European Movers: LSE, Air France-KLM, UBS
LSE Down GBP0.52 to GBP10.36... FY beats consensus, competition, pricing fears Announces FY revenue of GBP546.4m, +566; adj op profit GBP289m, +56%; adj EPS 73.1p, +30%. Raises div to 24p, +33%. Expects further growth this year. Figures beat consensus estimates. Citigroup notes the results are solid but unlikely to provide much reassurance against fears of new competition and pricing pressures. Reiterates hold.
CADBURY PLC Up GBP0.21 to GBP6.97... Gains on Kraft, Buffett bid talk - Shares gain on bid speculation that Kraft Foods and Warren Buffett could be interested. However, a trader says that it 'could be just an innocent attack on recent 6M trading range with top at GBP7.15/sh'.
CABLE & WIRELESS Up GBP0.04 to GBP1.57... FY PTP up 57%, EBITDA in line with ests - Reports FY PTP pre-ex of GBP308m, +57%; EBITDA pre-ex GBP605m, +23%; Europe, Asia & US EBITDA pre-ex exceptionals GBP219m, International EBITDA pre-ex US$830m, +3%; operating profit GBP284m. Says Europe, Asia & US trading cash flow was positive in 2H07/08 and expects to be trading cash flow to be positive for 2008/09. Expects Europe, Asia & US EBITDA for 2008/09 of between GBP285m and GBP295m; final DPS 5.0p, total DPS 7.5p, +28%. Analysts had forecast FY EBITDA of GBP605m.
TATE & LYLE Down GBP0.11 to GBP4.74... FY numbers ahead of consensus - Reports FY sales of GBP3.424bn; adj PTP 244m; adj dil EPS 32.70p. Lifts DPS to 22.60p. Reiterates target to deliver longer term target of a return on net operating assets of 20%. Notes surplus refined sugar stocks will need to be absorbed over at least 1H, during which time the market is likely to remain very difficult and challenging. Adds the 2009 financial year has started in line and expects to make good progress in the year as a whole.
AIR FRANCE-KLM Down EUR 1.91 to EUR 16.74... Core earnings miss consensus Co. reports FY core earnings of EUR 1.405bn (up 13.3% y/y, though lower than consensus of EUR 1.474bn) on revenues of EUR 24.1bn. Net income of EUR 748m falls 16% y/y. Proposes a 21% hike in its dividend payment to EUR 0.58 per share. In the context of the current 'challenging' year, Co. Chairman Jean-Cyril Spinetta says that 'under these conditions, and based on an oil price of US$120/bbl, our objective is of operating income in the region of EUR 1bn.' In other news, Il Libero reports that the Italian government has proposed to Co. that if it acquires Alitalia, it could make its hub at Rome's Fiumicino airport but should free up Alitalia's slots at Milan's Malpensa aiport to Air One. In sector news, American Airlines plans to cut thousand of jobs, raise charges and slash capacity.
SOC GEN Up EUR 1.51 to EUR 67.77... JPM reiterates overweight stance - JP Morgan reiterates Co. is its only overweight rating among French banks as it is now well-capitalised, has strong business mix in the current environment, and has well-managed credit risk. Sees Co. as cheap 8.1x est. 2009, despite below-consensus EPS. Bernstein ups target to EUR 76 from EUR 72, keeps market perform. Believes Co. will grow more slowly than the other French banks but adds that despite the relatively poor operational outlook for the group, there will be a persistent acquisition premium in the stock.
PERNOD RICARD Down EUR 0.05 to EUR 71.55... Kepler cuts target - keeps buy - Landsbanki Kepler ups target to EUR 90 from EUR 92, keeps buy. Following a private contact with Co.'s management, broker cuts its earnings estimates by 2.4% from 2008/09 onwards to reflect the rise in financial interest rates in Europe/US over the past two months.
VW Down EUR 1.83 to EUR 185.35... VW law in focus / Broker action / Car trade accord - The German government has agreed to a revised so-called VW law, Reuters reports a source as saying. Lower Saxony is to keep its blocking minority on important decisions. On the broker front, Morgan Stanley downgrades to underweight from overweight, cutting the target to EUR 141 from EUR 165. See Broker Views & News - Germany.
Other news: Russia and Serbia could sign a duty-free car trade agreement by late 2008. Co. could take advantage of this.
LUFTHANSA Down EUR 0.29 to EUR 15.84... Eyeing Austrian Airlines / Sector earnings slide - Co. said it is interested in Austrian Airlines, but hasn't been approached by the carrier nor has it yet issued an offer. In earnings news, Air France-KLM's core full-year earnings missed expectations, while overnight US news in the sector was grim.
BMW Up EUR 1.08 to EUR 35.83... Morgan Stanley upgrades to overweight from underweight, lifting the target to EUR 45 from EUR 39. See Broker Views & News - Germany.
ALITALIA Unchanged at EUR 0.55... Government to convert bridge loan into net asset - Italy's government will convert a US$473m emergency loan into an asset on Co.'s books, in an attempt to win auditor approval for certifying Co.'s FY07 results. Intesa Sanpaolo's CEO Corrado Passera has told La Repubblica he does not know if the Co. will survive, as 'things have taken too long'. Meanwhile, IL Libero reports that the Italian government has proposed to Air France-KLM that if it acquires Co., it could make its hub at Rome's Fiumicino airport but should free up Co.'s slots at Milan's Malpensa aiport to Air One.
A2A Up EUR 0.07 to EUR 2.52... Likely to win Campania waste management contract - Finanza e Mercati writes that Co. is likely to be awarded with the waste management contract in the Campania region.
CORPORATE EXPRESS Up EUR 0.22 to EUR 8.21... ING raises target to EUR 9 - After the close yesterday, Staples said that it reaffirms its EUR 8/share bid for Co. following Co.'s offer to buy Lyreco. Says is considering all options. ING upgrades to buy from hold and raises target to EUR 9 from EUR 8 since broker calculates that the proposed transaction with Lyreco would trigger a higher bid from from Staples of EUR 9 per share. See Broker Views and News - NL.
FRONTLINE Down NOK2.50 to NOK337.50... 1Q EBIT up 38.2% y/y - below forecast - Co. reports total revenue of US$528m (US$345m y/y), operating result of US$235m vs a Reuters forecast of US$249m (US$170m), net result of US$221m vs US$209m (US$159m), EPS of US$2.95 vs US$2.80 (US$2.12) and DPS of US$2.75 vs US$2.65 (US$1.50). Co. says based on trading results so far in 2Q08, it expects strong 2Q results with continued dividend high.
KEMIRA Up EUR 0.03 to EUR 9.46... Enters j/v with Rockwood - Co. says it is launching a j/v with Rockwood, which will consolidate the titanium dioxide and functional additives operations of both companies. Co. says the agreement values its titanium dioxide operations at more than EUR 250m and will result in a capital gain. Co. also says the j/v will have a positive effect on cash flow and reduce net debt.
IBERIA Down EUR 0.09 to EUR 2.14... Airlines tumble on oil, earnings - Air France-KLM reports FY core earnings below expectations. Meanwhile, American Airlines says it will cut thousands of jobs, retire old aircraft and charge passengers to check in bags. Oil prices continue to trade around record highs.
SANTANDER Down EUR 0.15 to EUR 13.63... May be eyeing US buys / Broker action - Co. is on the look-out for an acquisition opportunity in the US, but is not in any rush, according to Negocio. Adds Co. may also be interested in buying a Mexican entity to merge with its assets in that country. Bernstein ups target to EUR 18.0 vs EUR 16.0, outperform. Thinks Co. is an emerging champion of technological and operational integration which will drive new levels of cross-border revenue and cost synergies, leading to significant further earnings growth. Argues Co. will be a European retail banking winner with strong long term earnings growth (15% CAGR 2009-12).
RICHEMONT Up CHF0.70 to CHF65.55... Mulls split as FY net meets expectations - Co. reports FY net earnings of EUR 1.57bn, in line with expectations. Separates into two entities: a luxury business, headquartered in Switzerland, and an investment vehicle, which it is currently proposed should be based in Luxembourg and structured as an investment fund. In addition to retaining their shares in the luxury goods business, it is envisaged that Richemont unitholders would receive shares in the investment vehicle and would be able to receive a substantial part of their interest in the BAT (UK) shares directly. Co. also announces a programme to buy-back up to 10m Richemont `A' units through the market over the coming 2-year period. Proposes a dividend of EUR 0.78 per share, up 20% y/y.
UBS Up CHF0.34 to CHF30.98... Reveals terms of rights issue - Co. says shareholders will be allotted one subscription right for each existing share held. The exercise of 20 subscription rights will entitle the holder to subscribe for 7 new shares at a subscription price of CHF21 per new share. This is expected to translate into gross proceeds of approximately CHF15.97bn. The rights issue has been fully underwritten by a syndicate of banks led by JPMorgan, Morgan Stanley, BNP Paribas and Goldman Sachs.