Irish plcs to spend up to €6.14bn in record share buybacks flurry

Irish publicly-quoted companies are on track to spend as much as €6.14 billion buying back their own shares this year, marking a record level of activity, according to Irish Times calculations.
The heightened spend reflects a surge in stock repurchases on both sides of the Atlantic this year, following a drop-off in 2023 as interest rates were rising rapidly and corporates took a conservative view on spending cash amid economic uncertainty.
It also comes as earnings and cash flow continue to be robust, and economists – from major investment banks to the International Monetary Fund – see the global economy stabilising in 2024, after slowing for three straight years.
The Irish buyback figures have been skewed by the likes of AIB, which has spent €1.5 billion of surplus capital on its balance sheet this year to repurchase some of the shares the State acquired in the lender during its post-2008 crisis-era bailout.
Building materials giant CRH, which continues to be based in Dublin, even after dropping its Irish stock exchange listing a year ago as it moved its main quotation to New York, has been the most active domestic buyer of its own stock in recent years. It acquired $900 million (€811 million) of its own shares and duly cancelled them in a little over the first seven months of the year and subsequently announced a follow-up scheme to mop up $300 million of shares by early November.
Ryanair distributed €700 million to shareholders through its first buyback since the pandemic and set out in August to spend a further €800 million over six-nine months, partially down to delayed deliveries of new Boeing aircraft to the company leaving it with a higher-than-expected cash position.
Kerry Group has been active, targeting a spend of almost €500 million on buybacks by the end of this year, most of which has already been completed. Bank of Ireland used up €520 million of spare cash to repurchase stock.
Meanwhile, Grafton Group, Glenveagh Properties and Dalata Hotel Group have each announced buyback schemes in recent weeks.
Buybacks have underpinned global equity markets in 2024, including the Iseq All-Share Index, which has advanced 9.3 per cent so far this year. The S&P 500 on Wall Street has gained 14 per cent, and the pan-European Stoxx 600 index had edged 6 per cent higher.
They can be an efficient way of returning excess cash to shareholders, especially if boards believe companies’ shares are trading cheaply and offer greater value than chasing acquisitions. Using buybacks instead of dividends to return surplus cash can avoid the risk of setting unsustainable expectations for dividends.
Buybacks can also be a more tax-efficient method of returning funds to shareholders than dividends and, when executed properly, can create value for long-term investors.
However, they can also be used to boost earnings per share, manipulating key metrics used for deciding executive bonus pots.
Critics of buyback programmes also say that they can be a waste of money if the stock market is nonplussed and it does not translate into better share price performance.
Large buyback schemes can also reduce the number of tradable shares in a company significantly, affecting liquidity and, ultimately, its value.
The logic of companies using debt to help fund buybacks has dissipated in recent years, following a spike in borrowing costs.
European public limited companies have long lagged US peers on the stock repurchasing front. However, there has been a marked increase in such programmes in Europe in recent years.
Irish companies spent close to €4 billion on buybacks last year, which was more double the outlay for the two previous years.
The list of Irish companies active on the buybacks front this year also includes Cairn Homes, Kingspan, C&C, Greencore, Greencoat Renewables, Origin Enterprises, Malin Corporation, and Irish Continental Group. Icon plc, the US-listed clinical trials company, also announced plans earlier this year to buy back $500 million of shares, but has yet to pull the trigger.