Markets & Finance

Renault Denies Interest in Ford, GM


From Standard & Poor's European MarketScope

France

RENAULT fell €1.95 to €78.50 in Thursday's session. The company denies a press report it is considering tabling an offer for Ford Motor (F) or GM (GM) of the U.S. Les Echos reports that Carlos Ghosn believes that the company does not have an adequate product range.

RHODIA was up €0.15 to €1.87. Germany's BASF says it has no plans to take over the company , although it is keeping a watch over the market, for any possible M&A advantages.

VALLOUREC fell €22.10 to €392.80 amid speculation that Vincent Bollore is selling down his 9.75% stake in the company. However, the share price could be affected by the decline in the energy sector as oil prices retreat. Meanwhile, Fortis says the company has reiterated great confidence in its prospects. Fortis says the discount of the share price to that of Tenaris has widened to an unmerited 34%, and believes a reasonable 15-20% discount would imply a €510-550 fair value. The firm reiterated its buy rating on Vallourec with a €460 target.

Germany

AWD was down €5.33 to €26.30. The company says it won't be possible to fulfill market expectations for the full year. It expects total third quarter revenues to come in at €142 million, a 13% decline year-over-year. The company puts third quarter EBIT at around €1 million. Merck Finck has lowered its fiscal 2005 EPS forecast to €1.05 (€1.36). The broker does not think the company 's growth target of a fiscal 2008 EBIT of at least €135 million is still realistic, and sticks to its sell rating.

MLP was down €0.25 to €17.01. The positive trend in pension product sales continued in recent months, the company said, following AWD's profit warning.

DEGUSSA was down €1.60 to €35.07. The company ay not pay a dividend after it predicted a loss of €450 million this year, Berliner Zeitung reports, citing unnamed people in the company.

Italy

SAN PAOLO-IMI was down €0.04 to €12.63. The company has allegedly denied rumors reported by Finanza & Mercati that Monte dei Paschi and the company are considering forming an alliance. According to the paper, Ifil (which owns a 6.8% stake in the company ) is in favor of the deal, seen as a defensive move against a possible takeover from Spain's BSCH, which holds a 7.7% stake in the company.

EDISON was up unchanged at €1.86. Transalpina di Energia's takeover bid on the company starts Thursday. Transalpina di Energia is entirely jointly owned by WGRM Holding (fully owned by France's EdF) and Delmi (controlled by AEM Milano).

PARMALAT restarted trading Thursday on Milan's stock exchange. Previously, Lehman initiated coverage on the company with a overweight recommendation. Separately, talks over the company between potential bidders Granarolo and Lactalis intensify, Milano Finanza writes, adding that a deal between the two sides to split assets appears more likely than a takeover battle. Others bidders including private equity groups are also lining up, the paper says.

Netherlands

ROYAL DUTCH SHELL (NL) (RD) was down €0.60 to €26.06. Cheuvreux downgraded the shares to underperform from outperform. Due to hurricanes Katrina and Rita, the broker raises refining margin forecasts. However, it keeps its 2006 Brent crude price forecast unchanged at US$47.5 per barrel as the broker sees downside risk on crude oil prices. Neste Oil and Total (TOT) remain the broker's top picks in the sector. Separately, Merrill Lynch says the 2005 third quarter should set another new record for quarterly earnings and profitability for European oil stocks.

AKZO NOBEL (AKZOY) fell €0.73 to €35.97. Fortis downgraded the shares to hold from buy but lifted the target price to €42 from €40. The broker continues to believe in the company's long-term value. It also believes the company will be susceptible to hefty raw material price inflation. Fortis says the use of forward contracts will cushion the third quarter margin impact but broker expects even more pressure on fourth quarter and 2006 results, adding that this jeopardizes the company 's flat 2005 earnings guidance. The broker sees 8% lower 2005 earnings. In order to remain exposed to the company 's long-term value, Fortis suggests investors might be able to pick up the stock on lower levels after the third quarter results.

HAGEMEYER was down €0.05 to €2.38. ING says the company's analysts day in Germany further increased the broker's confidence of a successful turnaround in the UK. ING now sees further upside potential in margins beyond fiscal 2007. It believes a higher price target of €2.5 (vs. €2.4 previously) is justified. However, the recent share price rally leads the broker to downgrade its rating on the stock to hold from buy. Longer term, the broker sees upside to €3.0.

Nordic

STATOIL was down NOK8.25 to NOK149.75. Cheuvreux downgraded the shares to underperform from outperform and removes the company from its list of top oil and gas picks.

NOKIA (NOK) fell €0.22 to €13.93. Merrill Lynch added the company to its Europe 1 Recommended List. The broker says a new scenario is unfolding, which may yield a compounded annual growth rate for EPS of 15% to 20%. It adds that the company 's lack of purchasing power and margins in emerging markets turns out to be a myth. It rates the stock buy with a €16.2 target. Separately, U.S. group Motorola (MOT) is cutting 1,900 jobs as part of its move to boost operating margin. The job cuts will cost the group about US$70 million.

BANG & OLUFSEN was down DKK17.00 to DKK530.00. Ahead of the company 's first quarter results, due Friday, Danske Equities expects a mixed report, due to weak trading in July. However, the broker remains confident about the company's full-year prospects thanks to a strong product pipeline, booming flat-screen market and distribution expansion. Consequently, it retains its buy recommendation.

Spain

IBERIA gained €0.05 to €2.15. The company's board may approve a new business plan Thursday, Efe newswire reports, citing unidentified union officials. On Wednesday, the company announced that it had reached an agreement with unions regarding employment regulation in handling services.

BANESTO was down €0.29 to €12.01. The company expects fiscal 2005 profit growth of at least 20%, vs. 16% in fiscal 2004. It remains optimistic about fiscal 2006 and does not rule out a capital increase to improve capital ratios, though it did not give any indication of the timing of such a move. The company reported net interest income up 9.7% to €822.50 million; net commission income up 7.2% to €427.24 million; operating profit up 15.8% to €748.13 million; pretax profit up 17.0% to €645.16 million and net attributable profit up 16.2% to €440.37 million.

Switzerland

SWISS LIFE fell CHF4.40 to CHF192.20. The company's banking unit Banca del Gottardo named Rolf Aeberli as head. Aeberli, who is replacing current CEO Marco Netzer, is currently CFO at Julius Baer. It turns out Wednesday's rumors of a Gottardo sale are unfounded.

CLARIANT was down CHF0.30 to CHF18.00. German specialty chemicals peer Degussa is taking an impairment charge of €830 million on its fine chemicals activities due to poor business and reduced prospects at the unit. Degussa is on S&P's CreditWatch Negative based on this charge. However, Bank Leu would not expect Clariant to follow Degussa in taking an impairment on its Fine Chemicals or any other activities. The broker advises investors to take advantage and build up positions, if the company's share price is affected by potential speculations surrounding an impairment.

United Kingdom

CADBURY SCHWEPPES (CSG) fell £0.28 to £5.59. CEO Todd Stitzer says the company is continuing to experience strong sales momentum across the group and expects revenue growth for the year to be around the top-end of its goal range. However, he warns it is unlikely to make sufficient progress to be within its margin goal range this year, despite improvements.

RIO TINTO (RTP) gained £0.56 to £22.69. ING raised its target to GBP25.75 from GBP22.06 on the back of higher market multiples. ING argues that commodity prices, as a basket, have remained particularly firm during the 2005 second half. The broker maintains the view that prices may remain well above their historical averages, and reiterates its buy recommendation on the stock.

BURBERRY declined £0.20 to £4.05 on the news CEO Rose Marie Bravo plans to step down as chief executive once the company has demerged from GUS, its majority shareholder, according to the FT. Bravo will quit when her contract is due for renewal next July. Brian Blake, who joined Burberry as chief operating officer last year, is believed to be one of the potential successors of Bravo.

BRITISH AIRWAYS (BAB) was up £0.09 to £3.11. The shares extended Wednesday's 1.86% gain following news the company's passenger traffic rose 7.8% last month thanks to strong demand for premium seats. The shares are also higher as crude oil prices slump to a two-month low because of lower demand from U.S. refineries.


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