Business News | Gorman Quigley Penrose

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01 Aug 2018

€1K ‘Granny Grant’ proposed for grandparents who help with childcare in Budget talks

Grandparents who help out with childcare would receive a €1,000 annual payment under plans outlined by Independent ministers in Budget negotiations.

The self-assessed payment would be available to all grandparents who care for their grandchildren for more than 10 hours per week.

In their first negotiations with Finance Minister Paschal Donohoe ahead of the Budget, Shane Ross’s Independent Alliance, which props up the Fine Gael-lead Government, called for its introduction.

It is being described as a “grandparent and grandchild expenses reimbursement scheme”, which could be worth a four-figure sum to those who help mind younger relatives.

Grandparents would apply for the payment through the Department of Social Protection – but would not be required to provide vouched expenses to receive the State cash.

Transport Minister Shane Ross said the scheme would give “serious recognition” of the important childcare role that grandparents play.

“The payment is aimed at recognising that grandparents allow young mothers and fathers re-enter the workforce by giving their children care they would not get anywhere else and which comes at no cost to parents or the State,” Mr Ross told the Irish Independent.

“This is something that should be encouraged and the reward is significant.”

Mr Ross has been calling for the introduction of a payment for grandparents for the past three budgets but Fine Gael has resisted the move.

However, after the group’s meeting with Mr Donohoe, the Alliance specifically named the grandparent grant as a key demand for October’s Budget.

Mr Donohoe has committed to costing the proposal before his next meeting with the Alliance. Mr Ross said he would be “banging down” the Finance Minister’s door over his proposal in the coming weeks.

An Independent Alliance analysis, compiled before the last budget, estimated that almost 70,000 grandparents could be eligible for the grant, costing around €71m a year.

“These grandparents are currently making a key contribution to the Irish economy, resulting in an increased workforce, facilitating a return to employment for parents, who would otherwise be unable to do so,” it stated. “This childcare provision reduces the impact of high childcare costs on young families, whilst providing children with the love and attention of family members.”

The Alliance has also called for the reinstatement of the €850 bereavement grant, which helps with funeral costs.

The group also told the minister to increase the VAT rate on price-gouging hotels. However, they want small hotel and restaurant owners along with the newspaper industry to be able to avail of the lower rate.

The group also looked for an increase in the threshold for inheritance tax and a hike in gambling taxes.

Super Junior Minister Finian McGrath called for greater investment in disability services. This includes increased funding for residential care places and speech and language services.

In a statement issued after the meeting, the Alliance said: “In our first two budgets, we brought stability to the nations’ finances and established firm foundations on which to build the recovery. As we face into our third budget, this responsible approach has put us in a strong position to share the rewards of our economic progress with the citizens of our country while taking steps to avoid a return to the destructive boom and bust policies of the past.”

In a separate meeting with Taoiseach Leo Varadkar, the Alliance demanded to be allowed free votes on contentious issues, such as legislation calling for a boycott of goods from Israel.

No proof of expenses will be needed to claim the payment
The Independent Alliance’s ‘Grandparent and Grandchild Expenses Reimbursement Scheme’ would be operated by the Department of Social Protection.

Grandparents who care for grandchildren for more than 10 hours a week, while their parents are in work, would submit a form to the department seeking payment to reimburse them for childminding expenses.

An Independent Alliance source said expenses could include petrol or food costs related to caring for grandchildren.

However, it is not expected that grandparents will have to provide vouched expenses to receive the State payment.

Similar schemes exist in other countries. In the UK, grandparents can top up their pension pots by applying for national insurance credits if they look after children aged under 12.

Around 100,000 grandparents in the UK are eligible for the scheme.

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01 Aug 2018

Trump and Brexit boost Silicon Docks

The rapid growth of Dublin’s Silicon Docks is being fuelled by a combination of US president Donald Trump’s stance on immigration and ongoing uncertainty in relation to the attitude of the UK authorities to foreign workers post-Brexit.

That’s the message Hibernia Reit CEO Kevin Nowlan says his company has been hearing from its tech-sector tenants as they seek to navigate the twin challenges of doing business both in Trump’s America and in Britain as it prepares to leave the EU.

Referring to the drivers of demand from global technology companies for office space in the Dublin Docklands and beyond, Mr Nowlan said: “We’ve been getting feedback for over a year from our occupiers that they have been having difficulty getting people into the US to work in their organisations.

“And other people are nervous that this is going to happen with the UK post-Brexit.

“That’s one of the drivers that’s coming on with the tech sector in Dublin. It’s only one of them. Dublin is ticking a lot of the boxes for these organisations.

“Brexit is definitely providing a tailwind for Dublin at the moment,” he added.

The Hibernia chief’s observation came in the course of questions from reporters following his company’s AGM yesterday.

While much of the focus in the lead-up to the meeting centred on calls for Hibernia’s shareholders to vote against the re-election of non-executive director Colm Barrington and to oppose salary increases for Mr Nowlan and chief financial officer Tom Edwards-Moss, neither issue gained any traction. Just over 30pc of Hibernia Reit’s stock voted against the company on each of the two proposals.

Regarding the recommendations from proxy advisers, Institutional Shareholder Services and Glass Lewis, Hibernia chairman Daniel Kitchen said the idea that investors should be told how to vote was “nonsense”.

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01 Aug 2018

Hotels face higher costs due to staff shortages

Ireland’s resurgent hotel sector is facing competition for labour that is likely to push up costs for operators as they battle for staff in an economy with falling unemployment, a new study has warned.

The annual Crowe Ireland survey of the country’s hotel sector said that the industry has enjoyed the seventh consecutive year of increased turnover.

It’s now firing on all cylinders across the country, with record profitability, record occupancy and record room rates in all regions.

That also raises the prospect of the special 9pc Vat rate introduced by the Government in the depths of the financial crisis coming under closer scrutiny as budget day approaches.

In a review of the 9pc Vat rate published yesterday, the Department of Finance said it had cost the Exchequer €2.6bn since its introduction in 2011, and was now a “significant deadweight”. The Department said the reduced rate cost €490m in 2017.

The Crowe Ireland survey found that average room rates across the country rose 6.9pc last year compared to 2016.

In Dublin, the average room rate was 6.8pc higher at €136.96. The pace of growth in average Dublin room rates last year was half that recorded in 2016, despite just 237 new rooms coming on stream.

In the southwest and western seaboard, average room rates soared 8pc and 9.7pc respectively to €100.67 and €87.49.

Luxury hotels saw room rates rise 6.2pc to €218.02, a new record. Economy hotels saw the biggest growth in average room rates, which rose 11.8pc last year to €68.43.

The Crowe Ireland survey found that Dublin hotels increased their profits by 12pc. Profits at hotels in the southwest jumped 17.4pc on average, and by 17pc along the western seaboard. At hotels in the midlands and east, profits were 13.9pc higher on average.

But the report insisted that strong profitability is required to spur the €1.5bn investment it says is needed to deliver an extra 11,000 hotel rooms across the country over the next seven years.

Speaking to the Irish Independent, Crowe Ireland partner Aiden Murphy said that payroll cost increases were the most significant threat to the hotel sector’s profitability.

He said that given the reduced unemployment rate in Ireland, the premium that hotels must pay for staff above minimum wage “will have to increase”.

The minimum wage is €9.55 an hour. Last month, the government agreed a recommendation by the Low Pay Commission that the rate rise to €9.80 from next year.

Mr Murphy said that hotels typically pay between €1 and €3 an hour above minimum wage.

“There is a concern that the payroll cost for hotels, which was 34.5pc of revenue in 2017, could return to much higher levels,” he said. “Going back seven years, it would have been as high as 38pc or 39pc.”

Mr Murphy also said that accommodation and other costs in Dublin could push hotel workers to move to hospitality jobs outside the capital.

“There’s a concern for certain staff in Dublin about the cost of living increasing,” he said, pointing out that workers at regional hotels would find the cost of living much lower.

Ireland had a record 9.9 million overseas visitors last year. The figure has been projected to hit 13.7 million by 2025.

Mr Murphy said certainty is needed regarding the 9pc Vat rate.

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30 Jul 2018

DataStax opens first Irish office creating 30 jobs in Cork

DataStax, a US-based data management IT company, is to create 30 jobs in Cork with the opening of its first office in Ireland.

The California-based company, which was founded in 2010, currently has over 500 employees based in multiple US and international locations.

The move into Ireland is a chance for DataStax to expand its back-office operations and opens the possibility for attracting a wider range of talent in Ireland and elsewhere in Europe the company said.

“Our investment in Ireland is further reflection of the reputation held by Ireland in terms of the talent and resources available and will be a key foundation of DataStax’s further growth in both US and international markets” Niall Cotter of DataStax said.

Tánaiste and Minister for Foreign Affairs and Trade, Simon Coveney T.D. described the announcement as “a vote of confidence in Cork’s business ecosystem.”

The move is supported by IDA Ireland, with Mary Buckley, director of IDA Ireland, saying that Cork’s tech infrastructure, talent pool, and supportive academic network has “created a compelling business environment which continues to attract investment from overseas companies in the technology sector.”

Among the companies that DataStax works with are Comcast, eBay, McDonald’s, Microsoft, Safeway, Sony, UBS, and Walmart.

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30 Jul 2018

Europe IPO market up 5pc in first half

The European IPO market posted a 5pc increase in money raised in the first half of 2018, with total proceeds of €21.8bn.

The number of initial public offerings was up 4pc at 168.

The figures are contained in a new report from PwC, which said that after a strong first quarter activity had become subdued in the second quarter – with a 43pc decrease in money raised and a 7pc decrease in IPO numbers compared to the same quarter last year.

Activity this year was boosted by large offerings from health care business Siemens Healthineers, which raised €4.2bn, and Deutsche Bank’s asset manager DWS Group, which raised €1.3bn).

Both of those companies listed on the Deutsche Borse in Frankfurt.

Activity was strong in Dublin in the first half also, where the Irish Stock Exchange was acquired by Euronext and rebranded as Euronext Dublin.

Edtech business, virtual reality education and property investor Yew Grove Reit completed flotations, while Glenveagh Properties and Greencoat Renewables raised fresh capital.

But with geopolitical matters ranging from trade disputes to Brexit posing uncertainty, PwC warned that the market could become more difficult.

“Volatility could well creep back into the markets, potentially unsettling the IPO markets across Europe,” said Denis O’Connor, from PwC Ireland’s transaction services arm.

“Pricing will likely remain a challenge and investors are increasingly selective. That said, we expect to see the volume of IPO activity picking up again in the second half of the year.

“Despite a more subdued second quarter, and the current economic and political outlook, the market is open and deals are being done.”

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30 Jul 2018

Apple expects profit to soar as iPhone X boosts strong sales

Apple is expected to unveil its biggest rise in profits since late 2015, with third-quarter revenue set to hit $52.9bn (€45.3bn), boosted by dearer iPhones and strong sales from its lucrative app store and services business.

Analysts and mobile industry sources expect investors in the Silicon Valley giant to receive the welcome news of another quarter of significant year-on-year growth when the group reports its quarterly results tomorrow night.

Some estimate growth as high as 37pc in earnings per share. It was only last quarter that Apple broke its own record for the biggest quarterly profit of all time, despite a fall in iPhone sales.

The technology giant sold 52.2 million iPhones in the second quarter of 2018, up by 2.9pc from 50.6 million in the same quarter the previous year.

The higher price of the new handsets meant that revenue from selling iPhones rose.

The high price tag for the iPhone X should buffer any further drop in sales, analysts predict. Insiders have said that Apple’s services – made up of the App Store, Apple Music, iCloud, iTunes, Licensing, Apple Care and Apple Pay – could soar by 19pc.

Apple’s sales and earnings are typically lower in the third quarter, prior to the arrival of new phone models, which are usually unveiled in September.

But Guggenheim Partners estimates that Apple will hit a 4pc increase in sales in comparison to the same period last year.

The promising figures are shrouded somewhat by figures from Gartner, suggesting that worldwide smartphone sales declined for the first time in 2017 and that growth could be cooling across the industry.

Analysts will use Tuesday’s earnings call to grill Tim Cook, Apple’s CEO, on how the company will evolve in a maturing smartphone market, where the pace of innovation has slowed.

The company’s failure to sell cheap phones to foreign emerging markets, such as India, might become “an issue”, Gartner smartphone specialist Annette Zimmermann said.

“Apple has not grown in any emerging markets because it don’t have a low-end device,” she explained. “I don’t see it wanting to take that seriously and that might become an issue”.

Apple’s Korean rival Samsung is also due to report results this week. Set alongside Apple’s, they will provide a glimpse into who is winning the smartphone war.

Investors will be eager to learn whether Samsung’s latest Galaxy S9, which was launched in February, has pipped the iPhone X to the post or whether the rumours that shoppers are suffering ‘smartphone fatigue’ are true.

Once a spectacular source of rising profits, the smartphone market has stagnated recently – but nevertheless remains enormously valuable.

Last year, shoppers snapped up 1.48 billion of the gadgets, spending $382bn, according to figures from analysts CCS.

However, smartphones have graduated to the ‘mature category’ of consumer electronics, with the pace of innovation more incremental than a few years ago.

Insatiable desire among consumers to swap their phone every year appears to have cooled. Western consumers are savvier, reading spec lists and armed with comparison websites to help them shop around.

Smartphone sales declined for the first time in 2017, according to Gartner, suggesting that the consumer frenzy has now hit a peak.

As sales stagnate, major players have turned to selling premium gadgets at a higher price tag. Apple’s plan to sell fewer units – but at a premium price – may pay off in the short term, but as smartphone growth slows it may regret its decision not to chase new consumers in emerging markets.

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25 Jul 2018

Irish students scoop major award for super-efficient car that can drive from Galway to Dublin for less than 15c

A team of engineering students from NUI Galway have scooped a major European award for a super-efficient vehicle.

They took first place for technical innovation at Europe’s prestigious Shell Eco-marathon Europe competition.

The Galway energy-efficient car (Geec, left) is said to be Ireland’s ‘greenest’ with a claimed range of 350km on just one unit, or kilowatt-hour (kWh), of electricity.

That, they say, means a drive from Galway to Dublin would cost less than 15c worth of electricity. Put another way, it’s calculated as the equivalent of 10,000mpg (diesel).

University president Professor Ciarán ó hÓgartaigh said the students had brought talent and ingenuity to bear on one of the most important challenges of our time – energy-efficient transportation.

A total of 149 top European engineering schools built cars and sent teams to the Shell Eco-marathon Europe in London. In all, more than 2,000 students, from Morocco to Siberia, took part. The award recognises the single best innovation on any car across all competition categories.

It is claimed to be the world’s toughest test for ultra-efficient vehicles. Teams battle in a 15km race where efficiency, not speed, is all that matters.

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25 Jul 2018

Ryanair warns of potential job cuts for up to 300 Dublin-based employees

Ryanair has today written to over 300 employees warning them that their services may not be required from October 28.

The protective notice to staff has been issued after the board took the decision to cut its Dublin-based fleet by 20pc for the winter.

Over 100 pilots and 200 cabin crew employees will be affected by Ryanair’s decision to cut its Dublin fleet to 24 from 30 for the winter period.

The low-fares airline said that the decision had been driven by the rapid growth of its Polish charter airline, allied to a down turn in forward bookings and airfares in Ireland, which it said was “partly as a result of recent rolling strikes by Irish pilots.”

The airline said that the strikes had resulted in consumer confidence in the reliability of its Irish flight schedules being disturbed.

Ryanair expects few route closures from Dublin during the winter, although some routes may suffer frequency reductions.

“We regret these base aircraft reductions at Dublin for winter 2018, but the board has decided to allocate more aircraft to those markets where we are enjoying strong growth, and this will result in some aircraft reductions and job cuts in country markets where business has weakened, or forward bookings are being damaged by rolling strikes by Irish pilots,” Peter Bellew, COO of Ryanair, said.

Earlier this week the airline reported profits after tax fell by 20pc year-on-year to €319m in the three months to 30 June.

Higher fuel and staff costs off-set the airline’s increase in revenue, which grew 9pc to €2bn, Ryanair said in a trading update on Monday.

The earlier timing of Easter also led to a 4pc decline in average fares, the airline said.

Ryanair experienced passenger growth of 7pc year-on-year during the period, with the group carrying 37.6 million passengers in the three months.

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25 Jul 2018

Wednesday 25 July 2018 Housing crisis deepens and raises pressure on Murphy

THE number of people living in emergency accommodation has hit another record high – but campaigners say the figures don’t take account of the “hidden homeless”.

Housing Minister Eoghan Murphy is under renewed pressure after a series of reports showed the housing crisis continues to worsen.

According to the Department of Housing, 9,872 people were in emergency accommodation during the week of June 18-24. This is an increase of 26 compared with the previous month.

Another study revealed that almost half of local authorities did not complete construction of any new social houses in the first three months of this year.

However, Mr Murphy insisted the latest set of figures show a “stabilisation in terms of the number of people in emergency accommodation”.

“The reason that is important is because it tells us that some of our methods are working, but we have to do more and create sustainable paths for people out of emergency accommodation,” he said.

In relation to the construction figures, the minister pointed to a “roughly 60pc increase in delivery of new builds” compared with 2017.

“Not every local authority area saw completions in the first quarter but every local authority area has sites under construction.

“What’s also encouraging about this is that the first quarter is typically the lowest quarter of activity in the year because our building programme is managed towards an uptake in delivery as we move towards the end of the year. We see this when we look back at 2016 and 2017. This is on track to happen in 2018 also,” Mr Murphy said.

Political opponents said the Government’s ‘Rebuilding Ireland’ plan was failing to make the necessary impact.

Niamh Randall, spokesperson for the Simon Communities, said it is deeply troubling and frustrating to see the homeless figures increase again.

“Living in emergency accommodation is traumatic, stressful and filled with uncertainty.

“At the heart of this is the lack of secure, affordable housing. Without an accessible private rental sector or social housing, people have nowhere to go if they cannot afford to rent,” she said.

“They are trapped and it is so unfair because there is no way out.

“These figures don’t include rough sleepers or those in squats, women and children in refuges, those in direct provision or people who are ‘hidden homeless’ – those staying with family or friends as they have nowhere else to go.”

Ms Randall also raised concerns about suggestions the minister may move to publishing updates quarterly rather than every month.

Mr Murphy said yesterday that monthly reports do not tell enough “about the trends, or the people behind the trends”.

But Ms Randall said this would be wrong “in the midst of the greatest housing and homelessness crisis that we have known”

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23 Jul 2018

US stock markets well-positioned to weather any trade war storms

Trade war fears have rattled US markets this year – but despite these worries, they have continued to post gains.

The S&P 500, the US’s main benchmark index, and the Nasdaq index of leading technology shares, retreated from their bull run following President Donald Trump’s decision to impose tariffs on steel and aluminium imports in May, but investors soon shrugged off the announcement.

The US is imposing tariffs of 25pc on steel from the EU, Canada and Mexico, and 10pc on aluminium. Meanwhile, other trading partners, including Brazil, South Korea and Australia, will face quotas on metal imports.

The muted stock market reaction, according to some commentators, may be due to the proposals not being considered to have a large enough impact to stall US economic growth. May’s jobs report topped expectations, providing a welcome boost to the economic outlook. However, the impact of rising trade tensions has yet to fully filter through, with the outcome depending on how trade partners respond, and whether there may be larger trade battles ahead.

Canada is among those that have announced retaliatory measures, with tariffs on US steel and aluminium. Meanwhile, other geopolitical issues continue in the background that could affect the US, such as strained US-Iran relations.

Yet Trump’s pro-growth stance has continued to boost financial markets, despite some risk factors that threatened to take the steam out of the stock market bull run.

It’s not only trade wars which could affect markets. The US Federal Reserve voted on June 13 to raise US interest rates by 0.25pc – the second increase in rates this year.

Further increases could affect market movements, with higher rates typically having a negative effect on technology and consumer discretionary stocks, as consumers often find themselves with reduced disposal income once borrowing costs increase.

Despite the above, the US remains the world’s largest economy and is in a strong position to weather potential storms, such as a trade war.

US stock markets have soared over recent years, comfortably beating the returns available in the global stock markets elsewhere.

The passing of the Republican Party tax reform legislation has helped push US stocks higher over recent months, with cuts going to the wealthy and business owners, to encourage more investment. In some senses, the backdrop looks more conducive for American stocks now than at any other time in this economic cycle – the Republican tax cuts, alongside the bipartisan spending agreement, represent a substantial dollop of fiscal stimulus to an economy that is already doing pretty nicely. Both, particularly the former, will materially lift corporate earnings for the next two years.

However, the announcement of the tariffs imposed on some imports could shrink some of the savings from the cuts and inject some uncertainty into the stock market, alongside raising concerns about inflation. Analysts generally agree that tariffs are negative for the economy and will impact business confidence.

Yet fundamentals for the US economy remain strong, despite slightly slower growth in the first three months of 2018, at 2.2pc, compared to the 2.3pc that was estimated. Consumers continue to spend, and unemployment remains low.

The US stock market has not only benefited from improving global growth and corporate profits, but also from a rising oil price, and a slide in the value of the dollar. A weak dollar benefits multinational companies that receive their earnings overseas, boosting profits when they are converted back into dollars. The reverse holds true, when the dollar strengthens.

Of course, no-one can predict with any certainty which way the US stock market will move next, but the economic fundamentals appear positive for investors who are seeking to add an investment in the US to a diversified investment portfolio.

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