BHP Billiton Falls on Outlook
From Standard & Poor's European MarketScope
Anglo-Australian mining giant BHP Billiton was down £0.36 to £7.99 after reporting fiscal-year earnings before interest, taxes, depreciation and amortization $11.40 billion, up 52.5%. The group said that production volumes were at record levels for 11 commodities. Looking ahead, it said it expects higher interest rates and higher energy prices to keep global economic growth rates below last year's level, though it still expects growth to remain at an above trend rate this year. The company retains the view that China will remain a large and sustainable consumer of raw materials and resources over the coming decades. It said that prices will inevitability ease from their highs as demand growth slows and new supply comes on stream, although the company continues to expect prices to remain high by recent historical standards.
Utility Centrica, owner of British Gas, was up £0.09 to £2.53 on market talk of a possible bid. Sources mentioned energy groups Royal Dutch Shell, Gaz de France and Norsk Hydro as possible interested parties. The company declined to comment any further and said that this is just market speculation. Gaz de France said that it wants to confirm the origins of the rumor before making a comment.
Fashion and fragrance retailer Peacock Group was up £0.31 to £3.15 after the brokerage and investment bank Seymour Pierce downgraded the company to hold from outperform, following news of a bid approach. The broker said that it does not see a price of much more than £3.20 to £3.30. Earlier, the company confirmed that it has received an indicative bid approach that may or may not lead to an offer being made. The group stressed that discussions are at a very preliminary stage and that the proposals being considered are subject to a number of material pre-conditions and there is no certainty that any offer will be made.
Shire Pharma was up £0.12 to £6.86 after the company said that Health Canada is reinstating the marketing authorization of its Adderall XR in Canada starting August 26. The group said that this follows Health Canada's acceptance of the recommendations from the New Drug Committee.
France Telecom was down €0.52 to €24.93, after a report by France's Le Canard Enchaine said that Bouygues Telecom, France Telecom's Orange and Vivendi Universal's mobile phone unit SFR agreed to share the French mobile phone market at meetings between 1997 and 2003. The satirical paper cites a report by the Finance ministry's competition unit, and could land the different telecom groups fines amounting to 10% of their revenue. Separately, Google is introducing software that enables users to make telephone calls via their computers. Bouygues fell €0.67 to €36.32 and Vivendi Universal fell €0.20 to 25.71.
Toll highway operator Autoroutes du Sud de la France was down €1.10 to €48.30 after the newspaper Le Figaro reported that construction group Vinci is thought to be the only company to bidding for the company after Spain's Abertis left the race.
Brewer Carlsberg was up 4.50 Danish kroner to 356.50 kroner, after Lehman Brothers raised its target to 400 kroner from 350 kroner, reflecting the recent evidence of intentions for further cost initiatives and a more commercial outlook of the foundation that controls the company. Specifically, the broker is factoring in the potential for a large brewery closure and further general cost initiatives of about 230 million kroner. It retained its "overweight" rating. Separately, 300 to 500 staff at its Norwegian Ringnes breweries will be laid off, reported the daily Dagens Naeringsliv.
Watch maker Swatch was down 5.70 Swiss francs to 179.60 francs after reporting first-half group sales of 2.075 billion francs, up 6.1% and net income of 267 million francs, up 21.4%. The company said that growth in sales of high-end watches was significantly higher than the statistics published by the Swiss watch industry federation. The group also reported a sharp rise in sales in the watches, movements and components production segment, with a slight decline in electronic systems, but clear indications of recovery in June. Following the results, the brokerage Cheuvreux downgraded the group to "outperform" from its "selected" list, saying that organic growth of 7.5% was lower than its estimate of 8.7%, and earnings before interest and taxes margins (before exceptional items) of 14.4% were short of the broker's estimate of 15.1%.
Volkswagen was down €0.58 to €43.93 after saying that it sees challenges as it confirmed targets and said that it needs to cut manufacturing costs in order to compete globally. Meanwhile, no agreement was reached with the company's works council over a new shift system which would save the company money at its main Wolfsburg plant in Germany.
Commerzbank was up €0.37 to €21.78 after two British hedge funds are among a number of alternative investors to have bought aggressively into the company's sharesin recent weeks, awakening fears in corporate Germany of a fresh bout of shareholder activism, the Financial Times reported. Toscafund and Lansdowne Partners, both London-based, have been two of the leading buyers of shares in a wave that has pushed the stock price up by 17% this month.
Financial services group Fortis was down €0.24 to €23.36 ahead of reporting its results Thursday. The bank Societe Generale noted that the comparison with the second-quarter of 2004 is not meaningful, as the company has not yet restated those figures under International Financial Reporting Standards. The broker expects second quarter net profit of €698 million, compared to the the consensus forecast of €664 million. The broker rates the stock "neutral" with a €23 target. Lehman Brothers expects net profit of €821 million and remains "underweight" on the stock.
Defense group Finmeccanica was up €0.27 to €15.21 after the Financial Times newspaper said that after several acquisitions - particularly in the U.K. – the company has thrust itself into the center of what many expect to be the second large-scale consolidation the European sector has seen in a decade.