Weak European Indexes; Hermes Hikes Dividend

Arthi Gupta
22 Mar, 2012
New York City

European indexes declined after euro area private sector activity worsened and Chinese manufacturing output fell in March. The UK retail sales dropped more than estimated in February. Hermes proposed a special dividend of

[R]2:00 PM Frankfurt – European indexes declined after euro area private sector activity worsened and Chinese manufacturing output fell in March. The UK retail sales dropped more than estimated in February. Hermes proposed a special dividend of €5 a share after record annual results.[/R]

European indexes edged lower more than 1.4% after Chinese manufacturing activity fell to a four-month low and euro-zone private sector output contracted unexpectedly in March. Both manufacturing output and service sector activity in the euro area shrunk in March.

Output rose in Germany, but fell slightly in France for the first time in four months, and dropped sharply again in the rest of the region.

In addition, China''s manufacturing sector shrank for a fifth consecutive month in March, a survey by Markit Economics showed.

The headline flash HSBC/Markit manufacturing purchasing managers'' index fell to a four-month low of 48.1 in March from 49.6 in February.

In Paris trading, the CAC-40 Index fell 54.46 or 1.5% to 3,472.91 and in Frankfurt the DAX Index edged lower 96.78 or 1.4% to 6.974.44.

Italian 10-year yields rose 0.08 percentage points to 5.07%. The 10-year Spanish bond yields rose 0.11 percentage points to 5.49%.

Euro-zone Private Sector Shrinks

Euro-zone private sector activity deteriorated further in March, according to a survey report released by Markit Economics today.

The flash composite output index fell to a three-month low of 48.7 in March from 49.3 in February.

The flash manufacturing purchasing managers'' index fell to 47.7 in March from 49 in the February. The manufacturing output index fell to 48.8 in March from 50.3 in February.

The services activity index dropped to 48.7 in March from 48.8 in February.

Separately, Germany''s private sector expanded slightly in March, flash data from Markit Economics showed today. The flash composite output index fell to 51.4 in March from 53.2 in February.

Also, French private sector contracted for the first time in four months in March, the flash results of a survey by Markit Economics showed today.

The composite output index fell to a four-month low of 49 in March from 50.2 in February.

UK Retail Sales Drop

UK retail sales fell more than estimated in February, the Office for National Statistics said.

Retail sales volume, including automotive fuel, dropped 0.8% in February from a month ago, reversing a 0.3% rise in January.

Food stores sales declined 0.1% and non-food store sales fell 1.5% in February.

Gainers & Losers

aleo solar AG rose 0.9% to €21.19 after the solar module manufacturer said fiscal year 2011 revenue decreased 16.6% to €461.8 million from €553.5 million in 2010 and swung to a loss before interest and taxes of €30.5 million compared to earnings before interest and taxes of €43.0 million last year. Loss per share was €2.47 versus earnings per share of €2.41 in the prior year.

Fuchs Petrolub AG gained 0.7% to €38.27 after the German lubricants maker said fiscal year 2011 sales revenue increased 14.3% to €1.668 billion from €1.459 billion last year. Profit for the year advanced 6.7% to €183.1 million or €2.56 per ordinary share from €171.6 million or €2.39 per ordinary share a year ago.

GlaxoSmithKline plc climbed 0.1% to 1,426 pence after the global healthcare group confirmed that it will invest above £500 million in the UK across its manufacturing sites to increase production of key active ingredients for its pharmaceutical products and vaccines.

Hermes International S.C.A. soared 3% to €251.65 after the French fashion house reported fiscal year 2011 sales revenue rose 18.3% to €2.84 billion from €2.40 billion a year earlier. For 2011, consolidated net income surged 41% to €594.3 million from €421.7 million.

The company proposed a special dividend of €5 a share in addition to an ordinary dividend of €2 a share for 2011, up from €1.50 the year before.

Lanxess AG surged 6.4% to €59.86 after the specialty chemicals group said fourth quarter sales climbed 16% to €2.12 billion s from €1.83 billion in the prior year. Net income for the quarter slumped 80.8% to €5 million or 6 cents per share from €26 million or 32 cents per share last year.

Premier Oil plc advanced 0.5% to 426 pence after the independent UK oil explorer reported full-year 2011 sales revenues advanced 8.3% to $826.8 million from $763.6 million in 2010. Profit for the period climbed 32% to $171.2 million or 31.5 cents per share compared to $129.8 million or 25.8 cents per share a year ago.

Rolls-Royce Holdings Plc fell 1% to 815.50 pence after the power systems and defense contractor said it received recent contracts exceeding $275 million to provide support services for the US Armed Services.

SGL Group gained 3.6% to €34.85 after the manufacturers of carbon-based products and materials said full-year 2011 sales grew 11.5% to €1.54 billion from €1.38 billion in the prior year. Consolidated net profit for the year rose 40.2% to €73.2 million from €52.2 million last year. Basic earnings per share were €1.09 compared to 80 cents a year ago.