Markets & Finance

VW Higher on Strong Audi Sales


From Standard & Poor's European MarketScope

Germany

Software giant SAP was up €1.18 to €136.23 after the company's chief financial officer, Werner Brandt, said it plans to dramatically expand its business from smaller clients in coming years as the number of large orders decline and it beefs up its network of partnerships. The company currently gets 30% of its business from smaller customers.

Conglomerate Siemens was up €1.16 to €60.51, after it won a €220 million order to build a power plant in Germany. The order comes from Statkraft, Norway's state-owned power utility.

Volkswagen was up €0.97 to €36.71, after it was reported that the company's Audi division increased worldwide sales in May by 14% to 72,000, and in the first five months of the year, by 6% to 342,000. According to the German newspaper Wolfsburger Allgemeine, the company wants to change the working hours of 20,000 employees in coming months to save as much as €67 million a year.

Sporting goods maker Puma was up €1.71 to €207.57, after the Polish newspaper Gazeta Wyborcza reported that the company is to open 14 more stores in Poland by the end of 2006. Puma aims to increase its sales of sports shoes in Poland this year by 20%.

BMW was up €0.96 to €36.16, after its French May car sales rose 29% to 4,499 units after it introduced a new version of its 3-Series.

Chemical maker Lanxess was up €1.08 to €18.35 after the company said it plans to issue a benchmark bond sale and has been issued a Baa3 credit rating by Moody's rating agency. The company will decide exact size of the bond sale after a bookbuilding period. Separately, Lehman Brothers increased its target to €7.30 from €6.40, with an underweight rating, saying that the better-than-expected first-quarter, due principally to seasonality, does not change its view that the company remains overvalued..

France

LVMH Moet Hennessy Louis Vuitton was up €2.60 to €60.60, as European exporters and U.S.-dollar earners like the luxury goods maker remain in focus as the euro loses further ground, following political turmoil in Europe after the French rejection of the European constitution.

Carmaker Renault was up €1.45 to €71.00, after French new car registrations were reported to be up 8.4% year over year in May, and up 6.4% in the first five months of fiscal year 2005. Meanwhile, Renault Samsung, of which the company owns 70%, said sales in May rose 60% year over year, boosted by vehicle demand.

Cosmetic maker L'Oreal was up €1.65 to €60.60 after J.P. Morgan said that it expects the company to announce a share buyback programme for fiscal year 2005/2006. The broker thinks the buyback could be of as much as €2.0 billion, but warned that despite the recent weakness of the euro compared to the U.S. dollar, the company may struggle to deliver on its top-line target.

Exchange group Euronext was up €0.77 to €28.22 after the company reported first-quarter revenues down 6% to €22.6 million, while costs increased 2.8% to €4.3 million, mainly due to €7 million legal and advisory costs linked to the London Stock Exchange project. Ahead of the release, most brokers expected sales and profits to fall because of the high comparative base.

The bank Credit Agricole was up €0.32 to €21.39, after Basque bank Banco Guipuzcoano shareholders said they do not plan to sell their stakes. This follows news that the company and the Royal Bank of Scotland approached the major shareholders of Banco Guipuzcoano, the savings banks Kutxa and BBK - to establish whether they would be prepared to sell their stakes, according to Spanish newspaper Expansion. Separately, the company is due to report its first quarter tomorrow. A Bloomberg survey puts the group's revenues at EUR

3.1 billion, up from €506 million in the period last year, although that figure is under French accounting standards.

Mobile phone game publisher and developer Gameloft was up €0.37 to €4.00, after Citigroup initiated coverage with a buy recommendation and €4.8 target price, implying an expected return of 34%. The broker said the company is the only listed European pure player in the booming wireless gaming industry.

Aerospace giant EADS, the parent of Airbus, was down €0.07 to €23.96, as it emerged that the company will fail to deliver on time A380 double-deckers to airline carriers like Quantas Airways and Singapore Airlines. Singapore Airlines, which has an order for 43 planes, will be worse hit, but both airlines plan to seek compensation from Airbus. Meanwhile the company is being referred to the World Trade Organization after the US trade representative said launch aid for development by the EU governments is illegal.

Britain

Drugmaker Glaxosmithkline was up £0.16 to £13.76, after the European Union's highest court on Tuesday failed to resolve a case on parallel trade in pharmaceuticals, dashing hopes that it would bring legal clarity to the controversial issue, the Financial Times reported. At stake was whether large pharmaceutical groups should be allowed to restrict the flow of drugs from countries with traditionally low prices to states such as the UK, Germany and the Netherlands. Greece's competition commission had referred the case involving Glaxosmithkline to the European Court of Justice, but the court refused to rule on the substance of the drugmaker's practices.

British Sky Broadcasting Group was down £0.10 to £5.36 after Morgan Stanley downgraded the company to underweight from equalweight and lowered its target to £4.80 from £6.10. The broker said its new forecasts include an assumption of higher customer retention spend and reduced subscriber estimates, and noted that that competition in the market is increasing.

Oil group Shell Transport was up £0.09 to £4.87 after the Independent newspaper reported that the company has reopened talks with the people of the Nigerian region Ogoni about a possible return, more than 12 years since it fled the region in fear at the growing violence towards its operations from the local population. Representatives of the Ogoni people, the Nigerian federal and state governments, and Co. have all pledged to attempt reconciliation in an effort to bring stability to the Ogoni region, according to the report. Meanwhile, the company is to auction its liquid petroleum gas (LPG) business and is hoping for bids of up to $3 billion, The Sunday Telegraph reported.

Boots pharmacy chain was down £0.11 to £5.95 after agreeing to a £400 million deal to outsource part of its back-office operations to cut costs, The Times reported. The move comes days after the health and beauty chain said that it was battening down the hatches on expectations of a slow year on the high street. The stock also trades ex-dividend today.

The Royal Bank of Scotland was up £0.13 to £16.29, after the company and the French bank Credit Agricole have approached the Basque bank Banco Guipuizcoano's major shareholders, the savings banks Kutxa and BBK, to establish whether they would be prepared to sell their stakes, according to the Spanish financial daily Expansion. Kutxa controls 9.98% of Banco Guipuizcoano while BBK controls 14.47%. However, the paper reported that BBK has said it does not wish to sell its stake.

Barclays was up £0.07 to £5.29, after the Financial Times reported that the bank is considering buying a bank in Egypt as part of its ambition to expand into Africa. Britian's third-largest bank, which recently agreed to buy a majority stake in South African bank Absa for £2.9 billion, is understood to have submitted an offer to buy Misr International Bank, which has been put up for sale by the Egyptian government. The company is thought to have been one of four parties that submitted an initial offer for the bank, which has 30 branches. Other interested parties are believed to include BNP Paribas and Societe Generale, the French banks.

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