European Markets Drop on Weak Earnings, Carlsberg, JCDecaux Fall

Lucy Stoeva
11 May, 2016
New York City

European stock markets declined on disappointing earnings reports and company news. JCDecaux lowered its second-quarter outlook. Banco Popolare reported first-quarter loss due to loan write-downs. Carlsberg

[R]4:00 PM Frankfurt, Germany – European stock markets declined on disappointing earnings reports and company news. JCDecaux lowered its second-quarter outlook. Banco Popolare SC reported first-quarter loss of €314 million due to loan write-downs. Carlsberg’s revenue declined on weak sales in China. Deutsche Post reported double-digit profit growth.[/R]

European shares declined on Wednesday on disappointing earnings and corporate news. However losses were trimmed by a surge in volatile resource sector stocks.

Among major losers, JCDecaux plummeted 9.6% on weak second-quarter outlook, while Banco Popolare SC slumped 8.9% on a surprising first-quarter loss due to loan write-downs.

Carlsberg erased 2.6%, TUI and Experian lost 1% each on lower than expected financial results.

Concerns about mergers also contributed to the negative sentiment. Raiffeisen Bank plummeted 8.6% ahead of the Austrian bank’s merger with its parent company Raiffeisen Zentralbank.

Spanish Telefonica lost 1.4% on reports that the European Union may block the sale of its U.K. mobile unit O2.

On the positive side, Deutsche Post advanced 2.6% after Germany controlled postal services operator reported double-digit profit growth after reorganizations.

Norwegian publisher Schibsted surged 12.5% after posting first-quarter core earnings ahead of expectations.

In the U.K, losses were limited by a strong surge in mining stocks as the U.S. dollar continued to decline and made the dollar-denominated commodity prices more attractive.

The dollar fell against most major currencies, down 0.46% against the euro to €0.8751 and losing 0.72% against the yen to ¥108.5530.

Among mining shares, Randgold Resources soared 5.4%, Anglo American PLC jumped 4.9%, Fresnillo gained 3.9%, and BHP Billiton was up 1.6%.

U.K. manufacturing output increased 0.1% in March, below expectations. The data, however, showed an improvement from a contraction of 0.9% in February.

Overall industrial production grew 0.3% in March, but fell 0.4% in the first-quarter from a year ago quarter.

In London, the FTSE 100 inched down12.58, or 0.20%, to 6,144.07, while in Frankfurt, the DAX index dropped 73.43, or 0.73%, to 9,972.01.

In Paris, the CAC 40 index fell 31.83, or 0.73%, to 4,306.83.

Banco Popolare SC plunged 8.9% to €4.41 after surprisingly reporting a first-quarter loss of €314 million due to loan write-downs.

The write-downs were a condition of the European Central Bank for the approval of the planned merger with Banca Popolare di Milano.

Earlier in the day, the stock was down 14% to record low.

Carlsberg A/S lost 2.6% to 616.5 Danish kroner after the brewer posted a 3% decline in first-quarter revenue to 13.01 billion kroner due to decline in the Chinese market and foreign exchange fluctuation.

The company did not disclose its profit, but expects low single-digit organic operating profit growth in 2016.

The brewer forecasted negative foreign exchange impact of 550 million kroner in 2016, lower than the earlier guidance of 600 million kroner.

Deutsche Post AG advanced 2.6% to €26.51 after Germany’s main postal company reported double-digit profit growth due to booming parcel deliveries for online retailers and savings from reorganizations.

First-quarter earnings before interest and taxes jumped 21% to €873 million, above expectations.

Revenue fell 6.1% to €13.9 billion due to currency effects, reduction in fuel surcharges, and an accounting shift.

Deutsche Post expects full-year EBIT of €3.4 billion to €3.7 billion. In addition, the company expects lower corporate tax rate of 14%, compared to previously expected 18% tax.

Experian Plc shed 1% to 1,257 pence after the credit-check services company posted a decline in fiscal-year revenue to £3.2 billion and a slight increase in pre-tax profit to £711 million.

The company is planning to buy back $400 million of its own shares.

JCDecaux SA plummeted 9.6% to €35.6 after the French outdoor advertising company negatively revised its second-quarter outlook.

Although first-quarter adjusted revenue grew 15.3% to €748.5 million, JCDecaux forecasts revenue growth of only 3% in the second-quarter, due to the slowdown of the world economy.

The company warned of substantial delays to its Transport for London bus shelter contract because of the complexity of the installation. In the beginning of the second quarter, JCDecaux has installed only 20 digital screens, compared to planned 300 screens, thus leading to lower advertising revenue.

Raiffeisen Bank erased 10.1% to €12.19 on concerns about the merger of the Austrian bank with its parent company Raiffeisen Zentralbank.

In Oslo, Schibsted surged 12.2% to 286.4 Norwegian kroner after the publishing company reported core earnings above expectations.

First-quarter EBITDA grew to 421 million kroner from 376 million kroner a year ago. The company confirmed its forecast of annual revenue growth of 15% to 20% in online classifieds for the mid to long-term.

CFO Trond Berger said he expected the decision on the acquisition of Swedish online real estate web portal in June.

TUI AG fell 1% to 1,057 pence after revenue of the travel-service provider came below expectations.

Revenue increased 2.7% to £5.3 billion in the first-half of the 2015/2016 financial year from a year ago.

Pre-tax loss narrowed to £251 million in the first-half of its fiscal year from £257 million in the same period a year ago.

TUI plans to sell its Specialist Group, which includes adventure and education holiday brands, to focus on its main tourism business.

Summer bookings are in line with the company''s expectations, with 59% of capacity already sold. The company confirmed its outlook for at least 10% growth in underlying earnings.

Telefonica SA lost 1.4% to €9.23 on reports that the European Union would block the Spanish telecom’s plan to sell its U.K. mobile unit O2 to CK Hutchison Holdings.