Europe Stocks Are Little Changed as Kering Offsets BASF
European stocks were little changed, with the Stoxx Europe 600 Index posting a third weekly advance, as companies from Kering SA to Renault (RNO) SA reported sales that missed projections, offsetting gains in BASF SE.
Kering slid 3 percent after its Gucci brand posted the worst sales growth in four years as demand waned in China. Renault slipped 3.2 percent after the French carmaker said weaker emerging-market currencies cut third-quarter revenue. Telecom Italia SpA slumped 6.4 percent as people familiar with the matter said the company may seek to raise as much as 2 billion euros ($2.8 billion) of new capital. BASF rose 1.3 percent after posting better-than-forecast earnings.
The Stoxx 600 slipped 0.1 percent to 320.09 at the close of trading. The gauge still climbed 0.5 percent this week as companies from Daimler AG to Royal Philips NV posted results that beat analysts’ estimates. The benchmark has gained 14 percent in 2013 as central banks around the world pledged to leave interest rates low for a prolonged period.
“We still haven’t seen confirmation that earnings will accelerate into 2014,” said Lars Kreckel, a London-based global equity strategist at Legal & General Investment Management, which oversees about $702 billion. “Investors are willing to be a little patient if the base case for earnings growth gets pushed out into the next quarter, but the real risk is that you start to worry about an earnings decline.”
Analysts predict earnings for Stoxx 600 members will drop 2.4 percent this year and increase 13 percent in 2014, according to estimates compiled by Bloomberg News this month.
Data from the U.S. Commerce Department today showed orders for durable goods increased 3.7 percent in September after a revised 0.2 percent advance in the prior month, as stronger demand for commercial and military aircraft outweighed a drop in business equipment. The median estimate compiled by Bloomberg was for a 2.3 percent gain.
Kering (KER) retreated 3 percent to 167.40 euros after the luxury-goods maker said third-quarter sales from continuing operations fell to 2.52 billion euros. Analysts predicted 2.55 billion euros, according to the median estimate compiled by Bloomberg. Gucci’s sales rose 0.6 percent, less than projections for 2.1 percent growth, and the weakest performance since the third quarter of 2009.
Renault declined 3.2 percent to 66.11 euros. Sales fell 3.2 percent to 8 billion euros from a restated 8.26 billion euros a year earlier, the French company said late yesterday. Revenue was less than the 8.5 billion-euro average of six analyst estimates compiled by Bloomberg.
Shifts in the Russian ruble, Argentinian peso, Brazilian real and Indian rupee reduced automotive revenue by 5.7 percentage points in the quarter. That amounted to 439 million euros, Chief Financial Officer Dominique Thormann said yesterday on a conference call with journalists.
An index of European carmakers, the best-performing industry group on the Stoxx 600 this year, fell 0.7 percent after closing at a record yesterday.
Volvo AB (VOLVB), the world’s second-largest truckmaker, dropped 6.6 percent to 88.10 kronor, its biggest decline in more than two years, after saying that the strength of the krona and new-vehicle investments ate into profit. Earnings before interest and taxes decreased 18 percent to 2.4 billion kronor ($379 million) from 2.92 billion kronor a year earlier, missing the 3.15 billion-krona average estimate compiled by Bloomberg.
Telecom Italia tumbled 6.4 percent to 67.2 euro cents. The phone company may propose the 1.5 billion euros to 2 billion euros capital increase at its Nov. 7 board meeting, according to three people with knowledge of the matter, who asked not to be identified because the deliberations are private.
Schneider Electric SA slipped 1.1 percent to 62.58 euros. The world’s biggest maker of low- and medium-voltage equipment cut its 2013 profit and revenue forecasts because of the strength of the euro. The decline of emerging-market currencies will crimp its margins by 0.3 to 0.5 percentage points. Schneider had earlier forecast that margins would not narrow.
Electrolux AB (ELUXB) tumbled 5.8 percent to 162.80 kronor, its biggest decline since Feb. 1, after the maker of ovens and dishwashers posted quarterly profit that missed estimates. Electrolux will also take 3.4 billion kronor in charges in the fourth quarter and 2014 as it cuts costs and 2,000 jobs.
BASF, the world’s largest chemical maker, rose 1.3 percent to 75.17 euros. Third-quarter Ebit excluding one-time items jumped 15 percent to 1.69 billion euros, beating the average analyst estimate of 1.62 billion euros, according to a statement today.
MorphoSys AG climbed 2.2 percent to 56.95 euros. Ebit for this year may rise to as much as 10 million euros from last year’s 2.5 million euros because of the lower-than-anticipated cost of developing its MOR202 cancer treatment with U.S. partner Celgene Corp. The German biotechnology company had previously predicted profit wouldn’t exceed 6 million euros.
Software AG rallied 4.8 percent to 28.14 euros, for its biggest two-day gain in a year, after saying it will buy back as much as 110 million euros of shares until May 16 2014.
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