Markets & Finance

L'Oreal Shares Fall after Profit Disappoints


France

L'Oreal dropped 4.3% Friday after reporting a 3.46% fall in operating profit to €1.11 billion, weaker than the €1.17 billion expected by the market. Operating profit margin is 15.7%, higher than 15.0% in fiscal 2004. The company posted first-half net profit down 5.8% at €892 million, on LFL IFRS revenue growth of 4.1% to €7.164 billion, driven by Asia and Eastern Europe.

Air France jumped 3.2% after disclosing solid first-quarter net profit growth of 26% to €110 million. The flag carrier expects fiscal 2005 operating profit to increase significantly, feeling confident on the quality of its fuel future contracts to buffer the impact of rising oil prices. In May, Air France said it expected flat operating profit for fiscal 2005.

United Kingdom

Exel slipped 1% on profit taking after ABN Amro raised its target price to £12.0 from £8.95. The broker explains that the new price reflects the bid situation, while the old one was a fundamental stand-alone valuation prior to the last set of interim results. ABN says if a bid were not to materialize, the shares could fall back to around £10.0, but factoring in synergy benefits and/or the possibility of a bidding war, it believes an exit price could exceed £13.00. CSFB calculates that based on 19 times 2006 estimates, the take out price for Exel would be £12.50, representing a 20% premium to the price the company paid for Tibbett & Britten. ING thinks a bid from Deutsche Post - if it proceeds- will likely be near £12. At this level, ING argues that a UPS counter-bid is improbable.

BOC jumped 5.1% on takeover talk. The industrial gases group says this is just speculation and declines to make a comment on it. The Guardian reports BASF has been mentioned as a possible interested party that may launch a £6.5 billion bid for the UK group. However, BASF has made no comment on talk of a £13/share cash offer.

Diageo rose 1.1% as analysts adjust estimates and targets. JP Morgan lifted its 12-month target price by 3% to £8.85 from £8.60, representing 10% upside potential. It also raised its fiscal 2006 EPS projection by 3.0% to 53.1p from 51.6p; and fiscal 2007 EPS by 6.2% to 62.0p from 58.4p. The broker says this represents growth of 8.3% followed by 16.8% and a 3 year CAGR of 11.8%. Deutsche Bank raises target to £8.30 from £7.70 and rates the stock hold. Merrill Lynch upgraded the shares to to neutral from sell, and set a 12-month fair value of £7.77, excluding 4% dividend yield.

Germany

Siemens' stock slips 0.15% as the FTD writes that the industrial conglomerate is looking to spin off its fixed-line business, retaining only services and sales operations.

U.S. sales of DaimlerChrysler's Chrysler and Mercedes-Benz vehicles rose 5.3% in August to 206,352. BMW said its US vehicle sales climbed 18% in the month, boosted by demand for 5-Series car. VW said August sales in the U.S. climbed 1.6%, helped by demand for the remodeled Jetta. Porsche's North American sales rose 7%, helped by the revamped Boxster model.

Netherlands

Dutch food retailer Laurus dropped 6.2% after posting a wider than expected 2005 first half consolidated net loss of €46 million, excluding non-recurring items, vs. a loss of €51 million in the year-earlier period. Including a one-off windfall of €47 million for pension provisions, consolidated net profit comes in at €2 million, compared to a net loss of €15 million last year. Laurus says that given the poor market climate, it does not expect the year to end with a positive net result.

Spain

Repsol shares rose 0.7% after the Spanish energy group has confirmed that it has abandoned the fight for Turkish group Tupras. Expansion reported this morning that after examining Tupras' business, Repsol's directors thought that it would not obtain much advantage from integrating its refineries with those of Tupras.

Antena3 shares dipped 0.1 after TV viewing data released Friday confirms that Antena3 has toppled Telecinco from the top of the table. August viewing figures show Antena3 had an audience share of 22.0%, vs. Telecinco's 20.8% and TVE1's 19.5%. So far in 2005, Telecinco remains the leader with 22.5%, followed by Antena3 on 20.9%. Caja Madrid forecasts fiscal 2005 audience share at 22.3% for Telecinco and 21.3% for Antena 3. Notes

increased competition from November with the launch of Cuatro.

Scandinavia

Skandia gained 0.96% after Old Mutual said it is attracted by Skandia's growth and Old Mutual CEO Jim Sutcliffe says a bid may come Friday or in the next few days, according to daily Dagens Industri. Meanwhile, Dagens Nyheter says that one way to finance the deal would be to sell off Skandia's banking activities. However, CEO Sutcliffe says this is one of the moves the board would oppose. Furthermore, the Skandia chief says Old Mutual is willing to increase its cash share of the bid.


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