Magills Financial Diary - July 1978
AIB, Bank of Ireland, Donal McAleese the IDA, Bord Bainne, Kerry Co-op and CRH's Scottish takeover
DONAL McALEESE
HAVING PRACTICALLY worked all his life with Irish Life, Donal McAleese has been treated rather roughly at the end with George Colley forcing him off the board. He has been replaced by a good Fianna Failer ahd ex Lord Mayor of Waterford, Maurice Downey.
Donal McAleese rose to general manager of Irish Life and was first appointed a director in 1971. He unnfortunately was round when Irish Life pumped millions into Braids Ltd., one of the most disastrous fallouts from the whole shell company movement.
Three years ago McAleese, probably in recognition of his involvement, moved in as full time chief executive of Braids. He closed down and sold off several activities like Freedex and McDonagh & Boland and merged the most troublesome GWI joinery commpany with McInerney's Capincur Joinery.
The final bill for Irish Life in this whole unfortunate affair has not yet been fully determined, but it comes to several million pounds. Braids is the big black mark on McAleese's record and must explain his departure from Irish Life, but gorgeous George should have made this clear. As it is, Colley appears to have.acted partially. It will be intereesting to see if he allows McAleese to now stay on as chairman of Irish Interrcontinental Bank.
AIB vs BOI
THE BATTLE between the two major Irish Clearing Banks has reached commpletely new proportions in the USA. Both banks had representative offices in New York and Chicago but are now moving in to full branch banking.
AIB under Gerry Casey pipped his :ival by opening a full branch on 23rd Ianuary last. The B of I had hoped to oe first, but it only managed to get the 100rs open a month later on 22nd February.
Willie Burke does have an advantage n that B of I's branch is at the ground 100r on 5th Avenue whereas poor old '\.IB is in Park Avenue on the 23rd floor
but is already fitting out a ground floor branch around the corner from B of 1.
The Bank of Ireland has also stolen a march on AIB for it has taken the unnprecedented step, for Irish banks anyyway, of making special offers as in a supermarket. This is nothing unusual in the States. The B of I are offering a free Arklow Pottery breakfast set if you deposit over £500 for at least fourteen months. Perhaps the idea might catch on here, but I somehow doubt it.
BORD BAINNE
ONE OF THE most extraordinary things about Bord Bainne's performance last year was the tiny 5% increase in turnover to £307 million. Considering that dairy exports went up by about 40%, the Bord is clearly losing out to those who refuse to operate under its banner like Express Dairy and Unigate, and of course Mitchelstown.
Through its UK subsidiary, Holland & Sons, Mitchelstown pushed up its UK sales by 30%. This has meant a much higher financing burden with borrowwings of £ 14% million, whereas those who sell through Bord Bainne get paid on the nose.
Bord Bainne is thus more a banker than a marketer with total borrowings of £107 million on its balance sheet. Peak borrowings however come around September when they almost double this figure. This problem could be rectiified simply by the board only paying the co-ops after sixty days credit, but Brian Jones will not find this an easy task to achieve.
IDA
IN THE IDA's mad drive for jobs at allmost any price, ownership, control and direction of our industrial base has been shifted radically inti) the hands of forreigners. If continued, this process will become irreversible.
At the moment there are just under 200,000 industrial jobs in Ireland. As many as 50,000, 25% of these are conntrolled from abroad. Under the IDA's four year plan, 65,000 of the new jobs will be supplied from abroad to lift the total number of jobs under foreign control to 115,000, 50% of the projected 230,000 1980 industrial job base.
Having fought for political indepenndence, it does seem peculiar to now be selling out to foreigners again. If not political this will certainly create an inndustrial dependency.
KERRY CO-OP
UNDER DENIS BROSNAN the Kerry Co-Op has taken a number of initiatives that will secure the company despite mounting butter and skimmed milk surrpluses. Money however will still be needed, which, with working capital escalating, may cause a problem.
The most recent deal is a two part one whereby the Kerry Co-Op buys 25% of the US group, Cheese Tek Corp. for £40m. Cheese Tek in turn are taking up a 25% stake in a new plant to be built in Dingle.
This £3m plant will use up a lot of the Co-Op's milk, making cheese anaalogs. This will take the Co-Op out of the bulk case in commodity market and move it downstream into a high added value catering product.
SCOTTISH TAKEOVER
FOR OVER A year now Cement Roaddstone Holdings has been looking for a substantial company to takeover in the UK. It has now come up with J & W Henderson, a Scottish builders supplyying firm at a cost of £5'h million cash.
Three months ago Dessie O'Malley turned down a 7V2% price increase by Cement Ltd. eRH has now put in a further application for a cement price increase but one of its arguments, namely that a good return on capital is vital in boosting domestic investment, is now wearing thin.
If CRH can pour £5'h million into an already established Scottish firm then it cannot be short of cash unless Dessie O'Malley wants to believe this. With the more efficient dry process Platin plant now on steam, Cement Ltd. are saving millions in fuel and labour costs. This should enable them to reduce the price of cement, never mind increase it..