Ireland’s quoted agri-food companies up a whopping 54% in 2013

The value of Ireland’s publicly quoted agri-food companies continued to rise in 2013. Following the 43% rise in 2012, Ireland’s agri-food companies increased in value by a further 54% in 2013.

Despite increased volatility, rising input costs, and, of course, the international banking debacle, the performance of Irish agri-food companies has been consistent over the past decade.

The management of these companies throughout recent difficulties has been exemplary, something not lost on the investment community.

Events of recent weeks remind us yet again of the importance of the agri-food sector to the Irish economy and that of its future. The agri-food sector can stand shoulder to shoulder with any of the other high potential sectors, for example ICT and pharma, in terms of assisting Ireland’s sustainable recovery.

Let’s hope our agri-food sector is facilitated by our policy-makers continuing to play its part in closing our ongoing Exchequer deficit, supporting existing jobs and creating much needed new jobs throughout the country.

Ireland’s nine food and drink companies yet again outperformed all other sectors on the Irish stock exchange, despite overall Irish equity market (ISEQ) appreciating by an impressive 28% last year. Such agri-food share price appreciation in 2013 (+54%) excludes the annual dividend payments, which increase the overall returns by a further 2.5%.

Economic contribution

The true extent of the wider economic contribution and wealth creation of agriculture and its associated agribusinesses is often undervalued.

While shareholder returns is just one such measure, there are many others such as direct expenditure by the food sector in the Irish economy which is equivalent to almost 60% of sales. This compares with 21% for the rest of the manufacturing sector. Therefore, every extra euro of food exported is putting a minium of 60c back into the Irish economy.

In practical terms and particularly in the context of job creation, local and regional economy input linkages in terms of purchases of raw material, services, labour and the ag sector has a far bigger effect on jobs and economic activity than macro growth figures, such as gross value added (GVA), suggest. This is because the agri-food sector buys over 80 % of its inputs in the domestic Irish economy versus around 15% for multi-nationals.

Furthermore, while profit levels are lower and thus GVA is lower than in the multi-national sector, there is much higher retention of profits in Ireland from the agri-food sector.

Aryzta

Aryzta was formed in June 2008, following the merger of Irish-based IAWS and Swiss firm Hiestad. Aryzta’s share price increased by 38% in 2013.

Much of Aryzta’s growth in recent years has been fuelled by acquisitions, and the group continues to deliver the results to satisfy the investment community despite such an aggressive and capital intensive expansion path pursued in recent years.

C&C

C&C Group, the manufacturer, marketer and distributer of branded cider (e.g. Bulmers) and beer, has experienced extreme share price volatility over the past five to seven years. However, in recent years, shareholder returns have powered back into positive territory, up 56% in 2012 and up 60% in the past three years. However, it fell by 4% in 2013.

Donegal Creameries

Following the sale of its liquid milk and stores business to Connacht Gold co-op in 2012, Donegal has further concentrated its efforts on its seed potato business, through its wholly-owned subsidiary Irish Potato Marketing (IPM).

Donegal plans to become a global player in the seed potato business.

Investors were richly rewarded in 2013 (+88%).

FBD

FBD share price increased in value by 72% last year, reflecting strong underwriting management, prudent cost containment and its loyal and profitable customer base that is the agri sector.

In addition, the removal of its Irish and Spanish property and leisure operation (the hotels) into a joint venture with Farmer Business Developments plc (developments), has significantly enhanced the attractiveness of this stock to investors.

Fyffes

The recovery for Fyffes investors continued in 2013, as the share price rose by 57%.

Glanbia

Following Glanbia’s stellar performance in 2012 (+77%), the stock increased in value by an impressive 31% last year. Glanbia has a new CEO — Siobhan Talbot — and the group’s next major acquisition/development will be watched closely.

Greencore

Long been the ‘black sheep’ of Irish agri-food companies, Greencore was the ‘star pupil’ in 2013, rising by a huge 104%. Greencore has certainly turned the corner under the stewardship of CEO Patrick Coveney.

The acquisition of Uniq in Britain in 2011 and Greencore’s recent US acquisitions and its partnership agreement with Starbucks is expected to open up significant opportunities for the company, especially in the lucrative US convenience stores arena.

Kerry Group

Ireland’s largest agri-food company, valued at €8.6bn, Kerry shareholders yet again saw its investment appreciate by 22% in 2013.

Origin

Origin Enterprises, the on-farm agronomy company saw its value soar by 76% in 2013.