From Standard & Poor's European MarketScope
The FTSE 100 tumbled in the second half of the session, tracking a sell-off in global equities, hit by credit worries. Wall Street was deep in the red on fears of a global liquidity crunch after financing plans for Alliance Boots and Chrysler ran into rough weather. The Yen jumped to a 3M high vs US$ on weak June durable goods orders and new home sales. GBP = 2.0468. WTI moved to US$76.84/bbl on demand.
Oil heavyweight Shell (-2.09%) poured out a 20% jump in 2Q CCS earnings, well ahead of forecasts, helped by fat margins. Cigarette maker BAT (-2.80%) reported a forecast-beating 9% rise in 1H earnings, but said operating profit growth will slow in 2H. Legal & General's (-6.64%) 1H op profit missed forecasts. Rolls-Royce (-6.46%) tumbled after Citi suggested taking profit after a strong 1H. Telcos fell on profit-taking after strong figures. BT Group (-5.26%) rang up a 3% rise in 1Q core earnings. Carphone Warehouse (-4.67%) said 1Q connections rose 19.9%.
Among retailers, Kingfisher (-2.77%) said wet weather has affected sales in 2Q, adding that LFL sales rose 2.6% in 10 weeks to 14 July. Kesa (-3.25%) reported a 4.2% rise in 1H sales. A downbeat Citigroup note added to woes of retail stocks. Shire (-0.58%) raised FY07 revenue forecast and reported a rise in 2Q earnings. Resolution (+2.52%) surged after Pearl Assurance declared a 10.27% stake. Merger partner Friends Provident (-6.49%) sank.
The CAC 40 (-2.78%) closed 162 points lower, with Wall Street also trading on a negative footing. Credit worries sustain bearish sentiment. At home not one blue chip ended in positive territory. AXA (-4.88%) wiped off 14 index points. Deutsche Bank cut its target.
In results, Renault's (-4.83%) 1H operating margin topped expectations, coming in at 3.5%. However, JP Morgan downgraded to neutral, seeing the stock as priced for unproven margin sustainability. PSA (-4.28%) continued yesterday's dismal run, with brokers mixed on the future of the stock. Vivendi (+2.57%) posted 2Q sales of €5.20bn; up 7.4%, ahead of expectations. EADS (-3.6%) posted 1H07 revenues of €18.493bn, -3%; net income of €71m, -93%. Said this is due to Airbus restructuring and programme charges. PPR (-2.04%) reported 1H07 revenues of €9.2bn, up 11.4%. Pernod Ricard's (-5.18%) FY06/07 sales came in at €6.443bn, up 6.2% y/y. Michelin (-6.07%) was heavily stung ahead of its 2Q results tomorrow.
In the wider market, Thomson (-13.14%) reported below-expectation 1H core business EBIT of €99m, down 25.6% y/y. Publicis (-2.92%) posted 1H op. profit up 4% y/y, but cut its FY sales growth target to 4-5% from 5%. Technip (-3.4%) reported 2Q sales of €1.845bn, up 16.1% y/y, better than expected. Finally, Areva (+1.52%) wins a €6bn Chinese nuclear reactor contract.
In line with other European and US indices, Xetra-Dax (-2.34%) closed firmly below breakeven. Concerns about the credit market remained prevalent as US new home sales came in weaker than expected. DCX's (-2.58%) Chrysler spin-off, for one, has hit a bump as bankers have postponed a US$12bn syndicated loan, which is meant to finance the transaction. The buyout of Daimler's troubled US unit is still considered to be on track, though - albeit delayed.
On the local earnings front, Kontron (+3.23%) reported a 20% rise in 2Q sales to €111.7m. The computer group reiterated that it expects double-digit sales growth this year and profit to rise faster than sales. IDS Scheer (-0.57%) raised its forecast for licence growth to 28-30% from 24-26% after posting a 13% rise in 2Q revenues to €99.6m. Vossloh (+7.37%) upped its 2007 outlook. The transport technology group sees sales of around €1.14bn and EBIT of some €114m. Broker target hikes came to the fore after Praktiker (-3.
48%) lifted its EBIT guidance by €10m to €125m on the back of the good progress in the integration of Max Bahr and strong international sales. Finally, Nokia Siemens (-5.62%) Networks booked €905m in restructuring and integration charges in 2Q, suggesting the j/v has underdelivered on expectations.
Spanish shares ended mired in the red, along with other European markets. Credit concerns and higher oil prices weigh, along with weaker-than-expected US new home sales which fuel further fears regarding the US housing market. Locally, Repsol (-4.12%) plunged after unveiling 1H net profit -4.3% y/y to €1.706bn. Citigroup said R&M numbers in 2Q were disappointing. Santander's (-2.88%) 1H net profit topped forecasts, and the banking giant said its cost-income ratio improved by 4.9pp to 44.4%.
Among media firms, Antena 3 (-4.77%) delivered weaker numbers y/y, as a result of lower audience share, and announced a dividend of €0.4 per share. Peer Telecinco (-3.36%) beat estimates with 1H net profit of €211.58m, up 13.5%. Elsewhere, Mapfre (-2.56%) said its non-life combined ratio improved to 92.5% from 94.7% in 1H06. Cintra (-4.48%) said assets are valued at €7.18bn. NH Hoteles (-4.02%) unveiled total 1H EBITDA up 61% to €128.9m. Mecalux's (+2.46%) results were ahead of forecasts. The standout performance of the day came from Astroc (+38.74%) on news its chairman has stepped down.
All the Nordic bourses closed firmly in the red, Stockholm was weighed down by Scania (-11.57%) and Helsinki by Nokia (-2.63%), Stora Enso (-3.03%) and UPM (-2.65%). Wall Street traded lower as durable goods orders and new home sales for June came in weaker than expected. WTI rallied, trading at US$76.82/bbl amid crude stock decline. On the macro front in Europe the key German Ifo survey was broadly in line with expectations.
Back in Stockholm, Scania plunged as the truck maker missed earnings forecasts with PTP at SEK2.90bn vs SEK3.04bn forecast. AstraZeneca (-2.45%) reported 2Q showing falling profits. The pharma group revises guidance for 2007 EPS to US$3.60-US$3.75. ABB (+1.32%) kicked off Thursday's earnings releases with 2Q results topping expectations amid strong demand across all units and in all regions. Skanska (-3.81%) delivered 2Q earnings, with PTP coming in lower y/y but still beating forecasts.
In Oslo, PGS (+3.25%) delivered quarterly earnings with EBIT and EBITDA ahead of forecasts. In Helsinki, Kemira (-4.01%) underperformed as 2Q EBIT misses forecasts. Stora Enso fell as 2Q earnings missed forecasts. UPM fell as 2Q EBIT lagged forecasts. In broker action, Neste Oil (+0.19%) outperformed amid an upgrade at Goldman, Husqvarna (-3.85%) saw its target objective raised at Citigroup, while Konecranes (-3.05%) was rewarded with a raised target at Deutsche Bank.