Positive Earnings Lift European Indexes, Adidas Guides Higher

Lucy Stoeva
27 Apr, 2016
New York City

European shares traded higher on Wednesday amid positive corporate earnings and higher oil prices. Adidas raised its guidance for 2016 and posted an increase of 35% in operating profit. Antofagasta said copper output rose in the quarter and confirmed its full-year output guidance.

[R]4:00 PM Frankfurt, Germany - European shares traded higher on Wednesday amid positive corporate earnings and higher oil prices. Adidas raised its guidance for 2016 and posted an increase of 35% in operating profit. Antofagasta said copper output rose in the quarter and confirmed its full-year output guidance.[/R]

European shares traded higher on Wednesday amid positive corporate earnings and higher oil prices, and in anticipation of the Fed’s decision on interest rates.

In Greece, the ATG equity index fell 2.5%, underperforming the other European markets, after the meeting of euro zone finance ministers on the bailout of the Greek’s banking system was canceled.

In the U.K., GDP growth slowed down in the first-quarter, as expected. Gross domestic product rose 0.4% in the quarter as services growth was offset by contraction in manufacturing and construction, the Office for National Statistics said.

The pound fell 0.16% against the dollar to $1.4595.

Mining stocks climbed higher after Antofagasta said copper output rose in the first quarter compared from the same period a year ago.

Antofagasta surged 2.8%, Glencore added 1.6%, and Rio Tinto inched up 0.7%, and Randgold Resources gained 1.2%.

Brent crude oil futures increased 2.2% to $46.76 per barrel and WTI crude oil futures climbed 2.7% to $43.79 per barrel.

In London, the FTSE 100 index gained 22.70, or 0.36%, to 6,307.22, while in Frankfurt, the DAX index advanced 55.10, or 0.54%, to 10,314.69.

In Paris, the CAC 40 index rose 26.45, or 0.58%, to 4,559.63.

Adidas AG soared 7.4% to €115.6 after the German sportswear company raised its guidance for 2016 and quarterly operating profit increased 35%.

The company had raised its guidance in February. Now it expects currency-adjusted sales to grow 15% in 2016, up from the previous estimate of 10% to 12% increase.
Net profit from continuing operations is expected to increase 15% to 18%, up from the previous guidance of 10% to 12%.

Brand momentum and the big 2016 sport events, including the European soccer championship and the Rio Olympics, are among the main reasons for the increase.

In the first-quarter, revenues rose 17% to €4.8 billion and increased 22% on adjusted basis.

Operating profit soared 35% to €490 million, while operating margin reached 10.2%, compared to 6% in 2015.

Antofagasta Plc gained 2.8% to 484 pence after the miner said copper output rose in the first-quarter from a year ago and confirmed its full-year output guidance.

The company produced 157,100 metric tons of copper in the quarter ended March, 2016, up 7.3% from the same quarter a year ago.

Last year''s purchase of a 50% stake in the Zaldivar mine and the Antucoya mine offset lower production at Centinela Cathodes and the shutdown of the Michilla mine.

However, first-quarter gold production fell 1.2% to 56,700 troy ounces from the previous year, and molybdenum production dropped 19% to 1,700 tons in the quarter.

Net cash costs decreased 4.2% to $1.37 per pound of copper due to Antofagasta’s cost-savings program.

The miner reiterated its full-year net cash cost guidance of $1.35 per pound of copper, as well as the expected output of 710,000 to 740,000 tons of copper, 245,000 to 275,000 ounces of gold, and 8,000 to 9,000 tons of molybdenum in 2016.

Barclays Plc eased 0.2% to 173.5 pence after the bank said lower revenues at its investment bank unit harmed its first quarter results.

Pre-tax profit for the first three months of the year was £793 million, down from £1.1 billion a year ago. At the investment bank unit, pre-tax profit fell 31% due to declines in bond trading.

The non-core divisions lost £815 million during the quarter, compared to £310 million a year ago. The bank plans to sell its non-core divisions by the end of 2017.

Profit at the two main divisions, Barclays UK and Barclays Corporate and International, rose 18% from the same period a year ago.

In Spain, Banco Santander added 1.3% to €4.59 after the largest euro-zone bank reported better than expected quarterly results, despite a fall in profits.

Quarterly profit declined 5% to €1.6 billion, mainly due to the fall in the Brazilian Real and the British pound. Excluding the currency effects, profit increased 8% from a year ago.

Neste tumbled 7.8% to €26.77 after the state-controlled Finnish refiner posted a bigger-than-expected drop in first-quarter earnings.

Adjusted operating profit fell to €175 million in the first quarter from €215 million a year earlier.

The company didn’t provide an outlook for 2016 and said low crude oil prices to support product demand. CEO Matti Lievonen said he expected high utilization rates of Neste''s plants.