Markets & Finance

Pernod Ricard Shares Drop


From Standard & Poor's European MarketScope

France

Pernod Ricard fell €4.60 to €145.10 Thursday. The company unveiled first half group net profit down 7.2% to €157 million following exceptional expenses from the Allied Domecq acquisition. It also showed revenue organic growth of 9.4%, with an operating profit of €287 million; and operating margin up 7.9% in organic. It also reports first half net current profit up 4.4% to €182 million. The company says some key brands such as Chivas Regal, up 19%, Jameson, up 13%, and Martell, up 8%, are the main drivers. Cheuvreux lifted its target to €165 from €150 and maintains its outperform rating.

Danone rose €0.70 to €91.65. Fideuram downgraded the shares to hold on bid denial from buy and keeps €90 target price. The broker says CEO Franck Riboud's denials of a possible bid from PepsiCo are against its expectations. Thus, the stock loses its speculative aspect.

AXA fell €0.34 to €21.55 after reporting first half IFRS adjusted earnings at €2.132 billion, up 24%, year-over-year; while net capital gains come in at €370 from €263m in the first half of 2004. The company had already showed underlying earnings of €1.761 billion, up 21%, year-over-year net and net income up 27% to €2.274 billion. The company notes life and savings earnings were up by 22%, while property and casualty were up by 21%. However, international insurance fell by 26%, with Axa Re down 37% after being hit by Hurricane Katrina. The company reiterates double-digit growth guidance for the full fiscal year.

Suez was up €0.35 to €23.48. Argentina's planning minister Julio de Vido says the country is looking to mend fences with the company after it pulled the plug on its subsidiary Aguas Argentinas. Earlier this week, the Argentine president Nestor Kirchner urged the French to leave if they wanted to. The company was trying to negotiate a progressive thawing of utility prices, which were locked and converted from US$ to Argentinian pesos during the 2001 economic crisis. The second biggest shareholder, the Spanish Aguas de Barcelona also confirmed it will be leaving.

JC Decaux fell €1.05 to €18.40 after the company lost a €820 million street furniture contract in New York to Spain's FCC.

L'Oreal fell €0.85 to €63.20. The company and Morgan Stanley are teaming up to bid for Japan's Kanebo, according to the Japanese newspaper Asahi. The company is only be interested in the beauty arm of Kanebo, and would sell the other lines, including a food business and medicines.

Publicis rose €0.30 to €26.42, remaining in the spotlight Thursday after reports yesterday it is preparing a friendly bid for UK's Aegis, according to Les Echos. The UK group confirmed yesterday it has received an approach with an indicative price of £1.40 per share. Adds the fact that the company is making a move ahead of rival Havas is negative for Havas. Shares of HAVAS were down €0.13 to €4.03.

Germany

Volkswagen was up €2.05 to €50.15, driven by unconfirmed reports U.S. investor Kirk Kerkorian is planning to buy a stake in the company. Meanwhile, on the broker front, DrKW says the recent share price increase on high trading volumes is driven by overly optimistic expectations on the company's ForMotion Plus program and rumors regarding share buybacks, Seat plant closures, divestment of the commercial vehicles business and takeover speculation. The broker believes the price movement is overdone and recommends taking profits at these levels. It rates the shares hold.

Stada Arzneimittel rose €0.42 to €29.50. The Indian pharma major Wockhardt is believed to be close to signing an acquisition deal involving one of two large European generics. Pliva (Croatia) and the company have been mentioned.

Munich Re was down €1.23 to €88.77 amid fears of hurricane losses as Hurricane Rita approaches Texas.

BASF was down €0.61 to €58.39 as the company evacuated staff in Texas as Rita approaches. Bayer was down €0.48 to €29.37 as it released non-essential Texas staff.

DaimlerChrysler fell €0.02 to €41.28. Handelsblatt reports that the company plans to implement job cuts at its Mercerdes unit before the end of the year. Up to 5,000 jobs are said to be on the chopping block in Sindelfingen, southern Germany. On the broker front, discussing the S class at Mercedes, CSFB says buy the company's stock on weakness.

Italy

RCS Media fell €0.19 to €5.04. According to Il Sole 24 Ore, France's Lagardere will not buy property developer Stefano Ricucci's stake in the company.

ENI fell €0.15 to €24.65. The company has acquired from Nigerian companies Allied Energy Resources and Camac International a 40% stake in both Oil Mining Leases 120 and 121, located in the Nigerian offshore some 200 kilometers off the coast at a depth ranging between 200 and 900 meters. The FT reports the company's CEO, Paolo Scaroni, saying that he set himself the ambitious goal of turning the company into one of the world's oil majors over the next 10 years.

Netherlands

Philips declined €0.53 to €21.60. The company's global peer Sony warned that it now sees a fiscal 2005 net loss of 10 billion yen, vs. the tech group's previous expectations for 10 billion yen in profit. Separately, the U.S. Court of Appeals for the Federal Circuit has overturned the International Trade Commission's previous ruling that prevented the company from enforcing six recordable CD-ROM patent rights in Taiwan. The court says further proceedings may be necessary to resolve the situation.

Fortis fell €0.12 to €23.56 after Dexia's board unanimously decided that it is neither desirable nor advisable to proceed with talks over Fortis' proposal that the two companies look into a merger.

Nordic

Skandia was up SEK0.60 to SEK40.70. The company's largest shareholder, Fidelity, says to daily Svenska Dagbladet that it supports a merger with Old Mutual. Moreover, Fidelity adds that the fund has raised its stake in the company to 9%. The daily notes that another foreign owner is also said to support the Old Mutual offer.

Teliasonera gained SEK0.30 to SEK37.00. The company faces a reduced chance of gaining majority control in Turkcell as Alfa Telecom confirms that it obtains a 13.22% indirect stake in the Turkish operator.

United Kingdom

Smiths Group fell £0.18 to £9.35. The company acquired US Millimetre Wave and Antenna Company, expanding the company's Interconnect business, paying US$33.5 million in cash. The announcement came as the company reported results for the year ended July 31: sales from continuing operations were up 13% to exceed £3 billion, with all divisions contributing double-digit growth in headline profit. The company says cash generation is below target, but expected to recover. Outlook is for continued growth in 2006. The annual dividend increased for the 35th year, by 7.4%, to 29.0p.

Anglo American was up £0.07 to £16.13. Citigroup says the gold price is likely to be the near-term catalyst for share price performance of the company. Citi says long-term catalysts come from restructuring, cost reductions and leveraging the company's large resource base. Citi is bullish on the near-term gold price, expecting the metal to test US$500 per ounce in the coming months. It maintains its buy rating and £18.00 target on the company.

Easyjet fell £0.02 to £2.85. Deutsche Bank reinitiates with buy and £3.32 price target.

Marks & Spencer was up £0.05 to £3.59. Dresdner KW upgraded the shares to hold from reduce and raised its price target to £3.55 from £3.40.


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