Commerz Bank, ING, Merck Report Loss

123jump.com Staff
18 Feb, 2009
New York City

European stocks fall as OECD economies contract. Daimler AG dropped after rating agency lowered its debt rating outlook. Commerzbank reported full-year operating loss and insurance company AXA reported second half loss. Heineken net profit for full year dropped 87%.

[R]1:00PM New York, 6:00 Frankfurt – European stocks fall as OECD economies contract. Daimler AG dropped after rating agency lowered its debt rating outlook. Commerzbank reported full-year operating loss and insurance company AXA reported second half loss.[/R]

Disappointing bank earnings and falling commodity prices weighed on European stocks today. An OECD report indicating that economic growth in the world’s 30 most developed countries contacted last year, poured more gloom into distressed markets.

However, news of a $75 billion mortgage facility by the US government to strengthen the mortgage market and rescue distressed homeowners helped the trading sentiment.

Moody''s Investors Service today downgraded Daimler AG debt on the worries that the profits may be lower than estimated. The rating agency also painted a gloomy outlook for sales and profitability.

Commerzbank AG, Germany’s second-largest bank, today reported a full-year operating loss of 378 million euros for 2008 compared net income of 2.5 billion in 2007. The earnings beat analyst estimates.

Market sentiment

In Frankfurt trading the DAX Index declined 0.1% or 2.81 to 4,213.79. Of the DAX index shares, 11 gained, 18 lost and 1 traded unchanged.

Commerzbank AG led advancers after beating analyst profit estimates with a gain of 5.4%, followed by gains in Deutsche Telekom of 3.3%, in Deutsche Boerse of 3.2%, in Deutsche Postbank of 2.7% and in Merck KGAA of 2.4%.

Merck also rose after the German manufacturer of drugs and chemicals reported fourth-quarter loss of 279.5 million euros, just slightly below expectations.

K+S AG led decliners with a loss of 4.9%% followed by losses in Metro AG of 4.3%, in Deutsche Post-RG of 3.1%, in Daimler AG of 3% and Allianz SE –REG of %.

In Paris the CAC 40 lost 0.9% to 2,849.10.

Societe Generale led advancers with a gain of 2.3% after reporting a profit in the fourth quarter of 2008, followed by gains in Air Liquide of 2%, in Unibail-Rodamco of 1.6%, in Total of 0.1% and Peugeot of 0.1%.

Renault led decliners with a loss of 5.4%, followed by losses in Dexia of 5.1%, in Michelin of 5.1%, in ST Microelectronics of 4.7% and GDF Suez of 2.7%.

Construction Activity declines in Europe

The Luxembourg-based European Union’s statistics office in a statement today said construction activity in the region contracted in December 2008 compared to a year ago quarter.

According to the report, the decline, which was more pronounced in Germany, Europe’s largest economy, was the worst since 1991. In Germany alone, construction output dropped 3.4%, new property developments in the Euro area fell 10%.

Growth in OECD Economies slows

Bloomberg today reported that fourth quarter economic growth in the Organization for Economic Cooperation and Development (OECD) slumped to a record low due to global economic slowdown.

The report said that growth in the world’s thirty most developed economies declined 1.5% against the third quarter, the worst decline since the organisation was formed in 1961.

The GDP contracted 0.2% in the third quarter from the second.

The US, the world’s largest economy, recorded an economic declined of 1% in the fourth quarter, while Japan the world’s second largest economy, fell 3.3% in the last three months of the year.

Moody’s downgrades Daimler AG

Moody''s Investors Service today downgraded Daimler AG to a long-term rating of A3 and a short-term rating of Prime-2.

Daimler, the world’s second-largest luxury car-maker, yesterday reported a pre-tax fourth-quarter loss of 1.53 billion euros in 2008, its first quarterly loss since 2007.

Group revenues declined 4% in December 2008 compared to 2007. Revenues in the fourth quarter fell 12% from the fourth quarter of 2007.

Mercedes-Benz car sales declined 22% in the same period last year compared to the previous year''s quarter. Sales volumes for vans and busses also declined 18% and 14% respectively during the review period.

Frey, Senior Vice President and the lead analyst at Moody''s for the European automotive sector, said: ""The negative outlook reflects the more severe decline of Daimler''s key markets than previously anticipated by magnitude as well as by pace which also resulted in a significant deterioration of the company''s profitability and cash generation.""

The rating agency also changed the group’s outlook from stable to negative.

Obama mortgage plan brings new optimism

The US government announced a mortgage facility worth $75 billion to rescue distressed homeowners. About 3 to 4 million homeowners will benefit.

Earnings Review

AXA SA, Europe’s second-largest insurer said second-half net loss was €1.76 billion compared to net profit of €2.49 billion, a year earlier.

AXA SA, in the last one year traded as high as €40.00 in April 2008 and as low as €13.78 in February 2009. Based on the yesterday’s closing price of €13.90 the company has market cap of €28.64 billion.

Commerzbank AG, Germany’s second largest bank said fourth quarter net loss was €809 million compared to net profit of €201 million, a year earlier.

Heineken N.V., the biggest Dutch brewer said full-year sales rose 27% to €14.3 billion. Net profit in the full-year fell 87% to €209 million compared to net profit of €807 million, a year earlier.

Heineken N.V, in the last one year traded as high as €21.67 in June 2008 and as low as €20.50 in December 2008. Based on the yesterday’s closing price of €21.37 the company has market cap of €10.27 billion.

ING Groep N.V., the Dutch bank and insurer said fourth quarter net loss was €3.71 billion or €1.82 per diluted share compared to net profit of €2.48 billion or €1.18 per share, a year earlier.

ING Groep N.V, in the last one year traded as high as €40.67 in April 2008 and as low as €6.37 in February 2008. Based on the yesterday’s closing price of €6.73 the company has market cap of €13.68 billion.

Merck KGaA, a Germany-based pharmaceutical and chemical company said fourth quarter sales rose 5.4% to €1.9 billion. Net loss in the quarter was €279.5 million compared to net profit of €3.39 billion, a year earlier.

Societe Generale SA, France’s third- largest bank said fourth quarter net profit €87 million compared to net loss of €3.35 billion a year earlier.

Societe Generale SA, in the last one year traded as high as €78.99 in May 2008 and as low as €22.50 in February 2009. Based on the yesterday’s closing price of €23.20 the company has market cap of €12.78 billion.