Bloomberg News

Swiss Stocks Advance; Lonza, EFG Shares Climb on Earnings

July 25, 2012

Swiss stocks increased for the first time in four days as companies from Lonza (LONN) Group AG to EFG International AG reported results that beat estimates.

Lonza, the world’s biggest maker of drug ingredients, rallied 3.7 percent. EFG International, the Swiss bank controlled by Greek billionaire Spiro Latsis, surged by a record 26 percent as it said profitability is improving. Swatch Group AG (UHR) and Cie. Financiere Richemont AG gained more than 2 percent. Newron Pharmaceuticals (NWRN) SpA slid 5.8 percent.

The Swiss Market Index (SMI) added 0.1 percent to 6,180.77 at the close of trading in Zurich. The benchmark measure has still dropped 2.5 percent from its 2012 high on March 16 amid concern the euro area’s sovereign-debt crisis has hurt the economy. The broader Swiss Performance Index was little changed today.

“Good results from Lonza and EFG supported the Swiss market today,” said Christophe Ochsner at Mirabaud Securities LLP’s equity sales desk in Geneva. “Market sentiment is still uncertain though, with nervous investors watching the situation in Spain.”

Spain’s 10-year bond yields surged to a euro-area record of 7.64 percent yesterday, prompting policy makers to deny an international bailout was being prepared for the country.

Spain will probably lose market access shortly and might ask for sovereign bailout “within days,” Harvinder Sian, a strategist at Royal Bank of Scotland Plc in London, wrote in a note to clients.

German Economy

In Germany, business confidence fell for a third straight month in July to the lowest in more than two years. The Ifo institute in Munich said its business climate index, based on a survey of 7,000 executives, dropped to 103.3 from 105.2 in June. That’s the lowest reading since March 2010. Economists had predicted a decline to 104.5, according to the median of 35 forecasts in a Bloomberg survey.

The U.K. economy shrank the most in more than three years in the second quarter. Gross domestic product fell 0.7 percent from the first quarter, the Office for National Statistics said today. Economists had forecast a 0.2 percent decline, according to the median of 36 estimates in a Bloomberg News survey.

Greek Prime Minister Antonis Samaras is scheduled to meet with international creditors from the European Commission, the European Central Bank and the IMF on July 27, amid concern the country won’t abide by the commitments needed to obtain continued financial aid.

Lonza jumped 3.7 percent to 45.50 Swiss francs after it reported first-half profit that topped analysts’ estimates and Chief Executive Officer Richard Ridinger signaled he’s seeking efficiency gains at a Swiss facility and with the integration of Arch chemicals.

Lonza Earnings

Earnings before interest and taxes increased 24 percent to 168 million francs ($170 million), beating the 154.6 million- franc prediction in a Bloomberg survey of analysts. Sales of 1.96 billion francs also beat estimates, driven by revenue from acquired units.

EFG International (EFGN) surged 26 percent to 6.09 francs, the biggest gain since the bank’s initial public offering in 2005. First-half net income fell to 53.1 million Swiss francs ($53.4 million), beating the 29 million-franc median estimate of five analysts surveyed by Bloomberg. Gross margin, or the revenue generated from client assets, improved.

Swatch, the world’s largest watchmaker, climbed 2.3 percent to 378.40 francs, while Richemont, the owner of the Cartier brand, increased 2.2 percent to 54.15 francs.

Newron Pharmaceuticals dropped 5.8 percent to 6.02 francs as the biotechnology company’s extraordinary shareholder meeting in Italy didn’t reach the required quorum.

To contact the reporter on this story: Corinne Gretler in Zurich at cgretler1@bloomberg.net

To contact the editor responsible for this story: Andrew Rummer at arummer@bloomberg.net


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