European Markets Turn Higher on Corporate Deals and Restructuring

Nigel Thomas
11 Nov, 2015
New York City

European markets traded higher on Wednesday as breweries lift the spirits of the markets. Carlsberg announces restructuring and Anheuser-Busch InBev completes the purchase of SABMiller. Germany based Henkel earnings were ahead of expectations and lifted outlook.

[R]4:00 PM Frankfurt – European markets traded higher on Wednesday as breweries lift the spirits of the markets. Carlsberg announces restructuring and Anheuser-Busch InBev completes the purchase of SABMiller. Germany based Henkel earnings were ahead of expectations and lifted outlook.[/R]

Stock markets in Europe are back in positive territory after news on M&A activity, restructuring plans, and strong earnings reports buoyed Wednesday trading.

Unemployment in the U.K. is falling back to pre-financial crisis levels, although salaries are increasing slower-than-expected.

In London trading, FTSE 100 index gained 13.35 or 0.21% to 6,228.37 and in Frankfurt the DAX index soared 66.90 or 0.62% to 10,899.24.

In Paris, CAC 40 index rose 38.47 or 0.78% to 4,950.46.

The U.K. unemployment rate dropped to 5.3% in the third quarter, its lowest level since the first quarter of 2008.

The number of unemployed persons fell by 103,000 in the period, according to data of the Office of National Statistics.

Wage growth, however, remains disappointing and below the projection of the Bank of England.

The ONS said the total earnings, including bonuses, jumped 3% during the quarter.

The Bank of England closely watches the income growth to determine its policy on interest rates.

Carlsberg A/S shares jumped 6.45% to a five-year high of 590.25 Danish kroner, after the brewer announced its cost-cutting plans and tackle with the weak Russian beer market.

Third-quarter earnings before interest, taxes and one-time items rose 2% to 3.47 billion kroner, beating analyst estimates.

Sales, excluding currency and acquisition effects, grew by 3%.

The brewer said it plans to restructure at a cost of 10 billion kroner over the next two years and restructuring will reduce annual costs by 2 billion kroner and trim employee count by 15%, or 2000 people, in Russia, the U.K. and parts of Asia.

At the same time, rival Anheuser-Busch InBev NV formalized the acquisition of SABMiller Plc for $107 billion.

SABMiller gained 2.5% to 4,060 pence in London and AB InBev added 1.65% to €112.7 in Brussels.

In Germany, Henkel AG & Co, KGaA rose 5.77% to €87.50 after the Dusseldorf consumer and industrial goods maker reported third-quarter growth that exceeded market expectations.

In the third quarter of 2015, sales rose 8.4% to €4,590 million, but increased only 3.2% after adjustments for foreign exchange and acquisitions.

Adjusted net income for the quarter increased by 11% to €564 million and net income for the quarter grew 9.8% to €494 million.

The company also announced that it expects organic growth of 3% in sales for the fiscal year 2015, with strongest growth in Laundry & Home Care.

Due to slowing growth in China, organic sales growth in Adhesive Technologies is anticipated between 2% to 3%.

Earnings per share are expected to soar by more than 10% from the 2014 earnings per share of €4.38.

Among the losers, Vivendi SA plummeted 6.75% to a seven-year low of €20.20 after the French media company reported a lower third-quarter operating profit due to challenging environment for its music and pay-television units.

Vivendi’s adjusted earnings dropped 9% to €172 million, below analysts’ estimate of €190 million.

Revenues in the period rose 4.5% to €2.5 billion.