Markets & Finance

European Movers: HBoS, Soc Gen, Ericsson


Plus more European stocks making headlines in Wednesday's session

UK

HBOS

Down GBP0.34 to GBP4.47

Denies funding issues

Traders note talk in the market that Co. is in financial trouble and may be negotiating with the Bank of England. A Co. spokesperson says that Co. is facing no funding issues and that there is no substance to the rumour. A BoE spokesperson says that talk that BoE members have been told to cancel their Easter leave due to issues at a UK bank (possibly Co.), is 'absolutely rubbish'. The spokesperson refused to comment on company-specific rumours.

MITCHELLS & BUTLERS

Down GBP0.13 to GBP3.40

Shares down on talk of refinancing

Lehman cuts target to GBP2.35 from GBP4.50, keeps underweight, ahead of strategic review on 20 May. Fears Co. is in need of refinancing following closure of the GBP400m hedge facility. Thinks Co. has six options: cut capex; cut divs; refinance; sell pubs; trade out of the situation; sell the company. See Brokers Views and News UK. Panmure Gordon lowers target to GBP3.40 from GBP3.50.

EASYJET

Down GBP0.36 to GBP3.39

Warns on fuel costs, brokers cut target

Co. expects to deliver 1H results in line with expectations. Says currently, around 27% of summer seats are sold which is slightly ahead y/y and positive outlook for total revenue per seat in 2H is unchanged. Adds the price of jet fuel has risen to unprecedented levels and if it remains at current levels, will incur a significant increase in fuel costs. Dresdner cuts target to GBP5.20 from GBP7.50, retains buy. Numis lowers target price to GBP3.90 from GBP4.0, retains hold. Reduces 2008 PTP to GBP184.1m (EPS 32.1p). For 2009 keeps PTP at GBP203.3m (EPS 35.4p) vs. a consensus range of GBP260m-GBP350m. Panmure downgrades to hold from buy.

NEXT

Down GBP0.70 to GBP11.09

FY numbers in line with forecast

Reports group revenue GBP3.329bn, +1.4%; group profit before interest GBP537m, +5.8%; PTP GBP498m, +4.1%; EPS 167.7p, +15.5%. Raises DPS by 12.2% to 55p. Announces a GBP514m share buyback equivalent to 11.5% of share capital. Sees trading conditions in the year ahead still difficult. To extend the Next Brand into new overseas markets. Derek Netherton will step down from the Board at the AGM in May.

KESA ELECTRICALS

Down GBP0.04 to GBP1.94

FY profit ahead of forecasts

Announces FY revenue from continuing operations of GBP4.98bn, +10.6% (+8.9% CER, +3% LFL); group retail profit GBP194m, +7.2%; basic EPS ex goodwill impairment 22.6p, +9.2%. Says as consumer confidence declines, anticipates difficult trading conditions ahead. To focus on margin optimisation and cost control.

France

SOC GEN

Down EUR 4.75 to EUR 62.44

BNP Paribas will not bid

BNP Paribas says it has ceased to consider a potential tie-up with Co. as the conditions that would have allowed it to create value could not be met.

BNP-PARIBAS

Up EUR 2.70 to EUR 60.76.

Says won't bid for SocGen, saying it doesn't believe the conditions are right to create value for shareholders.

SAINT GOBAIN

Up EUR 0.27 to EUR 48.20

Reaches deal with Wendel – press

Co. is close to a deal with c.18% stake holder Wendel that would see the latter take three board seats, Les Echos reports without citing sources. Wendel has reportedly agreed not to raise its stake above 21.5%, while Co. has surrendered its attempt to abolish double voting rights - though only in return for a promise of moderation on Wendel's part. The deal will apparently go before Co.'s board tomorrow and be voted on at the AGM on 5 June.

Germany

DEUTSCHE TELEKOM

Down EUR 0.79 to EUR 10.59

Fixed-line guidance weighs

Co.'s fixed-line revenue decline is to slow this year to 4-6% from 8% last year, and to stabilise in 2010. The 2008 EBITDA decline is put at 5-8% versus the 14% slide the previous year.

RHEINMETALL

Down EUR 1.18 to EUR 43.32

To hit acquisitions trail

Co. sees 2008 EBIT at EUR 280-290m and proposes a 2007 dividend payment of EUR 1.30 per share, up from EUR 1.00 last time. Co.'s intends to hit the acquisitions trail, saying a merger with Krauss-Maffei Wegmann is not on the agenda. For DZ Bank's comment, see Broker Views & News - Germany.

Italy

ALITALIA

Up EUR 0.03 to EUR 0.31

Spinetta proposes two year moratorium on Malpensa cargo activities

Air France- KLM's CEO, Jean-Cyril Spinetta has proposed a two year moratorium on Malpensa cargo activities, according to Reuters. Air France's Chairman Jean-Cyril Spinetta has been quoted by Reuters as saying that the deal to acquire Co. is 'in jeopardy' in the face of union opposition to the deal, which Air France envisages would lead to lay offs of some 6,600 workers - some 35% of the workforce. Meanwhile, Italy's right wing opposition party, leading in opinion polls ahead of April's elections, has said that it opposed Co.'s takeover by Air France.

SEAT

Down EUR 0.03 to EUR 0.11

Reports FY07 net profit at EUR 98.4m

Co. announced yesterday that it will not pay a dividend and forecasts falling profit as it boosts investments this year. Says that FY net profit rose 23% to EUR 98.4m on lower interest payments, adding that net financial debt came in at EUR 3.27bn. Explains that FY07 EBITDA rose 6.3% to EUR 650.2m but expects FY08 EBITDA to decline to EUR 610m due to an increase in investments.

Netherlands

KPN

Down EUR 0.49 to EUR 10.92

Credit Suisse cuts target to EUR 12.80 from EUR 13.50 following the strategy presentation. Sees better risk/reward elsewhere in the sector. Says Co. has outperformed in the last few years due primarily to its price cutting strategy in German mobile. However, it has less scope for price cutting in German mobile now, is well behind on mobile broadband and is likely to see its price leadership reduced by O2 over the next 2 years. In the meantime, its Dutch mobile business may continue to be impacted by greater competition for another few quarters. Maintains neutral recommendation.

Nordic

ERICSSON

Down SEK0.89 to SEK10.59

Sony Ericsson issues profit warning

Sony Ericsson issues a profit warning saying that it expects slower growth in the handset unit during the 1Q08. Says 1Q08 PTP is now expected to be in the range of SEK150m-SEK200m due to increased operating costs y/y.

MEDIVIR

Up SEK7.00 to SEK63.00

Positive results from Lipsovir trial

Co. says results from a phase III trial show that the use of Lipsovir prevented 42% of patients from developing cold sores.

CARLSBERG

Down DKK3.00 to DKK593.00

Baltika acquisition cleared by Russia Co.'s proposed acquisition of outright control of Baltika, the Russian brewer, via a purchase of Scottish & Newcastle's 50% stake in Baltic Beverages Holding, has been cleared by the Russian anti-monopoly service, The Times reports.

Spain

IBERIA

Up EUR 0.09 to EUR 2.51

British Airways raises its stake to 13.15%

British Airways has increased its shareholding in Co. to 13.15%. It has bought 28,745,767 shares of Co. at an average price of EUR 2.34/sh. BA CEO Willie Walsh says he will consider further opportunities to increase stake.

BANCO POPULAR

Up EUR 0.19 to EUR 11.19.

Ram Bhavnani holds a 3.3% stake

According to a regulatory filing, the Indian investor Ram Bhavnani has acquired a 3.3% stake in Co. Cinco Dias reports that he has also bought about 2% of Banco Sabadell.

Switzerland

CS GROUP

Up CHF1.96 to CHF51.80

EKB comments and M. Stanley note provide cheer

Swiss banking regulator EKB said no big Swiss bank has liquidity or solvency issues. On the broker front, Morgan Stanley adds Co. as a long in its Financials Best Ideas Portfolio. The broker feels the Fed's recent action materially reduces tail risk by addressing broker dealer funding concerns and can help improve system wide confidence. Adds that the strong free cashflow generation of Co.'s A&WM and Swiss business are the primary attraction for the stock.

JULIUS BAER

Down CHF0.35 to CHF71.55

Contradicting reports on GAM sale

Italy's Intesa Sanpaolo is offering some US$5.5bn to take over Co.'s hedge fund unit GAM, according to Handelszeitung. Meanwhile, Il Messaggero writes that Intesa has suspended the conversations that it was holding with Co. over GAM. Adds that the decision has been taken given the current difficult market conditions. Co.'s spokesperson refuses to comment on market speculation.


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