Sperian Surges; Merck KGaA Earnings Plunge

123jump.com Staff
27 Apr, 2009
New York City

With the first case of swine flu in Spain, investors were cautious. Airlines and hotels declined but pharmaceutical companies gained in trading. Merck KGaA, the drug and chemical maker in Germany first quarter net income plunged to 56.7 million euros. Sperian Protection in Pairs surged 23%.

[R]4:00PM New York, 10:00PM Frankfurt – With the first case of swine flu in Spain, investors were cautious. Airlines and transportation companies declined but pharmaceutical companies gained in trading.[/R]

The DAX 30 index added 19.75 or 0.4% to 4,694.07.

The market research company GfK AG said that the consumer confidence remained steady for the third month in a row on weak inflation and expectations of economic revival. Germany is bracing for unemployment rate above 10% according to the institute in 2010 as exports remain weak and government stimulus take time to be effective.

Merck KGaA, the drug and chemical maker based in Darmstadt, Germany reported first quarter net income declined to 56.7 million euros from 239.1 million euros on revenues of 1.85 billion euros. The company holds the largest market share in liquid crystals used in the LCD TV panels but the market has been volatile and tough for the company.

The chief executive of the company Karl-Ludwig Kley estimated that the market is at its bottom and “convinced that we reached the bottom” and estimated operating profit margin between 20% and 30% for the year.

Gainers and Losers

Of the 30 stocks in DAX index, 10 increased and 20 declined. Deutsche Lufthansa led decliners with a fall of 8.2% followed by losses in Salzgitter AG of 3.3%, in Allianz SE of 3.2%, in Commerzbank of 2.6% and in Hannover Rueckversicherung AG of 2.6%.

Metro AG led gainers in DAX Index with a rise of 3.8% followed by gainsin deutsche Bank of 3.5%, in E.On AG of 3.3%, in Volkswagen AG of 2.8% and In Merck KGaA of 2.3%.

In Paris trading, CAC-40 was nearly unchanged on a rise in pharmaceuticals and fall in airlines and hotels.

Accor SA declined 4% to 31.47 after investors sold stocks of travel related stocks on the likely cancelation of breakout of swine flu in Mexico. Air France-KLM Group dropped 6.6% to 8.39 euros and Club Med SA declined 6.3% to 12.55 euros.

Societe Generale SA dropped 3.7% on media speculation that the company may have suffered losses between 5 billion euros and 10 billion euros in its alternative investment management unit published in Liberation newspaper. The company later denied the losses reported in the article.

Sperian Protection SA soared 23% to 34.50 euros after the investors surmised that the maker of guards and personal protective equipment may see increase in demand for its products. In 2008 the maker of protective shoes, eye shades, clothes and helmet maker reported revenue of 751 million euros and 101 million operating earnings.

European Pharma Rise

European markets were on the decline with a fall in commodities and crude oil prices and first reported case of swine flu in Spain. Airlines led the decliners in trading with Air France KLM and British Air declined as much as 10% and 17% and the Spain based Iberia Lineas Aereas de Espana SA dropped 9%.

Pharmaceutical companies edged higher on the hopes of higher sales of anti-viral drugs to governments. Roche Holding AG gained 3.3% in Zurich trading and GlaxoSmithKline PLC gained 5.4% in London trading.

Glaxo makes Relenza and Roche sells Tamiflu and government agencies and World Health Organization is looking to diversify their inventory of flu treatment drugs.

The British pound declined 0.5% against the U.S. dollar and 1% against yen after former UK Treasury adviser Roger Bootle worried that the Britain may face severe contraction in the economy on persistent weakness in home prices.

Europe Markets Review

In London FTSE 100 Index closed higher 11.02 or 0.27% to 4,167.01, in Paris CAC 40 Index decreased 0.42 or 0.01% to close at 3,102.43 and in Frankfurt DAX index higher 19.75 or 0.42% to close at 4,694.07. In Zurich trading SMI increased 62.92 or 1.23% to close at 5,175.95.