Danone, L'Oreal, Publicisand Rio Tinto Earnings Lift European Markets Higher

Lucy Stoeva
19 Apr, 2016
New York City

European stocks surged to three-month high on positive corporate earnings and momentum in oil prices. Rio Tinto quarterly shipments surged 11%. L''Oreal

[R]4:00 PM Frankfurt, Germany - European stocks surged to three-month high on positive corporate earnings and momentum in oil prices. Rio Tinto quarterly shipments surged 11%. L''Oreal’s comparable quarterly sales increased 4.2%. Swedish investment firm Kinnevik proposed one-time dividend of SEK5 billion.[/R]

European stocks surged to three-month high on Tuesday on positive corporate earnings from major companies and volatile oil prices perked higher.

Oil futures rose after Kuwait cut its output due to a strike, and the market looked beyond the failed attempt to freeze production at the latest meeting of oil producers.

Brent crude oil futures rose 2.8% to $44.11 per barrel and WTI crude oil futures advanced 3.37% to $41.12 per barrel.

Among oil-related shares, Subsea 7 jumped 6% and Statoil climbed 3.5% in Oslo. Tullow Oil was up 5% and BP added 2% in London.

Mining shares also charged higher after global iron ore producer Rio Tinto reported an increase of 11% in first-quarter shipments. Rio Tinto stock gained 3.1%.

Rival BHP Billiton, which is scheduled to report quarterly production tomorrow, surged 5.3% ahead of the announcement. Glencore and Antofagasta advanced more than 7%, while Anglo American soared 8.5%.

In Paris, L’Oréal SA traded up 5.1% after reporting growth in comparable sales of 4.2% in the first-quarter.

Danone gained 3.5% on better-than-expected earnings, while advertising major Publicis soared 6.7% on the growth of its digital business Sapient.

Swiss drug maker Roche Holding advanced 2% after reporting higher revenues fueled by its cancer and immunology drugs.

In London, the FTSE 100 index gained 52.72, or 0.83%, to 6,406.24, while in Frankfurt, the DAX index soared 229.36, or 2.27%, to 10,349.67.

In Paris, the CAC 40 index rose 62.29, or 1.38%, to 4,569.13.

Danone added 3.5% to €64.52 after the yoghurt maker reported stronger-than-expected first-quarter revenues on growth in Asia and North America.

Total revenues declined 3% from a year ago to €5.3 billion in the first-quarter. Organic sales, excluding the currency fluctuations, rose 3.5% in the quarter.

The company confirmed its full-year sales and profitability targets but said it expected economic conditions to remain volatile in emerging markets.

Danone forecasts organic sales growth of 3% to 5% and operating margin of more than 13%.

Kinnevik AB rose 6.7% to 265.10 Swedish kronor after the investment firm proposed extraordinary cash distribution to shareholders of SEK5 billion, or $616.52 million.

Together with the recommended ordinary dividend of SEK7.75 per share, shareholders will receive a total of SEK25.75 per share.

L''Oreal SA jumped 5.1% to €168.55 after the cosmetics giant’s revenue exceeded expectations.

Comparable sales, which exclude currency and structural changes, grew 4.2% in the quarter due to sales in North America, which helped offset sluggish sales in Hong Kong and Brazil.

L’Oreal also confirmed its projections for 2016 sales and profit growth, despite the volatile economic and monetary environment.

The company anticipated growth to pick up in the rest of the year and sales are expected to be ahead of 3.5% forecast.

Publicis SA soared 6.7% to €66.38 after the advertising group reported organic sales growth of 2% in the first quarter, resulting from accounts won at the end of last year and the strength of its digital business.

The acquisition of Sapient in 2014 payed off as the digital business accounts now account 55% of revenues.

Roche Holding AG advanced 2% to 254.4 Swiss francs after the pharmaceutical company reported an increase in first-quarter revenue due to sales of its cancer and immunology drugs.

Revenues grew 4% at constant exchange rates to CHF 12.4 billion and 5% in Swiss francs. The company also confirmed its outlook for 2016.

Rio Tinto Plc surged 3.1% to 2,338 pence after the global mining company reported an increase of 11% in first-quarter iron ore shipments from a year ago.

The iron ore producer also confirmed its forecast for a record output of 350 million tons in 2016 despite the concerns about slowing demand from China.

However, Rio Tinto cut its 2017 production guidance for its Australian iron ore mines because of a delay in the $518 million project for autonomous transport technology that includes driverless trains.

Zalando SE tumbled 2.3% to €29.31 after the German online retailer posted disappointing preliminary revenues.

First-quarter revenue was weaker than expected at €788 million to €801 million. The company expects first-quarter adjusted EBIT in the range of €12 million to €28 million.