Markets & Finance

European Movers: Xstrata, Deutsche Bank, Volvo


Plus more European stocks making headlines in Wednesday's market

UK

SAINSBURY

Up GBP0.21 to GBP3.58

4Q LFL ahead of estimates

Announces total sales in 4Q up 6.7% (+5.1% ex fuel). Says 4Q LFL ex fuel rose 4.1% (FY LFL ex fuel +3.9%) and incl fuel rose 6%. Says GBP2.70bn of sales growth was delivered agains a GBP2.50bn target. Signs property j/v with British Land worth GBP1.20bn. Sees significant growth potential in non-food. Adds enviroment remains challenging.

VODAFONE

Up GBP0.02 to GBP1.54

Forecasts Verizon dividend

Co. signalled it expects to start receiving dividends again from Verizon Wireless next year, the FT writes.

XSTRATA

Down GBP1.94 to GBP35.22

Vale ends bid talks

Brazil's Vale has ended merger talks with Co. after failing to reach an agreement. Vale said it put forward an indicative proposal to Co. that included a cash and shares offer for 100% of Co.

KAZAKHMYS

Up GBP0.64 to GBP16.06

In talks with Kazakhstan over stake options

Says welcomes statement by the Kazakhstan government that it wants to buy a minority stake of up to 15% in Co. Confirms has been in preliminary discussions with the government on a variety of options, including the potential for Co. to acquire natural resource assets in Kazakhstan in exchange for the Government acquiring a minority stake.

DEBENHAMS

Down GBP0.12 to GBP0.59

Down on ML share placement

Merrill Lynch has placed 47m Co. shares in the range of GBP0.60/sh-GBP0.66/sh, traders say. An ML spokesperson confirmed the placing. Bear Stearns says that Baugur has a 14% position in Co. through CFDs, but feels the position is more overhang than bid platform. See Broker Views & News UK. Separately, Lehman reiterates its long term positive view on the retail sector and recommends to long the stock and to short DSGI.

FRIENDS PROVIDENT

Down GBP0.02 to GBP1.22

JC Flowers working on new approach

JC Flowers is working on a fresh approach to Co. as Co. moves closer to calling in regulators to force the private equity group to clarify its intentions, the FT reports.

FRANCE

AIR FRANCE-KLM

Up EUR 0.44 to EUR 17.77

New Alitalia offer/May raise fuel charges

Co. will present a new offer for Alitalia on Friday 28 March, according to Italian unions. Co. CEO, Jean-Cyril Spinetta, reportedly said yesterday that Co. will study the possibility to integrate in the revised offer the AZ Servici activities. CEO has also proposed to take on 180 Alitalia pilots between 2008 and 2010. CEO reportedly agreed to continue talks with unions beyond 31 March. Separately, Co. may have to raise its fuel surcharge again to take into account rising oil prices, Les Echos reports, citing a senior executive of Co.

FRANCE TELECOM

Up EUR 0.23 to EUR 21.12

UBS adds to European Top 20 list

UBS adds Co. to its European Top 20 list given stabilization of broadband share, low risk domestic mobile (with voice prices already amongst the lowest in Europe) and high payout. Says the dividend yield is 6.8% and if broker assumes net debt/EBITDA is kept at 2.0x then Co. produces EUR 4-5bn 'extra' cash flow p.a. Iliad's Free and Neuf Cegetel want the prices of Co. lines to be lowered, Le Figaro reports, citing Xavier Niel, the head of Free.

GERMANY

DEUTSCHE BANK

Down EUR 1.45 to EUR 72.05

Clear Channel may sue / Profit goals at risk

The US$19.5bn sale of US radio broadcaster Clear Channel Communications to two private equity firms (Bain Capital and Thomas H. Lee Partners) is in jeopardy, The New York Times reports. Clear Channel and the private equity buyers may go to court to try to force the banks to complete the buyout, the paper writes. Co. is one of the lenders along with Citigroup, Credit Suisse, Morgan Stanley, RBS and Wachovia. Separately, Co. reportedly said it may need to make further write-downs if market conditions fail to improve and that its profit goals are at risk.

ITALY

TELECOM ITALIA

Up EUR 0.01 to EUR 1.35

Bear Stearns upgrades to peer perform from underperform. Says that Co.'s new management has rebased earnings expectations lower and set in place a reduced payout ratio, leaving room for a more credible debt reduction policy. Morgan Stanley lowers target to EUR 1.60 from EUR 2.10. Given challenges ahead, remains underweight. Lehman lowers target to EUR 1.60 from EUR 2.0. Cuts EBITDA by 6.3% in 08 and 7.6% in 09 and lowers EPS by 14.9% in 08 and 12.5% in 09. Keeps underweight recommendation. Co.'s board will have fewer independent members when it will be renewed on 14 April, according to Reuters.

FONDIARIA-SAI

Down EUR 1.23 to EUR 26.05

Posts FY07 net profit of EUR 620.1m

Co. has disclosed FY07 net profit of EUR 620.1m, up 3.2% y/y, as costs and claims increased. Says that its combined ratio narrowed to 94.7% from 94% in 2006. Adds it will pay out a dividend of EUR 1.1/sh, up 10%. Says that it had no exposure to US subprime lending, adding that it will review its industrial plan in April.

MILANO ASSIC.

Up EUR 0.02 to EUR 4.27

Cheuvreux cuts target to EUR 5.80 from EUR 7.00 and cuts EPS by 11%, due to a disappointing 4Q net profit (-18%) on higher costs. Says that while life business was really poor, it posted very good DPS (8.0% yield). Keeps outperform recommendation. Co. reported yesterday FY07 net profit of EUR 253.1m vs EUR 247.9m the previous year. Said it will propose a FY dividend of EUR 0.34/sh compared to the previous year's EUR 0.30. Adds that premiums for the year increased to EUR 3.598bn from EUR 3.416bn, boosted by full inclusion of its BPM Vita unit which was consolidated in the final quarter of 2006.

NETHERLANDS

DSM

Up EUR 2.61 to EUR 30.67

Sees EBIT excl. 20% up y/y

Co. releases a statement before holding its AGM today, saying that the year has started good due to strong manufacturing and operational performance. This has led Co. to raise expectations for the year. Co. now estimates that 1Q08 EBIT before exceptionals will be 20% above the EUR 192m achieved in 1Q07. For FY08, Co. expects EBIT before exceptionals to be higher y/y.

ARCADIS

Up EUR 0.55 to EUR 37.19

Signs 3 year agreement with Akzo

Co. says it has signed a 3 year agreement with Akzo Nobel to provide environmental consultancy services.

ARCELOR-MITTAL (NL)

Up EUR 1.05 to EUR 50.49

To close wire mill in Canada

Co. plans to close its Lachine wire mill in Montreal, Canada. The plant will close in June, resulting in a loss of 100 jobs. Separately, Co. today confirms that the Court appointed divestiture trustee has entered into an agreement to sell Co.'s Sparrows Point steel mill to OAO Severstal for US$810m, net of debt.

NORDICS

DANISCO

Up DKK6.00 to DKK345.00

Raises FY07/08 group EBIT guidance (updated)

Co. reports 9M sales of DKK14bn vs DKK13.9bn seen in a Reuters poll, EBIT before special items at DKK1.6bn - in line with expectations. Co. raises FY07/08 group EBIT guidance to above DKK2.0bn vs DKK1.95bn previously forecast. Says it now expects to report group profit for the year before above DKK1.6bn vs DKK1.5bn previously expected. Further, Co. trims EBIT outlook for Ingredients to c.DKK1.575bn vs c.DKK1.6bn previously expected. Upgrades EBIT forecast for Sugar by DKK100m to c.DKK600m and says it aims for the unit to be listed by end of 2008, unless sold at a better value. Forecasts pressure on Ingredients margins to accelerate.

VOLVO

Down SEK2.25 to SEK86.75

NA sale decline - CEO fears will spread elsewhere

Co.'s North America sales are declining and CEO Leif Johansson fears the downturn in the US economy will spread around the globe with negative effect on Co.'s markets elsewhere, he says in an interview with Dagens Industri.

RAUTARUUKKI

Up EUR 1.54 to EUR 29.20

Closure of sinter plant to cut emissions

Co. aims to close a sinter plant in Raahe, Finland, by the end of 2011 and to switch to iron pellets as raw material at its steel mill in Raahe. The move will reduce carbon dioxide emissions by 10% or 500,000 tonnes a year, and energy consumption will drop by 8% or 1.16mm megawatt hours annually. Yearly depreciations following the planed closure will amount to c.EUR 1.9m over the next four years, according to Co.

SPAIN

IBERDROLA

Down EUR 0.09 to EUR 10.41

Denies offering 20% stake to EDF – press

Co. has denied offering a 20% stake to France's EDF, according to Expansion. Meanwhile, El Economista writes that Co. has appealed to the Industry Ministry to overturn a decision by Spain's energy watchdog, CNE, not to limit the voting rights of shareholder ACS and prevent the group from increasing its stake above 10%.

CEPSA

Up EUR 0.05 to EUR 70.05

Sonatrach interested in Santander's stake

Algerian company Sonatrach aims to acquire Santander's 30% stake in Co., according to la Gaceta de los Negocios. Adds that Sonatrach will need the authorisation of Spain's watchdog CNE.

SWITZERLAND

BALOISE

Up CHF1.45 to CHF94.40

FY net profit ahead of estimates / New CEO

Co. reports FY net profit of CHF813.8m; EPS CHF15.48, +19.7%; ROE 16.9%; nonlife insurance net combined ratio of 95.1%. Says PTP for Life insurance rose 70.1% to CHF418.9m; PTP Banking rose 16.9% to CHF43.6m. Sees a further increase in pricing and competitive pressure in 2008. Expects to see an ROE of 15% and a steady increase in EPS. In the nonlife business, hopes to keep the combined ratio significantly below 100%. Also says Martin Strobel, CEO of Baloise Switzerland, will become the new CEO and President of the Corporate Executive Committee on 1 January, 2009. Rolf Schaeuble will remain the full-time Chairman of the Board of Directors.


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