BP Sees Hefty Charge for Storm Damage
From Standard & Poor's European MarketScope
SCHNEIDER was up €2.30 to €68.40 Tuesday after SocGen upgraded the shares to buy from hold with a fair value of €77.0. The broker says that after performing in line with the market, Schneider shares should now benefit from several positives: 1) robust sales growth in most regions, with an acceleration in the U.S.; 2) rapid implementation of the New2 plan targeting savings equivalent to 5% of sales; and 3) the likely appointment of the charismatic and highly competent Jean-Pascal Tricoire as CEO in the coming months, which will be an important step for the group.
MICHELIN gained €1.89 to €50.95 after Goodyear said it would begin temporary production cuts in the US after hurricane Rita caused supply disruptions to raw materials. The company is seen picking up Goodyear's slack.
DAIMLERCHRYSLER was up €0.58 to €45.58. The carmaker's U.S. September vehicle sales were up 3.7%. Meanwhile, supervisory board chairman Hilmar Kopper tells FAZ he is against buying a stake in VW.
BMW was up €0.72 to €39.97. Its U.S. September vehicle sales +1.6%
VW was up €2.54 to €53.95. Its U.S. vehicle sales were up 3.7% in September. The company may see an indefinite strike at its operations in Sao Paulo from Tuesday as workers demand a bigger slice of the car maker's profits.
BPU was up €0.94 to €18.00. JP Morgan upgraded the shares to overweight from neutral and lifted its fair value to €19.0 from €16.1. Furthermore, Cheuvreux upgraded the shares to outperform from underperform and lifted its target to €19.30 from €15.5. Separately, Citigroup says the company reported €378 million net profit in the first half of 2005 under IFRS. Citi notes that its estimates (based on Italian GAAP) were €248 million, adding that different accounting principles limit comparison.
LUXOTTICA was up €0.39 to €21.37. Merrill Lynch initiated coverage with a neutral opinion and €22 fair value. Merrill says the company is a dollar play and recent currency and business trends have prompted an upward revision in guidance. Separately, the company aims to strengthen its position in China, with nearly 280 stores, and is ready to buy a leading premium optical chain in Guangdong. Its chairman, Leonardo Del Vecchio, comments that Luxottica believes China to be the next big market for fashion and premium eyewear.
GETRONICS was up €0.40 to €10.87. ING upgraded the shares to buy from hold and lifted its price target to €12.30 from €10.15. The broker changes come after the company successfully issued a €150 million convertible bond to lower its interest costs and also reiterated that it is on track to reach its 2005 EBITAE margin target of 5%. With visibility on the 2005 second half improving, the broker now increases its 2005 estimates to reflect the 5% EBITAE margin. As the company is winning larger contracts, ING says its valuation is attractive again.
HAGEMEYER was up €0.02 to €2.47. At the company's analyst day in Munich, its CEO said this is a year of recovery and expects a positive net result in the second half of 2005 and in 2006, adding that the company wants to expand further in Europe, as well as Russia and China.
STOLT NIELSEN was down NOK0.50 to NOK260.50. The company posted third quarter operating sales down 5.9% year-over-year to US$384.0 million. Net income (and income from continuing operations) was US$53.1 million, vs. US$17.5 million (US$12.2 million from continuing operations) for the same quarter last year. EPS was 80 cents, up from 28 cents in the previous year, and above the market consensus estimate of 74 cents.
FORTUM was down €0.43 to €15.85. Citigroup downgraded the shares to hold from buy but lifted its target to €17.0 from €15.5.
ARCELOR (Sp) was up €0.29 to €19.95. The company withdrew from the tender of Turkish group Erdemir. Dutch group Mittal Steel has been eliminated from the bidding process to gain a 49% stake in Turkey's largest steelmaker. Reuters reports that the highest bidder is Turkish group Oyak with a US$2.77 billion bid. Elsewhere, shareholders approved the creation of Arcelor Brasil. This involves the merger of Companhia Siderurgica de Tubarao into Companhia Siderurgica Belgo-Mineira. The new group will be listed on the Brazilian stock exchange.
METROVACESA was down €1.50 to €60.30. Morgan Stanley trimmed its target to €44 from €46, keeping its underweight opinion. The broker downgraded its view on the European property sector to cautious from in-line. It says Spanish property stocks are particularly vulnerable as they are trading at high premiums to net asset values, in excess of those in France and the Netherlands.
ZELTIA was up €0.06 to €6.06. The company announced that its Pharma Mar unit has begun Phase 1 clinical trials of the anti-tumor compound PM02734.
ZURICH FINANCIAL was up CHF5.70 to CHF229.10. The company said it estimates aggregate claims payments from hurricane Katrina at around US$600 million after tax and net of reinsurance (or US$725 million before tax and after reinsurance). The charges will be booked in the third quarter, the company also said. Merrill Lynch notes that the number is lower than the investment community's expectations of a pre-tax loss in the range of US$1 billion to US$2 billion.
SERONO was down CHF9.00 to CHF850.00. The company, along with its partner CancerVax, said development of skin-cancer (melanoma) drug Canvaxin will be stopped after the independent Data and Safety Monitoring Board found that the treatment was likely no better than a placebo. Study results showed the Canvaxin treatment is unlikely to extend lives, both companies said.
BP was down £0.18 to £6.55. The energy giant estimates that the impact of hurricanes Rita and Katrina on third quarter replacement cost profit before interest and tax will be in excess of US$700 million. It also says that overall production in the third quarter is expected to be lower than the second because of hurricanes and maintenance in the North Sea.
LEGAL & GENERAL was down £0.03 to £1.11. The company says the scope and full impact of new draft legislation affecting life insurers is materially unclear. However, if the proposed legislation were enacted and were to apply to the accumulated non-profit reserves in L&G's UK Long Term Fund, then it estimates the additional tax charge which could be reflected in its European Embedded Value accounts could be of the order of £200 million. It says the potential impact of the draft legislation on IFRS accounts would be larger and, in 2005, could result in a one-off current tax charge of up to £500 million.
AEGIS was up £0.05 to £1.44. The company announces that in recent days its representatives and advisers have met with more than one potential offeror to share non-public information on Aegis. However, it says that at this point there can be no certainty that any offer will be made for the company.
Prepared by Standard & Poor's reporters Zaida Espana (France), Michael Sanderson (Germany), Mariella Mongio (Italy), Alexander Wisch (Netherlands), Holly Cook (Nordic), Emma Stevenson (Spain), Pawan Girglani (Switzerland), and Rocio Opazo-Aniotz (UK)