Markets & Finance

H & M Falls As Sales Disappoint


From Standard & Poor's European MarketScope

Nordic

Fashion retailer Hennes & Maurtiz was down 4.00 Swedish kronor to 265.50 kronor, after the company's July sales grew 12% instead of the 15% forecast in a Reuters poll. Separately, Citigroup expected local currency July sales up 13%, but saw flat like-for-like sales given the tight inventory position in May and strong June like-for-like pattern.

Brewer Carlsberg was down 4.50 Danish kroner to 345.50 kroner, after the investment bank Dresdner Kleinwort Wasserstein upgraded the company to add from reduce and lifted its target to 380 kroner from 315 kroner following the article in the Guardian on Aug. 12. The broker said that it sees a nil-premium with British brewer Scottish & Newcastle as by far the most likely outcome. It noted that the company's shares look expensive on fundamentals. Note, Carlsberg's CEO Nils Anderson told local press that he was misquoted in Friday's Guardian article, which led to speculation that the Carlsberg Foundation was investigating the sale of its 51% stake, fuelling merger hopes. Separately, the company said it has acquired 50% of Cambrew in Cambodia.

Switzerland

Drugmaker Roche was down 1.90 Swiss francs to 175.10 francs, after the U.S. Food and Drug Administration said that the company's acne drug Accutane can only be obtained by women if they agree to avoid pregnancy, as it causes birth defects.

Surveying equipment maker Leica Geosystems was up 52.50 Swiss francs to 564.50, after Swedish group Hexagon raised its offer to 573 Swiss francs. Hexagon raised its offer to 440 francs in cash plus five B shares in Hexagon for each Leica share, 14.5% higher than U.S. group Danaher's white-knight bid. The improved offer will run between August 23 and 23 September 23.

France

Supermarket retailer Carrefour was up EUR 1.08 to EUR 39.68 after the company denied being in talks with the U.S.'s Wal-Mart after the Mail on Sunday newspaper published a story suggesting that the two CEOs held a meeting last month. This market talk is regularly cited during dull trading periods.

Utility group Suez was down EUR 0.25 to EUR 24.34 after Belgium's energy minister Marc Verwilghen told the newspaper Le Soir that the government is planning to liberalise electricity production. The report added that the government is already looking for potential investors for the 2,000 megawatts of Electrabel capacity that isn't currently used.

Germany

Truck maker Man was down EUR 0.53 to EUR 39.50 after Credit Suisse First Boston raised its target to EUR 35 from EUR 32 kept its underperform stance. The broker explained that the upgrade is due to the better margin outlook for the group's commercial vehicles unit, however, the broker continues to doubt whether the asset quality at the compan is high enough to warrant further significant margin improvements into 2006. The broker raised its estimates slightly.

Commerzbank was down EUR 0.16 to EUR 20.93 after the Financial Times reported that CEO Klaus-Peter Mueller is under investigation by public prosecutors in Germany in an alleged money-laundering scandal. The daily explains that Mueller was the board member responsible for Russia and eastern Europea until 1999 and said that the investigation deals with allegations that about EUR 170 million of cash and hundreds millions more of Russian telecoms assets were diverted to private companies. Separately, last Friday ING raised its target to EUR 20.50 from EUR 16, but kept its hold rating.

Netherlands

Philips Electronics was up EUR 0.12 to EUR 21.64 after the bank Kempen noted that the company will buy back another EUR1.5 billion in shares, after buying back EUR 750 million in the first half of 2005. The bank said that the company also announced that it will acquire the remaining 47% in the U.S. lighting company Lumileds joint venture for EUR 765 million. The broker believes that it is positive that the company is investing in its core lighting business. It added that Lumileds had fiscal 2004 sales of EUR 280 million and earnings before interest and taxes of EUR 66 million. The broker kept its buy recommendation and EUR 26 target

Spain

Clothing retailer Inditex, owner of the Zara chain, was up EUR 0.19 to EUR 21.73 after rival Hennes & Mauritz reported disappointing July sales growth.

Britain

The London Stock Exchange was up GBP0.25 to GBP5.77 after saying that it has not received a formal approach from Australian group Macquarie Bank. Meanwhile, Macquarie confirmed its interest in the company but said that deliberations are at the most preliminary of stages. The bank said that if a bid were to be made it would be as part of a consortium and if any such offer was made it is likely to be solely in cash. Om Gruppen, the operator of the Swedish Stock Exchange, is also thought to be mulling over a possible bid for the London exchange, said the Sunday Times. The newspaper reported that the Stockholm exchange, which mounted a failed bid for the London Stock Exchange in 2000, is understood to be sounding out advisers and potential partners.

Telecom equipment maker Marconi was up GBP0.07 to GBP2.96 on bid talk. The Sunday Telegraph reported that the company has sounded out all the leading telecom groups, including Siemens and Ericsson about a possible GBP540 million takeover, according to the Sunday Telegraph. The newspaper said that, although speculation has centered on Huawei, Alcatel and ZTE Corporation are also understood to be interested. The report noted that the U.S. would be very reluctant to let a Chinese company develop its secure federal telecoms networks, currently carried out by two of the company's U.S. subsidiaries, so there is a possibility that the company would be carved up.

Miner Xstrata was up GBP0.81 to GBP13.54 after buying a 19.9% stake in Canada's Falconbridge for 2 billion Canadian dollars or 28 Canadian dollars per share, from asset management group Brascan. The company said that the deal will be earnings accretive immediately.


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