Sean Quinn’s New Year Message to Staff and Customers
As we enter the New Year, I felt it appropriate to outline some key information related to our current trading and to address some recent media comment. While enjoying the loyalty of almost 8,000 committed staff and with over 1million customers in Ireland alone, I feel this step is important, particularly in the context of the uncharted economic environment that we all now face going into 2009.
Within the current decade the Group has invested approximately €2bn in new production and service delivery facilities with a significant proportion of this in world class manufacturing technology. This investment continues to allow the Group to enjoy the highest margins in all of the business sectors in which it operates.
In each of the trading periods 2007, 2008 and 2009 the Quinn Group has and will comfortably generate cash profits of between €400m and €500m before exceptional items. Over the past two years, high-profile stock market investment losses incurred outside the Group have generated negative publicity for the Group. These equity investments were clearly ill-timed, costly and are very much regretted. These losses were primarily on our investment in Anglo Irish Bank plc in which the combined family holding remains at 15% as announced in July last year.
As previously published, exceptional charges of €829m resulting mainly from these equity losses impacted the Quinn Group in 2007 reducing the recorded pre tax position to a loss of €425m. For 2008 the maximum possible negative impact of Quinn Family investments on the Group results will be €130m with no further impact whatsoever thereafter. While these equity investments were clearly a mistake, I think it is also worthy of note that other investments made outside of the Quinn Group in recent years have been extremely successful, including the creation of a very significant property portfolio spread over ten countries incorporating a large element in the emerging economies.
While recognizing the very strong current trading position of the Quinn Group, expectations going into 2009 are budgeted in the context of the construction sector and general economic downturn. The Group has budgeted a reduction of 40% in cement and concrete products demand in 2009 as the benefit of agricultural grant schemes come to an end and as new housing schemes together with public and private building projects are scaled back or halted. While this is significant within the construction segment of the Quinn Group business, increased trading in other divisions such as glass and packaging, and recently added divisions including power generation, will more than make up any shortfall in profits. The Group is fortunate that decisions made in recent years to diversify significantly away from the building and construction sector have proven to be very timely. Cement and Building Products now account for less than 30% of overall Quinn Group trading.
Quinn Insurance remains excellently positioned to continue the tremendous success it has enjoyed over the past thirteen years. It remains the most efficient and competitive provider of Household, Private Motor, Commercial and Healthcare products in Ireland and continues to successfully develop its business in the UK. Its proactive claims model allows it to settle claims faster while maintaining the highest provision per open claim of any company in the Irish Insurance market. Quinn Insurance has total assets of €2.1bn with over €900m in cash and bonds. It recently opened a new office in Cork and is due to open its newly constructed Navan office in May 2009. This gives it the platform for continued profitable growth in the coming years.
Following my retirement from the Board of Quinn Insurance last year, the Group has now refocused its personnel and is in the process of restructuring the respective Boards of Quinn Group and Quinn Insurance to resemble more closely that of a public company.
The economic environment and my family’s investments have generated some negative media coverage for the Group which is understandable. I am surprised however that some of the Group’s undoubted strengths have not been recognized. Insofar as coverage in the Sunday Tribune, in particular, is concerned, the Group and others are continuing their legal action against that publication for substantial damages for libel arising from the Tribune’s publication of a forged document in April 2007. Notwithstanding a subsequent Garda investigation the Tribune has not accepted that the document is a forgery and continues to maintain what the Group considers to be an indefensible position. The Group views the Tribune’s coverage of its activities in that light.
I have received incredible loyalty and support from management, staff and customers over the past 35 years and that is sincerely appreciated by me and my family. I can assure you that we have never had more confidence and determination to continue the growth of the Quinn Group in the years ahead. Our management team in all areas is very strong and I am very excited by the possibilities for the future. I would like to wish all our staff, customers and their families a very healthy and successful 2009.
7th January 2009
For further information, please contact:
Brian Bell, WHPR
Tel: +353 1 669 0030
Mobile: +353 87 2436 130