Hermes Rises on Results
From Standard & Poor's European MarketScope
Recorded music group EMI was down £0.06 to £2.30, after Credit Suisse First Boston noted that American peer Warner Music priced its initial public offering at $17 compared to the original target range of $22 to $24. The Daily Telegraph added that the number of shares on offer was reduced to 27 million from 33 million.
Lastminute.com was up £0.49 to £1.54, after the company confirmed it has received an approach which may or may not result in an offer being made for the company.
Telecom equipment maker Marconi was down £0.12 to £2.59, after the Daily Telegraph reported that bidders for the company could be put off by a potential £300 million liability in its UK pension plan. The company disclosed on May 3 that it has a £243 million pension deficit, split between plans in the U.S., Germany, Italy and the UK, with the biggest figure -- £129 million -- in the British plan. The paper adds that under new rules governing British schemes, the buyout cost of the UK fund is likely to be nearer £300 million.
Media group Chrysalis was down £0.07 to £1.33 after ABN Amro lowered its target on the company to £1.46 from £1.71, and reiterated its hold rating. The bank noted that interims were mildly below forecasts that had been guided downwards by a downbeat trading update. Group sales fell by 4.9% to £78.4 million, while earnings before interest and taxes fell by 38.7% to £3.1 million. The broker said that there is an enticing discount to a break up value, but the reaffirmation of a two-pronged strategy in music and radio suggests little hope of a breakup. Separately, the bank UBS raised its target to £1.88 from £1.58, and kept its neutral rating, following interim results.
Hermes was up €4.80 to €152.30, after the company posted first-quarter sales of €324.8 million, up 3.3%, according to International Financial Reporting Standards. The result is just below expectations of €334 million. However, the bank Fortis noted that this disappointment is just a one-off as March was weaker because of non-linear wholesales. The broker reiterated a buy rating and €175 target. Ixis bank reiterated its add rating and €175 target after the figures, which it considered to be in line.
Aerospace group Eads, the parent of Airbus, was down €0.29 to €22.07, after the company finally confirmed the appointment of Noel Forgeard and Thomas Enders as co-chairmen. However, the company kept secret its intentions over the future Airbus boss. The Airbus appointment has created political tensions among France and Germany. The joint appointment of Forgeard and Enders has helped mitigate criticism, but Airbus remains a main bone of contention and is likely to be delayed further. The company reported in-line first-quarter results last week, including revenues of €7 billion, and above-average earnings before interest and taxes of €657 million.
Liquor group Pernod Ricard was up €1.70 to €120.50, after the bank UBS said the company's first quarter wine and spirits sales of €753 million (up 8.4% or up 6.4% like-for-like), look very good at first glance. The bank noted that organic sales growth of 6.4% beat its analysts forecast of 4.6%, and a consensus average at 5%. The bank Kepler was also pleased, reiterating its buy rating and €140 price target.
Household products group Henkel was up €2.20 to €73.20, after speculation grows that peer Beiersdorf may make a bid for the company's personal care unit. Yesterday Deutsche Bank upgraded its rating on the company to buy from hold, and increased its target to €85 from €61. The broker said the company still is unexciting but its portfolio is now more focused (laundry, home care, cosmetics, adhesives). The company now consistently creates value, and its management has very specific targets which it has good record of hitting, although the market has ignored this. The broker said that restructuring will continue to drive profits. The company's 12 times price-to-2006 earnings ratio is cheap, according to the broker, even if only partial targets are achieved.
Carmaker Porsche was up €13.04 to €534.87, after an auto enthusiast Website produced by Edmunds.com, said that the company's fourth model range will go on sale in 2009 at sticker prices between $125,000 and $175,000, according to CNN/Money InsideLine. While Porsche called the report speculation, a spokeswoman for Edmunds.com told CNN/Money that the information came from a reliable source at Porsche.
Airline Lufthansa was up €0.18 to €10.20, after it said that it saw its first-quarter operating loss narrow to a smaller-than-expected €26 million, compared to the €146.8 million loss that was expected, and the €116 million loss reported last year. First-quarter sales were flat at €3.9 billion. The bank Merck Finck said that numbers were above its and the consensus expectations, as cargo and catering saw a better-than-expected development. However, the broker noted that the core passenger business operating result was below expectation. In addition, the company did not change its 2005 guidance and expects its operating profit to be at the same levels as in 2004, due to the integration of acquisition Swiss Airlines. Meanwhile, Lufthansa said weaker rivals are cutting fare prices in Asia, as Asian business is hurt by overcapacity, and Asian yields will more than likely fall more. The airline also said that fuel costs may be €300 million higher than forecast.