Bloomberg News

Europe Stocks Climb After Two-Day Drop as Ferrovial Gains

July 29, 2014

European stocks climbed, following a two-day decline, as companies including Ferrovial SA and Next Plc reported better-than-expected results.

Ferrovial rose 1.2 percent after the Spanish construction company posted first-half profit that exceeded projections and said it will buy back shares. Next advanced 2.6 percent after the retailer increased its annual profit and sales forecasts. BP Plc, which owns a stake in OAO Rosneft, declined 2.5 percent. Renault SA slid the most in four months as the French carmaker revealed that it is consuming more cash than it did a year ago.

The Stoxx Europe 600 Index added 0.3 percent to 342.27 at the close of trading, paring gains in the final half an hour of trading as the European Union agreed to impose new sanctions on Russia for its role in the insurgency in eastern Ukraine. The benchmark trades at 15.5 times the projected earnings of its members, more than the multiple of 13.9 at the beginning of this year and the five-year average of 12.6, according to data compiled by Bloomberg.

“What we are still missing is a very positive beat, but the outlook for the year and the results in the third quarter will be more important,” said Carsten Hilck, who oversees about $4 billion at Union Investment Privatfonds GmbH in Frankfurt. “So far, it’s good enough for a steady market. Even though valuations are a little bit stretched now, it’s still not too expensive to remain invested.”

Russia Sanctions

The Stoxx 600 pared an advance of as much as 0.6 percent after an official told reporters that the EU’s 28 member states will stop selling shares or bonds to Russia’s state-owned banks. The group of nations will halt new sales of arms to Russia and exports of equipment to modernize the oil industry.

BP, which owns 20 percent of Russia’s largest oil producer Rosneft, slid 2.5 percent to 484.3 pence. The company earlier today warned that sanctions against Russia could hurt its income, production and reserves.

National benchmark indexes rose in 12 out of 18 western-European markets. Germany’s DAX climbed 0.6 percent and France’s CAC 40 gained 0.5 percent. The U.K.’s FTSE 100 added 0.3 percent. The number of shares changing hands in Stoxx 600-listed companies was 11 percent lower than the 30-day average, data compiled by Bloomberg show.

Ferrovial, Next

Ferrovial gained 1.2 percent to 15.95 euros. Net income fell to 168.4 million euros ($226 million) in the first half, beating the 145 million-euro average of analyst projections compiled by Bloomberg. Ferrovial, which is the biggest stakeholder in London’s Heathrow airport, also said it will spend as much as 350 million euros to purchase its own shares.

Next added 2.6 percent to 6,690 pence. The British clothing retailer forecast that sales will grow 7 percent to 10 percent this financial year, compared with its previous estimate of 5.5 percent to 9.5 percent. Next also reported that revenue climbed at a faster-than-expected rate at its directory business in the half year ending this month. The company raised its pretax profit projection for the year to as much as 815 million pounds ($1.4 billion).

Nobel Biocare Holding AG jumped 16 percent to 16 Swiss francs after people familiar with the matter said the world’s second-biggest maker of dental implants is working with Goldman Sachs Group Inc. on a possible sale. Private-equity firms have held preliminary talks with the company, one of them said.

Teleperformance surged 9.3 percent to 52.77 euros after saying sales will probably rise 7 percent this year, while its earnings before taxes, interest, depreciation and amortization margin will exceed 9.7 percent. The French operator of call centers had predicted revenue growth of 5 percent to 7 percent in May, and profitability of 9.5 percent to 9.7 percent.

Aixtron, GKN

Aixtron SE jumped 5.5 percent to 10.60 euros. The maker of semiconductor-production equipment reiterated its forecast that 2014 sales will reach a similar level to last year.

GKN Plc surged 6.7 percent to 366 pence, its biggest rally in two years. The supplier of parts to Boeing Co. and Airbus Group NV said its trading margin increased 60 basis points to 8.9 percent in the first half of this year.

Gecina SA (GFC) rose 2.7 percent to 103.75 euros, halting its longest losing streak since November 2008. Funds managed by Blackstone Group LP and Ivanhoe Cambridge Inc. bought 4.35 million shares in the French real estate company, according to a statement. Spain’s Metrovacesa SA sold its entire 27 percent stake to institutional investors at 92 euros per share today.

Renault, Peugeot

Renault fell 4.6 percent to 66.28 euros after reporting free cash flow from its automotive division of minus 360 million euros in the first half of the year. The business consumed 31 million euros of cash flow in the same period of 2013, according to figures posted on Renault’s website.

Peugeot SA, which reports earnings tomorrow, dropped 1.1 percent to 10.60 euros.

Banco Espirito Santo SA slumped 11 percent to 38.8 euro cents, extending its decline this month to 36 percent. The Portuguese lender will probably post a loss of 3 billion euros when it releases first-half results after the close of trading tomorrow, Expresso reported. The newspaper didn’t identify how it obtained the information.

To contact the reporter on this story: Sofia Horta e Costa in London at shortaecosta@bloomberg.net

To contact the editors responsible for this story: Cecile Vannucci at cvannucci1@bloomberg.net Will Hadfield, Alan Soughley


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