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|  | MARCH 16, 2005
 EUROPEAN MARKET MOVERS Car Makers Down on Slowing Car Sales Imperial Tobacco falls on British cigarette tax hike; plus more of Wednesday's European stocks in the news b>France: Energy group Total was down €2.20 to €180.40 Wednesday after OPEC agreed to raise production levels by 500,000 barrels per day to 27.5 million barrels per day. The cartel also gave its president Sheikh Ahmad al-Fahd al-Sabah the power to raise output by another 500,000 later in the second quarter, if prices stay high. Saudi Oil Minister Ali al-Naimi said Riyadh wanted prices to be between $40 and $50 per barrel. Standard and Poor's equity research points out that the cartel is already overproducing and its current production of about 27.7 million barrels per day is already near this new target. The research adds that 2005 is expected to be another year of strong oil demand amid limited heavy oil refining conversion capacity and signs of a slowdown in non-OPEC supply growth. Renault was down €1.60 to €67.00 after the European Automobile Manufacturers Association reported European car registrations in February fell 4.1% to 1.05 million units. GFI Informatique, European IT and communication services and consulting group, was down €0.42 to €5.24. after Fortis increased its target to €4.80 and kept its sell rating. The bank noted that, as expected, 2004 results were not good, as the operating margin came in at 4.3% after a slight 4.5% rebound in the fourth quarter. Fortis pointed out that the company is keeping its objective of divesting loss-making subsidiaries and boosting operating margin in 2005. European broker Cheuvreux said the fiscal year 2004 operating profit was in line at €22 million and restructuring should allow €10 million of savings in 2005. The broker, however, remains cautious on the stock. Euronext was down €0.63 to €27.52, after the Times of London reported the stock exchange group has shelved plans to set up an equities trading operation in London to compete with the London Stock Exchange, which Euronext has expressed interest in acquiring. Instead, the group's CEO Jean-Francois Theodore will press ahead with a charm offensive aimed at heading off any shareholder revolt of the type that forced rival bidder Deutsche Boerse to withdraw the auction for LSE, according to the report Britain: Homebuilder Barratt Development was up £0.25 to £6.61, as British Chancellor Gordon Brown raised the threshold on stamp duty on property transactions to £120,000, from £60,000 as of tonight. Such a move has been widely expected, and supporting Barratt's shares, along with peers Bovis, Persimmon, Wimpey, and Bellway. Imperial Tobacco was down £0.17 to £13.93 as Britain announced a new £0.07 per pack tax on cigarettes as part of the budget. Ahead of the budget announcement, Goldman Sachs was expecting a £0.06 to £0.08 cost increase per pack of cigarettes and noted that Imperial derives 37% of its profits from the UK compared to 49% at Gallaher. The bank expects both companies to pass on this increase to customers in full and remains cautious regarding outlook for the British cigarette market. It reiterated an in-line rating. Insurance group Aviva was down £0.25 to £6.60 after Citigroup downgraded its rating to hold from buy, but raised its price target on the shares to £7.25 from £6.90. The bank said that the company's fiscal-year 2004 figures were excellent and there was decent life insurance sales growth at 9%, but noted that margin expansion was relatively muted. The bank is also concerned about the investment being made to support the British personal motor account, and is not convinced by the revenue synergies. Banking group HBOS was down £0.27 to £8.28, as it began trading ex-dividend Wednesday. The company is also in focus as the British Chancellor Gordon Brown announces he is increasing the threshold for stamp duty in property transactions to £120,000, which would give a boost to mortgage lenders, like HBOS. Lender Provident Financial was up £0.33 to £7.11, after the company announced fiscal year 2004 pre-tax profit was up 7% to £220.7 on turnover (revenue) that was up 2.9% to £1.167 billion. The company said 2004 saw a strong international performance, with pre-tax profit up 68% year-on-year to £49.2 million. The company noted hat the home credit pre-tax profit was flat at £152.3 million while car insurance saw pre-tax profit up 21% to £34.6 million. Germany: Daimler Chrysler (DCX ) was down €1.00 to €33.87, after the company reported that its European car sales fell 10% in February. Overall European car sales fell 4.1% in February as rising unemployment and higher fuel prices impacted on consumer spending. The company's financial services division expects flat profits for 2005, as lower losses at Toll Collect should compensate for higher interest rates and foreign exchange impacts. The company's guidance is in line with current €1.23 billion operating profit estimate. The company also reported that its Mercedes unit is likely to produce a C-class based SUV called SUT from 2008 onwards, though a final decision will be made by the middle of this year. Analysts say the carmaker is late compared to BMW, whose X3 has been out since early 2004. Volkswagen was also down €0.97 to €35.21, on the news that its European February car sales fell 3.5%. Clothier Hugo Boss was down €0.88 to €23.50, after Commerzbank increased its target to €28.00 from €21.5. Commerzbank believes there is a real possibility that Italian apparel group Marzotto will attempt to increase its stake in the company, or even to acquire all the shares it does not own. The broker believes that on a purely fundamental basis, however, Hugo Boss's hares are trading above their fair value of €22.00 per share. However, Commerzbank believes that the prospect of Marzotto increasing its stake would require payment of a premium over current levels.  From Standard & Poor's European MarketScope All of the views expressed in this research report accurately reflect the research analyst's personal views regarding any and all of the subject securities or issuers. No part of analyst compensation was, is or will be, directly or indirectly related to the specific recommendations or views expressed in this research report. Standard & Poor's Regulatory Disclosure Any advice, analysis, or recommendations contained in articles labeled "Insight from Standard & Poor's" reflect the views of Standard & Poor's, which operates separately from and independently of BusinessWeek Online. It is possible that BWOL may from time to time publish information that is not consistent with advice, analysis, or recommendations that are published by Standard & Poor's. Standard & Poor's and BusinessWeek Online are each units of The McGraw-Hill Companies, Inc.
BW MALL
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