activity over the coming 12 months, compared to those predicting a decrease.

Eircom was forced to defend its spending as it unveiled its new identity as Eir and left behind the brand it had carried since 1999. The company invested an estimated €16m in the overhaul of its image which it described as a major milestone for the company that would revitalise and modernise the look and feel of the group. “It is a fundamental change — a much more aspirational, modern look. It’s not €16m on creating a logo,” said Eir director of corporate affairs Paul Bradley. Some 100 outside agencies were employed to deliver what Eir described as the largest rebranding in Ireland in the past 20 years.

The huge strengths of Ireland’s exporting base — which helped the country get through its worst ever economic crisis — were highlighted in the annual publication of the list of the top exporters on the island. Packaging company Smurfit Kappa — in eighth position — along with Tralee-based Kerry Group and Dundalk’s Total Produce were the only Irish companies to secure a top 20 place in the league table of largest exporting firms here. Microsoft Ireland, with 1,200 employees, topped the pile as the number one exporter in the Republic — producing €18.22bn in software exports. Google, medical devices maker Medtronic, Johnson & Johnson, and industrial giant Ingersoll Rand are the next largest Irish-based exporters by the value of the goods and services they sell abroad.

By region, Munster was home to five of the top 30 largest exporters, including Dell’s €8.65bn, Pfizer with €7bn, and Apple with €6bn. Tralee-based Kerry Group, with €5.2bn in exports, was named the fourth largest exporter in Munster and placed 13th in the overall league.

OCTOBER

Stockbroking firm Merrion Capital forecast that house prices were likely to rise rapidly again if the economy continued to post strong economic growth numbers through 2016. It said that GDP would surge by 6% in 2015 and continue to grow, by 5% in 2016, while unemployment will fall next year to an average rate of 8.8% from 9.6% in 2015. “From an Irish perspective, while the world economy as a whole may be stuttering, its key trading partners are among the shining lights on the global stage which will, in our view, only help to keep Ireland at the top of the eurozone growth league table for another couple of years at least,” said chief economist Alan McQuaid. Personal spending was predicted to rise 3.5% to the end of the year and increase 4% in 2016, signalling that consumers were set to return to spending in significant numbers for the first time since the banking crash.

A UCD spin-out company was acquired by a major US security data firm for €59.47m in a cash and equity deal. Logentries, which was co-founded in 2010 by Dr Trevor Parsons and Dr Viliam Holub as a spin-out from UCD’s Performance Engineering Lab, is a leading provider of technology which searches machine data, or information created by devices. The startup took part in UCD’s company development programme run through its incubation centre, NovaUCD, in 2010 and was the overall winner of the 2010 programme.

For Europe’s biggest oil companies, $60 was predicted to be the magic number going forward. BP, one of the first companies to predict a prolonged price downturn, “reset” its business to generate surplus cash flow, with oil expected to be at about $60 a barrel by 2017. The move followed that of Total, which the previous month unveiled investment cutbacks and project delays that would enable it to fund dividend payouts in the same circumstances, without the need to borrow. A year after oil sank into a bear market, the industry prepared for an extended downturn, with drillers slashing investments in exploration and production by a record 20% during 2015, according to the International Energy Agency.

NOVEMBER

Apple announced plans to create 1,000 jobs at its European headquarters on the northside of Cork City in a major boost for the country. The announcement marked a major expansion of the company’s Hollyhill campus where more than 5,000 employs are already in situ. Apple chief executive Tim Cook told staff of the plans on a visit to its Cork base as part of a visit that also saw him take in Trinity College Dublin.

Irish-based finance chiefs were identified as the most optimistic in Europe, in terms of their firms’ growth prospects. The latest chief financial officer survey from accountancy firm Deloitte shows that 25% of European finance chiefs were more optimistic about the financial prospects of their companies than they were six months ago. In Ireland, 58% of CFOs indicated increasing confidence, with the country ranking highest in terms of firms expecting to see job growth at their companies, with 35% anticipating growth in this regard. “Sentiment has fallen most in northern European economies, but in contrast, Ireland’s economy is likely to become the fastest growing economy in the EU for the second year in a row,” said Alan Flanagan, partner with Deloitte.

Bank of Ireland said it remained on track to buy back €1.3bn of preferred stock issued during the financial crisis, even as its capital level fell in the third quarter on a widening pension deficit. The bank’s shares hovered at 33c, giving the lender a market value of €10.68bn. Richie Boucher, chief executive since 2009, said he wanted to redeem the bank’s preferred shares between January and July of next year as a milestone in his plan to resume dividends. The State bought €3.5bn of preferred stock in 2009 as part of its bailout, with the Government converting €1.7bn of this into equity in the following year. Almost €540m of the notes were redeemed in 2013, and the remainder sold to private investors. Finance Minister Michael Noonan plots a course to sell a 25% stake in AIN in 2016.

At Paddy Cosgrave’s final Web Summit staged in Dublin, Stripe said it was aiming to double in size and expand into new markets in the coming 12 months as the online payments company founded by Irish brothers Patrick and John Collison continued its rapid expansion. The entrepreneurial duo built Stripe from a two-man operation into a Silicon Valley favourite, employing 320 staff in just five years. With just a tiny fraction of commerce conducted online, and mobile another growth trajectory yet to be tapped into, co-founder John Collison highlighted huge potential for expansion in 2016. Founded in 2011 and currently operating in 22 countries, Collison said Stripe would eye growth in Latin America and South East Asia next year, but is also “betting big on Europe”.

John and Patrick Collison of Stripe, which is aiming to double in size.
John and Patrick Collison of Stripe, which is aiming to double in size.

Jurys Inn said it would add eight hotels to its portfolio of properties and invest over €50m refurbishing them. All based in the UK, the hotels are be rebranded under the Jurys name, and are located in cities such as Cardiff, Cheltenham, Oxford, and Aberdeen. This bring to 36 the total number of Jurys hotels across Ireland, Britain, and Czech Republic. The controlling company, Amaris, is owned by private equity firm Lone Star which acquired Jurys from a consortium including Ulster Bank and the Oman Investment Fund for €910m in January.

DECEMBER

Taxi app Hailo launched a new service that allows passengers flagging taxis off the street pay via their mobile as part of its continued growth in Ireland. The company rolled out HailoPay to facilitate customers paying via their smartphone and eliminate the need to carry cash or divert to ATMs to pay for the journey. The company launched HailoPay to mark reaching the 10m customer mark since beginning operations in Ireland three years ago. 5m Irish passengers will have used the service in 2015.

The American Chamber of Commerce predicted some 14,000 jobs were likely to be created by the Irish-based divisions of US multinational companies over the next two years. According to the chamber, US firms had already announced about 7,500 jobs in their Irish operations this year and employ more than 140,000 here. Based on the employment plans of the firms, the chamber estimated additional job creation through the US multinational sector of around 10% over the next two years. Separately recruitment firm CPL Resources published research showing that 77% of Irish emigrants in Australia want to return home over the next five years.

Fraud detection company Trustev’s €49m takeover by Chicago-based TransUnion provided another major jobs boost to Cork, as the company looked to significantly ramp up its global expansion. As part of the deal, Trustev received assurances that its Cork headquarters will be developed into a European centre of excellence with the creation of a “tonne of jobs” in the coming months. Some 90 additional staff will be added to Trustev’s Cork workforce as the backing of the New York Stock Exchange-listed TransUnion sets it up for a much quicker global expansion.

The year finished on a particularly high note for Cork with the news that the €50m redevelopment of the city’s landmark Capitol Cinema site will commence in January. The 85,000sq ft scheme is scheduled to be completed by December next year, and will generate about 1,000 jobs once fully occupied. The project will contribute €92m to GDP and generate exchequer revenue of about €21m in a typical year. It will also support up to 200 Cork construction jobs during the year. Cork Chamber chief executive Conor Healy, welcomed the announcement: “Cork is a progressive city and the granting of this planning permission heralds a bright new future for the city.”

More in this section

The Business Hub
Newsletter

News and analysis on business, money and jobs from Munster and beyond by our expert team of business writers.

Sign up
Puzzles logo
IE-logo

Puzzles hub

Visit our brain gym where you will find simple and cryptic crosswords, sudoku puzzles and much more. Updated at midnight every day.

Lunchtime
News Wrap

A lunchtime summary of content highlights on the Irish Examiner website. Delivered at 1pm each day.

Sign up
Revoiced
Newsletter

Our Covid-free newsletter brings together some of the best bits from irishexaminer.com, as chosen by our editor, direct to your inbox every Monday.

Sign up