Ireland’s position as a global services export hub boosted by internet companies
Dublin. Thursday, July 12, 2012.
The Irish Exporters Association (IEA) today launched its annual publication of the Top 250 Exporting Companies in Ireland. Internet giant Google has been named as the largest exporting company in Ireland in the 2012 listing of the Top 250 Exporting companies. Google export turnover increased by 55% from €6.5 billion in last year’s listing to €10.1 billion in the current year. The Irish operation is now Google’s largest outside of the US, and employs staff from 40 different countries in the Irish operation.
The Tánaiste and Minister for Foreign Affairs and Trade, Eamon Gilmore, T.D., speaking at the launch said: “Today’s event acknowledges the top exporting companies in Ireland, north and south of the border, and provides an excellent indication of how Ireland’s export firms are reacting to the current challenging international economic environment. I would like to extend my congratulations to all the companies who feature in the list of Ireland’s Top 250 exporters”.
Speaking at the launch of the publications this morning, John Whelan, chief executive of the IEA said, “The continued success in attracting to Ireland the ‘born on the Internet’ companies is clearly evident in the Top 250 report, with Google expanding its sales by over 50% and Facebook entering the Top 250 for the first time with export sales of €229 million. PayPal Services Europe also features for the first time with exports of €92 million. The internet companies are one of the drivers of the fast growing Services export sector which last year accounted for €79 billion in exports, and 46% of total Irish exports”.
The Top 250 publication also brings into focus the continued shift from dependence on the domestic market to international markets by indigenous Irish companies, with the top five indigenous companies Smurfit, Kerry Group, Glanbia, Glen Dimplex and Irish Dairy Board Ltd showing international sales of €17.3 billion but with less than 50% of the sales being directly generated in Ireland.
Outward direct investment has developed as the key route for Irish companies to internationalise and grow their business, with Outward Direct Investment (ODI) from Irish companies now exceeding Foreign Direct Investment (FDI). In 2010, Irish ODI was €261 billion and FDI held in Ireland was €185 billion, stated the IEA.
“Outward direct investment is now commonplace amongst a wide range of large and medium sized Irish owned companies and is seen as a complimentary process to traditional exporting. It can be a more suitable means to gain market share in other countries for some products and services. Also in-country presence through ODI can help overcome trade barriers where market access is limited, particularly in emerging economies. Continued trade finance, capital market access and banking support for such ODI is essential to enable firms develop scale and have the capacity to compete internationally,” stated the IEA chief executive John Whelan .
Aisling Dodgson, Head of Treasury, Investec Ireland, sponsors of the Top 250 publication for the past two years said, ‘’We are delighted to once again sponsor the Irish Exporters Association’s Top 250 publication. We believe that the export sector will be a key component in the recovery of the Irish Economy and we are heartened to see that Irish exports grew by 5% in 2011. Over the past three quarters the Euro has weakened and this has helped Irish Exporters from a competitiveness viewpoint. Irish Exports should also benefit from decreased interest rates within the Euro zone and a softening in commodity prices. There are challenges to be faced, the continuing debt crisis situation in the Euro Zone has impacted globally and concerns remain over the US and UK economies and questions are also being asked about the robustness of the Chinese economy. Despite these issues, Investec remain confident in Ireland. Our recent acquisition of NCB reflects our commitment and confidence in Ireland and the Irish economy. We believe that the marriage of these two established businesses will bring a new dynamic to the Irish Financial Services sector and will be a benefit to Irish companies looking to access capital markets in the future. We have the ambition to be the number one specialist bank in the Irish market and we will continue to strive towards this.”
The Agri-Food export sector performs strongly in the Top 250 listing
While much of Kerry Group’s €5bn of sales consist of production and sales outside Ireland rather than strict exports of production from Ireland, it is no less impressive that Kerry has with such speed and consistency. Kerry posted another year of strong growth in 2011, which has continued into 2012. The same can be said of Glanbia, which has had 2 years of particularly strong growth with revenues increasing almost 50% in 2 years.
Both Kerry and Glanbia are benefiting from health and wellness and nutritional trends, although in different sectors. One of Kerry’s main areas of focus is around product reformulations, a trend which is likely to remain prevalent for some time. Product reformulation involves altering the ingredients in a product recipe. This can be for health reasons, e.g. reduced fat, salt, sugar; cost reasons, e.g. substitute an expensive ingredient for a more reasonably priced ingredient; or marketing reasons, e.g. replace an artificial ingredient with one that can be labelled as natural. Rising concern regarding obesity, high commodity prices and increasing consumer awareness regarding food ingredients are all contributing to a growth in demand for Kerry Group’s expertise that is unlikely to wane any time soon.
Glanbia’s nutritionals business is based around performance nutrition and vitamin and mineral pre-mixes. While sales in this business have been growing very strongly, little of this specialist production has been performed in Ireland to date. However, in November the company announced a €20m investment in its Irish dairy processing plant to begin producing high-protein whey for its nutritionals business. Production is expected to come on-stream towards the end of this year with the majority of production likely to be exported to European markets. This extra capacity is expected to support Glanbia nutritionals’ continued rapid expansion.
Strong global dairy prices, which were up around 10% in 2011 following a 40% increase in 2010, benefited 3 of the companies in the top 15: Glanbia, Irish Dairy Board and Lakeland Dairies. The outlook for the dairy market in 2012 is somewhat less positive with global dairy prices down around 15% so far this year. However, global dairy consumption is likely to continue its growth in the longer-term as Asia, the Middle East and Africa increase consumption.
The Life Sciences sector continues to dominate the Top 250 listing
Johnson & Johnson feature as the third largest exporter with export sales of €9.8 billion, Pfizer in 5th position with €6.8 billion in export sales, Stryker the medical devices manufacturer in 7th position with exports sales of €5.5 billion, then Boston Scientific, Forest Laboratories, Gilead Sciences and Astellas all part of Irelands largest top 20 exporters.
In 2011 the export trade of Pharmaceuticals and the Medical Devices was over €56 billion. Ireland continues to be a highly attractive environment for Pharmaceutical and Medical Device companies to conduct business, with significant investment announcements in 2011 and 2012 from Allergan, Mylan, Amgen, Cook Medical, Abbott, Eli Lilly and Merit Medical. All the top companies in the Life Sciences sector have moved up in the top 250 export rankings by export sales.
Information Communications & Telecoms (ICT) Sector
The ICT sector has changed dramatically over the past decade. Ten years ago ICT exports from Ireland were mainly hardware products from Dell, IBM, and Apple and a much lower level of export sales of software products from companies such as Microsoft. In 2002 the CSO statistics show exports of hardware totalled €30.2 billion and software exports €10 billion, totalling exports of ICT from Ireland of €40 billion.
However, in the decade the computer hardware manufacturing has been reduced very substantially, with companies such as Dell, IBM and Apple changing over their Irish operations to software production centres. However, we have also the rapid growth of internet companies globally and the significant success of IDA Ireland in attracting these companies to Ireland in the same timeframe. In 2011 ICT exports from Ireland were again at €40. 2 billion, but this time made up of €8 billion hardware exports and €30.2 billion software export sales.
“It is striking to see that our largest exporter is now Google with exports from Ireland of €10.1 billion, just ahead of the exceptional Microsoft export performance. But also there are a new breed of fast growing ICT now operating from Ireland all adding to the sectors export growth, such as Facebook, EA Games, LinkedIn, Gilt Groupe, Big Fish Games, Quest Software, Marketo and ZeniMax. These companies alongside investments from existing companies based in Ireland, such as Dell, EMC, HP and Microsoft in the cloud computing area have secured the long term stability of the sector. This glittering assemblage of ICT companies in the Top 250 has earned Ireland the title ‘Internet Capital of Europe,” said Whelan.
Mr Whelan concluded by stating that ranking The TOP 250 Export Companies was based on the most recent available turnover figures provided by Stubbs Gazette for the Irish Exporters Association. He added that the IEA believes that the report on the Top 250 Irish Exporting Companies will provide an insight into the makeup and direction of the Irish export industry. He said that the IEA was grateful for the sponsorship of the report which was provided by Investec.
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