Markets & Finance

Building Materials Shares Rise in Katrina's Wake


From Standard & Poor's European MarketScope

France

Lafarge was up €2.20 to €77.25 Thursday. Dresdner KW says U.S. building stocks rose strongly due to rebuilding post Katrina and expects Euro builders with U.S. exposure (such as Lafarge North America, up 5%) to follow suit. Dresdner notes in heavyside materials, stocks rose strongly, and distributors, DIY and lightside also rose, although not quite so much. Shares of Saint Gobain, also mentioned in the Dresdner report, rose €0.39 to €49.65.

Carrefour was up €0.84 to €38.51 after reporting a positive surprise on European growth. The company reported first-half sales, excluding VAT, of €35.44bn, up 2.6% on current exchange rates, or up 4.7% on a pro-forma basis. The market was expecting sales of €35.763bn.

Danone was up €2.10 to €87.20 after confirming that first-half net profits fell 37% to €346m, as it cut the value of the water unit by €200m after a €600m writedown last year. Note that the figures were first released on July 21. The company remains on takeover watch, although recent moves by the French government to block foreign ownership of certain sectors might put a damper on M&A activity in France.

Total was up €2.50 to €215.60 after Goldman Sachs upped its oil price forecasts 2005 to US$59.37 from US$53.62, and 2006 to US$62.75 from US$58.0.

Germany

VW rose €0.45 to €43.20 after news that it plans a €956 million car loan bond next Monday or Tuesday, sources reportedly say.

Deutsche Post was down €0.67 to €19.77 on word that it has approached Exel, with talks with the UK group at an early stage, reportedly. Due to lack of additional information (likelihood, stake size, price offer, timeframe, etc.) and in order to be cautious, Merck Finck downgraded the company's stock to hold from buy and its price target to €19.

Deutsche Telekom fell €0.03 to €15.37 after it said at a press conference that it will spend €3bn on an optic fiber network in Germany in the next years.

BASF was up €0.87 to €57.66. Hurricane Katrina had forced the company to temporarily shut down its biggest North American production site, in Louisiana, reports FTD, but this is causing only marginal costs. The newspaper goes on to note that BASF plans to make acquisitions in the North American chemicals market to benefit from consolidation in the region's industry.

Hypovereinsbank was up €0.51 to €23.53 after its board recommended that that shareholders accept UniCredito's offer.

Allianz rose €0.20 to €105.10. Goldman estimates the worst-case potential exposure of the company to Katrina losses could be in the order of US$245 million (gross of tax/reinsurance), with the ultimate after tax losses falling to a range of US$179m, (equivalent to 4% of earnings), with in all likelihood this estimate being too conservative.

Nordic

Statoil rose 2.00 Norwegian kroner to 157.50 kroner. as Goldman Sachs upped its oil price forecasts. Separately, the company signed a deal to supply 300m cubic metres of natural gas per year for a planned natural gas power plant in West Norway.

ABB rose 1.25 Swedish kroner to 55.75 kroner. CEO Fred Kindle said in an interview with Cash Magazine that the company could receive an investment-grade credit rating as soon as next year. First of all, though, the asbestos claims need to be settled and earnings need to improve. Kindle thinks this could happen by next year.

Nokia rose €0.19 to €12.87 after Citigroup upgraded the shares to buy from hold and lifted its price target to €16 from €13.

Switzerland

CIBA was up 3.30 Swiss francs to 79.65 francs on unconfirmed talk that the company may sell its textile business.

Novartis rose 0.55 Swiss francs to 61.35 francs after it announced it is launching a bid to acquire all outstanding shares it does not already own in Chiron( about 58%) for US$4.5 billion. S&P Equity Research analyst David Seemungal says that given the continuing efforts by the company to diversify its business and risk profile, the Chiron purchase appears to be a good move. American and European regulators have cleared Chiron to resume production of a flu vaccine at a facility in Liverpool ahead of the coming winter immunization program, The Times reports.

United Kingdom

Royal Dutch Shell gained £0.14 to £18.95. Two of the company's platforms were hit by hurricane Katrina in the Gulf of Mexico, iy says, while a pumping station also received damage. Shell adds that the affected areas are its Mars platform, which is significantly damaged, and the Cognac platform and West Delta-143 pumping station. The company's pipelines from the Gulf of Mexico remain closed while the damage is assessed.

BP was higher by £0.07 to £6.40 after Goldman Sachs rauised its oil price forecasts.

Glaxosmithkline gained £0.06 to £13.45 after the U.S. FDA approved its influenza vaccine, Fluarix, in time for distribution for the 2005-06 flu season.


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