Markets & Finance

Total Drops as Results Fall Short


From Standard & Poor's European MarketScope

France

Oil group Total was down €2.40 to €208.90 Thursday after reporting a strong second-quarter that still fell short of market expectations. The company posted second quarter net profit up 33% to €2.91 billion, slightly lower than expectations of around €2.925 billion. Adjusted earnings per share are up 37% to €4.92, in line with estimates. Sales are up 14% at €33.07 billion. On a negative note, second-quarter refinery output fell 11% to €2.2 million barrels per day.

Building materials group Saint Gobain was down €1.25 to €50.15 on the news that Standard & Poor's Ratings Services could cut its A- rating after company's hostile bid on Britain's BPB, maker of plasterboard. Moody's Investor Services announced that it could also trim the company's A2 rating.

The bank Societe Generale was down €2.15 to €89.05 after the company reported second-quarter net profit up 18% to €957 million, higher than expectations of around €895 million. Profit from corporate and investment banking is down 2% to €346 million, but profit from private banking and securities administration is up 22% at €117 million. S&P Equity Research said net attributable profit beat estimates, but noted that revenues were a little weaker than expected. The brokerage Cheuvreux downgraded the bank to underperform from outperform and kept its €100 target price.

Britain

Fund manager Amvescap was down £0.31 to £3.85 after Canadian group CI Financial withdrew a possible offer for the group rather than launch a hostile bid. The Canadian money manager said that it cannot develop an offer proposal at this point in time without the full cooperation of Amvescap.

Barclays bank was down £0.07 to £5.55 ahead of Friday's first-half report. Credit Suisse First Boston forecast net income of £8.3 billion, up 13%; pre-tax profit of £2.5 billion, up 5% and reported earnings per share of 27.5 pence. The broker said that attention will focus on credit quality, income and cost growth, and the performances of its investment banking unit, Barclays Capital and its British retail banking unit.

Royal Bank of Scotland was down £0.71 to £16.32, as traders said concern over the British interest margin pushed shares down in late morning trade. The company reported first half income up 15% to £12.5 billion, first half pro-forma pre-tax profit up 14% to £3.7 billion, and adjusted earnings per share up 8% to 86.7 pence. The group said that retail banking has seen a slight increase in the proportion of customers in arrears. Citigroup had forecast underlying earnings per share of 87.7 pence (higher than the consensus forecast of 86 pence consensus), and underlying pre-tax profit 8% higher at £4.1 billion.

British Airways was up £0.06 to £2.90 ahead of its first-quarter figures tomorrow. Dresdner Kleinwort Wasserstein expects the company to report first-quarter clean pre-tax profit of £95 million, up 44%, on sales of £2 billion, up 6.6%. Morgan Stanley sees revenues at £1.95 billion, up 1.5% and net income at £74 million, up 56.6%.

Netherlands

Unilever was up €1.90 to €56.90 after reporting second quarter turnover of €10.22 billion, up 2%, operating profit of €1.26 billion, down 18% and net profit from continuing operations of €787 million, down 26%. The numbers were lower than expected. The consumer-staples giant said overall market shares have been stabilised since the start of the year. The company does not expect significant changes in the market environment in the rest of the year, with pressure on margins increasing. It intends to focus on restoring top line growth.

Germany

Carmaker BMW was down €0.87 to €37.08 after Goldman Sachs said that the drop in the company's stock price following its second-quarter numbers yesterday shows what happens when expectations are disappointed in the auto sector, although the broker believes that the reaction seemed a little harsh given that returns at the company are still industry-leading in Europe.

Industrial gases group Linde was up €1.12 to €60.42 after its first-half earnings before interest, taxes and amortization topped expectations came in at €372 million, higher expectations of €353 million and higher than the €309 million generated a year ago. The company reiterated previous forecasts for an unspecified increase in revenue.

GPC Biotech was down €0.60 to €9.75 after its pro-forma net loss rose to €13.3 million in the quarter to June as sales climbed by a third from the previous quarter. Credit Suisse First Boston thinks the company is an attractive investment and rates the stock outperform.

Italy

Carmaker Fiat was down €0.12 to €6.99 after Societe Generale increased its fair value to €6.2 from €5.5 and maintained a sell rating. The company's 2005 to 2008 plan announced yesterday sees about €18 billion in investments, including €10 billion going to its auto unit and €4 billion for research. The company plans to launch 20 new car models and to update 23 existing ones.

Switzerland

Specialty chemical maker Clariant was up 0.90 Swiss francs to 19.20 francs, after reporting second-quarter numbers ahead of forecasts and giving a positive outlook. The group announced first-half sales of 4.1 billion francs, gross profit of 1.25 billion francs, and net income of 146 million francs, up 30%.


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