From Standard & Poor's European MarketScope
Retailer Marks & Spencer was up £0.14 to £3.55, after posting fourth quarter results. Following the trading update, J.P. Morgan said that the company's fourth quarter sales were slightly worse than it expected, but came within a broad consensus range. Merrill Lynch upgraded the company to buy from neutral with a £3.80 target price. Earlier, the company said same-store U.K. sales in the 13 weeks to Apr. 2 fell 4.9%, with total sales dropping 2.3%. The retailer said the trading environment remains difficult, though footfall and clothing volumes are up for the full year. The company said that the mid-season sale started earlier than last year due to the timing of Easter. The company said it expects fiscal year 2004 and 2005 pre-tax profit to be in the range of £610 million to £625 million. For fiscal year 2005 and 2006, the company said that it sees group capital expenditures at £300 million to £350 million and expects a profit of £15 million from its financial services business.
Reed Elsevier was down £0.06 to £5.30, after the company affirmed its 2005 and longer-term financial targets of at least 5% organic revenue growth and double-digit adjusted earnings per share growth at constant rates of exchange. The company also announced that LexisNexis, its global legal and business information division, has concluded its review into fraud at its Seisint unit. The company said the review found that there were 59 incidents where unauthorised persons may have fraudulently acquired personal ID information on a total of 310,000 U.S. individuals, from its U.S. risk management databases. The company expects the financial implications of this fraud to be manageable within the context of LexisNexis' overall growth.
Elan was down £0.06 to £2.91 after the troubled Irish drug outfit confirmed yesterday that American regulators are investigating trades in its shares and action taken by the company in the days leading up to the withdrawal of its multiple sclerosis drug Tysabri, The Guardian newspaper reported. The Securities and Exchange Commission has started an informal inquiry into share trading before the news broke and prompted the share price to plummet nearly 90%. The company was forced to withdraw the promising MS treatment on Feb. 28 after two patients were found to have died from a rare brain disease. Since then, a third patient has been shown to have died.
Tullow Oil was down £0.07 to £1.83, after the oil and gas independent announced fiscal-year 2004 turnover up up 74% to £225.3 million, with operating profit before exploration activities up 88% to £83.2 million. The company said basic earnings per share is up 112% to 1.75 pence, with operating cash flow up 82% to £154.3 million. The company said planned expenditure for 2005 is £100 million, with the primary focus on the U.K. and West Africa. The company added that it has £97 million realised from the disposal of non-core assets. It expects the the market environment and oil and gas prices to remain strong.
Deutsche Boerse was up €1.01 to €60.65, after AFX news reported that the company will start its share buyback program from tomorrow. In a statement, the company said it will buyback up to 10% of its share capital or 11.18 million shares. The value is limited up to the equivalent of its retained earnings which were €448 million. The company said it will use its best efforts to buy back no more than 25% of daily volume. The brokerage Cheuvreux said that until May 20, when the program will end, the company can spend up to €448 million out of retained earnings, equating to 7.47 million shares based on an average price of €60. That translates into 32% of average daily volume in April so far.
KarstadtQuelle was up €0.30 to €7.94, after the retailer said it has no plans to sell its stake in travel company Thomas Cook and has no plans to implement further job cuts. The company's chief executive, Harald Pinger also denied reports that it plans to break up the retail group or plans for further job reductions above the 5,700 earmarked. The retailer said it expects fiscal year 2005 earnings before interest, taxes, depreciation and amortization of more than €500 million, up from €383 million in 2004. The company forecasts a drop in fiscal-year sales in the low to mid single-digit percent range. The company said sales in the first quarter fell 8.6%, thereby missing its target. Fiscal year 2004 earnings before interest, taxes, depreciation and amortization, excluding one-offs, comes in at a loss of €191 million, down from a profit of €225 million in 2003, but better than its forecasts of a loss between €280 million to €295 million. According to the German newspaper Handlesblatt, Chairman Thomas Middlehoff wants to break up the department store operator. The paper alleges Middlehoff has persuaded major shareholder Madeleine Schickedanz that a clever breakup delivers more value than the ordinary cost-saving program proposed by former CEO Christoph Achenbach.
Swiss chipmaker Micronas was down €2.93 to €29.51, after the company said it cannot rule out the possibility of lower fiscal-year sales, abandoning an earlier target of a 1% to 5% increase for 2005 sales. The company said it expects demand to remain restrained for the rest of the 2005 business year, and said that first-quarter sales fell 19% to 193 million Swiss francs from 237 million. First-quarter net fell 79% to 7.8 million Swiss francs from 36.8 million previously. Analysts say fears are that the market for traditional TV-tubes is not recovering. Yesterday LG Philips posted its first quarterly loss in two years after an industry glut drove down prices, according to Bloomberg.
Deutsche Bank was down €0.90 to €66.83, after the newspaper Westdeutsche Allgemeine Zeitung reported that the company is still aiming to strengthen its private client unit through acquisitions. Juergen Fitschen, head of the company's German business, said it is keeping an eye out for attractive opportunities and said that organic growth alone will not suffice to improve its market share.
PSA Peugeot Citroen was down €0.98 to €48.77, after the company proposed a fiscal year 2004 dividend of €1.35 per share, unchanged year-on-year. The dividend will be paid on June 1, after approval from shareholders meeting on May 25, when shareholders are also expected to approve a share buy back programme of up to 24 million shares. The shares were hit, as the dividend payment may signal a difficult 2005 and 2006.
Vivendi Universal was down €0.34 to €23.95, after an executive in the media company's fixed-line telecoms unit Cegetel told French business radio station BFM radio that negotiations about a merger with rival Neuf Telecom are an "open secret." However, the executive could not confirm or deny specific details of such talks. Earlier Tuesday, the newspaper La Tribune reported a merger could be agreed as early as Friday this week.
Drugmaker Sanofi-Aventis was down €0.80 to €65.85, after Bloomberg reported that the U.S. Attorney's Office in Boston has expanded an investigation into drug sales practices that affect Medicaid to include allegations that a unit of Sanofi-Aventis made payments to obtain business and tried to skirt Medicaid reporting requirements.
Aerospace giant Eads, parent of Airbus, was down €0.48 to €22.97, as the deadline to cut subsidies received by Airbus and Boeing passed on Monday without an agreement. However, both Washington and Brussels want to avoid taking the dispute to the World Trade Organization. European Union Trade Commissioner Peter Madelson said that support for both Airbus and Boeing should be reduced and disciplined, but equally on both sides.
Tiremaker Michelin was down €0.75 to €50.95, after Deutsche Bank said it remained comfortable with the company's flat year on year first half of 2005 earnings before interest and taxes estimate. The broker had expected 17,000 retirements over the next 5 years, but now sees 24,000 (including 7,000 in North America) or 33% of workforce. The broker expects 10 plants to be shut and moved to low-cost countries, which explains the company's recent high capital expenditure of €1.3 billion as new plants are built. The broker predicted that in the next five years labour cost will fall to 25% of sales from 32% and productivity will rise as capital expenditure falls. Deutsche Bank estimates fiscal-year 2005 earnings per share of €5.4 compared to the consensus of €5.1 and rates the company a buy with €65 target. Separately, the company announced that it will build a new factory in Brazil to manufacture tires for civil engineering vehicles. The unit, which will employ 400 people, will start production in the second half of 2007.