There was more upheaval at Independent News and Media (INM) this week, as major shareholder Denis O'Brien lost his remaining representatives on the media giant's board and editor-in-chief Stephen Rae announced plans to step down.
The backdrop of all this tumult is becoming increasingly difficult to summarise concisely. Firstly, the State’s corporate watchdog has applied for the appointment of High Court inspectors to investigate matters at the media group.
This followed whistleblowing over an aborted bid for radio station Newstalk, which is owned by Denis O'Brien's Communicorp. There was a boardroom row at INM when O'Brien's associate Leslie Buckley, then the chairman, wanted to go with a higher bid. Buckley is alleged to have told other executives to "maximise returns" for O'Brien.
Then there’s the data breach. Buckley is alleged to have facilitated a third party in removing servers from INM’s offices on Talbot Street, Dublin, for “interrogation” in another jurisdiction. Data belonging to journalists and lawyers who have been critical of O’Brien or acted against him was allegedly compromised.
Since all of this began to trickle into the public domain, there has been an unravelling of O’Brien’s influence in the company, culminating this week in the exit of board member Paul Connolly who was O’Brien’s last remaining nominee.
INM also confirmed its editor-in-chief Rae is leaving. Rae served as the group's most senior editorial figure for five years, almost entirely during Buckley's reign. It's believed Rae will be replaced by Richard McClean, the current managing director of the Belfast Telegraph, although the role is to be recast as "head of publishing".
The changes have fuelled speculation of a potential shareholder shake-up and the possibility that O'Brien may exit the company. INM shares surged to a 10-week high after it emerged beef magnate Larry Goodman has built up a sizeable stake in recent weeks.
EU Commission warns State of challenges
With the summer months now upon us, it won’t be long before the media is consumed with the annual saturation of budget news.
Minister for Finance Paschal Donohoe moved this week to clear up some confusion over how big the kitty will be come October. He said the Government may have as much as €1.3 billion for tax cuts and spending increases, somewhat more than previously thought.
Donohoe also committed to putting €3 billion into the State’s so-called rainy day fund by 2021, but said the aspiration was to get the fund up to €8 billion over the medium term.
That might be a good shout, particularly following the European Commission’s warning this week that there are a myriad of challenges facing the State, chief among them Britain’s impending EU exit. The commission said the Republic was vulnerable to “macroeconomic imbalances”. It was also critical of both the State’s corporate-tax strategy and called for faster and durable cuts in long-term mortgage arrears.
Furthermore, it suggested that “windfall gains” should be used to cut debt and broaden the tax base, as well as calling for measures to address “cost-effectiveness” within the healthcare system and for pension reform.
A report from the Economic and Social Research Institute (ESRI) suggested reforming the amount of tax relief on pension contributions could boost exchequer funds by up to a billion euro annually, with higher earners bearing the brunt of the cost.
However, the ESRI said this was unlikely to result in increasing the saving habits of lower paid workers.
In terms of Brexit, there was new research from the Central Bank which said border delays and additional red tape could cut trade in goods between the Republic and the UK by almost 10 per cent. Fresh food, drink and raw materials are particularly exposed.
It’s not all doom and gloom though, as Moody’s raised its growth forecast for the economy to 5 per cent for 2018, driven by recovering private consumption and residential investment.
Companies announce expansions
If the Government was looking for votes of confidence in the State and the economy, they didn’t have to look far this week, as a host of companies announced plans to expand here, while others posted financial results.
Biopharma giant Gilead Sciences opened a new €9.5 million facility at its Cork plant, which it said would boost its production levels for markets in Europe, the Middle East and Asia.
Elsewhere, US company Hyatt agreed a deal to enter the booming Irish hotel market. It will open its first property here in Dublin’s Liberties in May next year. The €50 million hotel is currently under construction.
In retail, Musgrave, which owns brands including SuperValu and Centra, is in talks with developers about possibly building more stores in Dublin. The group released annual results that showed revenues steady, and profits up 9 per cent to €80 million.
It was a good week also for convenience food giant Greencore as shares jumped nearly 10 per cent even though the company reported an operating loss of £4.4 million (€5 million) for the six months to the end of March. Investors were apparently buoyed by stronger-than-expected revenue, which rose by 22.6 per cent to £1.24 billion (€1.42 billion).
Staying with food, shares in beleaguered firm Aryzta, which makes Cuisine de France, plummeted 25 per cent after it said it would trim costs by €200 million over three years and that its earnings for the year would be 12 per cent below guidance.
Ryanair also reported, with profits up 10 per cent to €1.45 billion in the 12 months ended March 31st, 2018, while passenger numbers swelled 9 per cent to 130 million. Despite the positive numbers, Michael O'Leary predicted that fuel and labour costs will cut profits this year. He said average fares will remain at €39.40.
Finally, another of the Republic's biggest companies, packaging manufacturer Smurfit Kappa, agreed to acquire Dutch paper and recycling business Reparenco for approximately €460 million.
