Wednesday 30 November, 5:00 PM GMT (Thomson Financial): European markets
closed below parity, despite an upward revision to third quarter U.S.
growth.
The media sector bucked the trend, led by Daily Mail and General Trust
after it posted full year pre-tax profits of 162.9 million pounds compared
to 124.6 million pounds last year, with the possibility of regional
newspaper divestments and the return of some proceeds to shareholders. In
the telecom sector, Danish telecommunications operator TDC may go private,
while Swisscom continued to struggle with the federal government over its
desire to make foreign acquisitions.
Elswhere, Corus Group's third quarter pre-tax profits dropped on falling
selling prices and higher raw material costs but its share price rose as
the results still topped forecasts. Kingfisher's quarterly retail profits
also declined, with international profit growth more than offset by lower
profits in the United Kingdom.
London's FTSE-100 Index fell by 67.80 points or 1.23% to 5423.20, while
Paris' CAC-40 Index dropped by 21.32 points or 0.46% to 4567.41.
Frankfurt's DAX Index declined by 6.08 points or 0.12% to 5193.40 and
Milan's S&P MIB Index weakened by 217 points or 0.63% to 34,090. The
pan-European blue chip Dow Jones Stoxx 50 Index ended down by 22.33 points
or 0.68% to 3264.53.
* Anglo-Dutch steel company Corus Group's third quarter pre-tax profit
dropped to 80 million pounds from 227 million pounds last year, due to the
continuing downward pressure on selling prices along with a significant
increase in raw material costs. Operating profit declined to 103 million
pounds from 247 million pounds last year, while turnover rose to 2.383
billion pounds from 2.356 billion pounds last year. However, its share
price rose as the results topped market expectations, and the outlook
improved. The company said reduced steel production throughout Europe,
combined with lower imports, had gradually restored the balance between
supply and demand, adding that European stock levels had returned to
normal and demand had improved during the fourth quarter. Meanwhile
selling prices have stabilised and were beginning to recover, Corus added.
* Home improvement retailer Kingfisher's third quarter retail profits
declined to 157.1 million pounds compared to 199.8 million pounds in the
same quarter last year, as international profit growth was more than
offset by lower profits in the United Kingdom. Retail sales rose to 2.068
billion pounds from 1.937 billion euros in the prior year, but in the U.K.
alone, retail profits slumped to 53.3 million pounds from 105.5 million
pounds last year, with the domestic environment continuing to weaken,
significantly impacting B&Q's earnings. Outside the U.K., where Kingfisher
generates half its sales, strong growth and development continued, with
sales up 15% and profits up 9%.
* Greece's Alpha Bank posted a rise in third quarter net profits to 138.2
million euros compared to 104.3 million euros in the same quarter last
year, with earnings per share of 0.48 euros compared to 0.37 euros
previously. Net interest income rose to 315.2 million euros from 265.7
million euros in the prior year, and commissions were up to 94.9 million
euros from 79.7 million euros before.
* Business software supplier Sage Group revealed full year pre-tax profits
of 205.4 million pounds compared to 181.1 million pounds last year on the
back of its expanding customer base. Operating profit grew to 211.1
million pounds from 184.5 million pounds in the prior year, on turnover of
776.6 million pounds compared to 682.6 million pounds last year. Meanwhile
it raised its dividend to 2.875 pence per share from 2.33 pence.
* Daily Mail and General Trust's full year pre-tax profits grew to 162.9
million pounds compared to 124.6 million pounds last year, reflected by
earnings per share of 24.9 pence from 15.5 pence. Turnover rose to 2.138
billion pounds from 2.109 billion pounds in the prior year, while the
dividend was increased to 12 pence from 11 pence before. The company said
it would broaden its review of its Northcliffe regional newspapers
business announced earlier this year to include a possible divestment. The
company said it would return some of the proceeds of a sale to
shareholders.
* Swisscom said its board of directors had held intense discussions with
representatives from the Swiss federal government in its effort to
overturn a government-backed board members' vote against the company's
plans to make foreign acquisitions. The government, which holds a
two-thirds majority in Swisscom instead supports the distribution of free
capital to shareholders. Swisscom says it would inform the general public
next week at the earliest about its future strategy regarding this issue.
* Danish telecommunications operator TDC may go private after the
fund-owned Nordic Telephone Company offered 382 Danish kroner per TDC
share, valuing the entire company at 76 billion kroner. TDC recommended
the bid to shareholders, although its chairman said that while the firm
was not looking for rival bids it did not rule them out, saying that
Danish legislation required the company to consider a rival bid if it is
equal to or better than that currently recommended by the board.
* British Airways (BA) said it would cut management by 35% over the next
two years as part of its ongoing cost-cutting drive. BA will cut the
number of senior managers by 50% to 207, from 414, and the number of
middle managers by 30% to 911, from 1,301, by March 2008 to save it 50
million pounds annually as part of its drive to cut costs by 300 million
pounds by March 2007. The money is needed to fund further investments, and
ensure that it hits its target of a 10% operating margin, it said.
Simon.Tse@Thomson.com; Thomson Financial
This is Thomson Financial Corporate Services Europe Market Commentary.
The information herein is believed to be true and accurate. If you have
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SOURCE Thomson Financial Corporate Group
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