* Irish firms benefit from better employment, consumer data
* Executives say sustainable domestic recovery under way
* External shock, slowdown in growth abroad the chief risk
By Padraic Halpin
DUBLIN, March 7 Ireland's largest listed
companies are confident over half a decade of weak earnings,
gloomy outlooks and shrinking dividends are behind them and that
the economic upturn under way is sustainable and sensible.
In a busy week of earnings, an Irish bank turned a profit
for the first time since the downturn, its main state-owned
rival said it would soon be investor-ready and the largest
builders' merchant said recovery had taken hold.
That came against an improving economic backdrop following
Ireland's completion of a European Union/International Monetary
Fund bailout, with unemployment falling below the euro zone
average, consumer sentiment hitting a near seven-year high and
mortgage arrears stabilising.
"We're probably more confident about the Irish economy than
we have been in any time in the last six years, and the last six
years have been very tough for us all, for Irish people and for
Irish companies," Andrew Langford, chief executive of general
insurer FBD, told Reuters.
"It is still difficult on the ground but there are a number
of very encouraging signs. It looks like there might be a rise
in consumer demand this year which follows six years where it
has fallen by a total of 25 percent, an incredible figure."
While the Irish market is of less significance to major
international players like builder's supplier CRH and
airline Ryanair than ever before, FBD is one of the few
Dublin-listed companies that are 100 percent geared to recovery
The insurer, which this week upped its dividend by 16
percent, said the level of cover being demanded was finally on
the rise following a contraction of 15 percent, as business
customers stopped laying off staff and policy holders upgraded
their cars or renovated their houses.
The number of new cars licensed jumped by almost 50 percent
in January while the property market has begun to rebound with
prices in Dublin up 14 percent on a year ago.
Signs of life in the property market, the root of Ireland's
crisis, are also being felt by building merchant Grafton
, whose profits rose 27 percent last year.
Among the most bullish about Ireland's prospects, Grafton -
which has cut its workforce by a quarter - said there were few
risks to the 7 percent rise in Irish building merchanting
slowing as builders' order books fill up and the government
renews its focus on the construction sector.
"I think the risks are relatively low but I do think it will
be quite a gradual, shallow recovery rather than necessarily a
significant spike upwards," its chief executive and industry
veteran Gavin Slark told Reuters.
"There's always risks in any economic cycle but the really
positive thing about Ireland is if you look at the depth of the
downturn, there's an awful lot of pragmatism now in terms of
people making sure the recovery is sensible and sustainable."
FRAGILE GROWTH STORY
The main concern shared by the country's top executives is
that an external shock or slowdown in growth abroad could stop
Ireland's open-economy achieving the 2 percent growth needed to
start reducing one of the highest debt levels in Europe.
An event outside Ireland is the biggest risk, according to
Bank of Ireland CEO Richie Boucher, whose bank returned
to profit in the first two months of this year. This week, two
investors who kept it out of state hands in 2011 tripled their
money when they sold part of their stake.
Recovery stories like Bank of Ireland's have helped the
local bourse rise by 14 percent this year to almost three-times
its 2009 level, although it is still at just a third of the
value hit during the heady times of the 'Celtic Tiger' economy.
For Allied Irish Banks, which said on Wednesday
that it hoped to begin reducing the state's 99 percent holding
from next year, the risks are the same.
"The real exposure for us is European growth and not the
Irish domestic, I think we've done a lot and it seems like the
government is very disciplined and will execute the rest," Chief
Executive David Duffy told Reuters.
"You're so geared towards the export universe, European
growth and the UK market, you need growth in those to be able to
step beyond the 2 percent mark on GDP."
The signs from abroad so far look good ahead of the release
of Irish fourth quarter GDP data next week with euro zone
private businesses enjoying their fastest growth rate in over
2-1/2 years last month.
But with an economy whose exports are worth more than the
total size of the economy, the Irish growth story needs that
narrative further afield to continue.
"At the moment it looks like Europe's larger economies are
emerging from recession but any shock won't be good for what
still is a fragile economic growth story," said FBD's Langford.