Economic Rebound in Europe; VW, Porsche Feud

Mayank Mehta
13 Aug, 2009
New York City

Euro area economic decline slowed sharply in the second quarter and the economies of Germany, France and Greece expanding. Volkswagen will acquire 42% stake in Porsche. Aegon posts

[R]7:00PM Frankfurt, Paris; 1:00 PM New York – Euro area economic decline slowed sharply in the second quarter and the economies of Germany, France and Greece expanding. Volkswagen will acquire 42% stake in Porsche. Aegon posts €161 million loss in second quarter. Celesio second quarter net increased 1.1% on lower taxes. RWE first-half profit advanced 4.7% on tariffs.[/R]

Gross domestic product declined slowed to 0.1% in the second quarter from the first when it fell 2.5% in the euro zone. Germany, France and Greece expanded at 0.3% in the quarter and Lithuania fell 12.3%.

UK economy fell 0.8% in the second quarter after decreasing at 2.4% in the first according to the latest read from the Eurostat, according to the Statistical Office of the European Communities.

In London FTSE 100 Index closed higher 38.70 or 0.82% to 4,755.46, in Paris CAC 40 Index increased 17.15 or 0.49% to close at 3,524.39 and in Frankfurt DAX index higher 51.02 or 0.95% to close at 5,401.11. In Zurich trading SMI increased 24.23 or 0.41% to close at 5,986.72.

Volkswagen and Porsche SE settled their four month old battle. Volkswagen will pay €3.3 billion for 42% of Porsche by the end of the year and will merge the rest of the company by 2011.

The deal culminates the four month battle to acquire each with the first shareholder outside the two controlling families in the Middle East. Volkswagen will issue preference shares to finance the purchase in 2010.

Volkswagen in the press release estimated that in the long term the operating profit of the group will increase to €700 million.

Gainers & Losers

Aegon N.V declined 6.4% to €5.34 after the insurer second quarter net loss was €161 million compared to net profit of €276 million a year ago.

Aeroports de Paris SA rose 4.8% to €59.12 the French airport group reaffirmed its full-year guidance for core earnings as it reported first-half revenue figures which exceeded market expectations despite a steep decline in airline passenger traffic due to the global recession.

Arcandor AG fell 18.3% to €0.247 after the tourism and retail group said that “Due to most recent developments and a difficult market environment the prospects for attracting an anchor investor allowing the group to continue as a going concern are by now considered to be extremely low.”

Aurubis AG rose 2.0% to €25.00 after the copper producer said nine months revenues fell 21.3% to €4.70 billion from €5.98 billion a year ago. Net loss in the nine months was €9 million or €0.23 per diluted share compared to net profit of €167 million or €4.11 per share a year ago.

Celesio AG dropped 8.0% to €19.91 after the pharmaceutical distribution company said first-half sales fell 2% to €10.4 billion from €10.6 billion a year ago. Net profit in the first-half rose 0.7% to €124.4 million or €0.72 per diluted share compared to net profit of €123.5 million or €0.72 per share a year ago.

K+S AG the chemical sector surged 0.5% to €37.45.

Lanxess AG the chemical company said first-half sales fell 30.5% to €2.3 billion from €3.3 billion a year ago. Net profit in the first-half fell 98.1% to €3 million or €0.04 per diluted share compared to net profit of €159 million or €1.91 per share a year ago.

Nestle SA the food group said first-half sales fell 1.5% to CHF52.3 billion from CHF53.1 billion a year ago. Net profit in the first-half fell 2% to CHF5.1 billion or CHF 1.40 per diluted share compared to net profit of CHF5.2 billion or CHF1.39 per share a year ago.

RWE AG dropped 1.1% to €59.08 after the power producer said first-half sales fell 1.3% to €23.6 billion from €23.9 billion a year ago. Net profit in the first-half rose 91.4% to €2.22 billion or €4.17 per diluted share compared to net profit of €1.16 billion or €2.12 per share a year ago.

STADA Arzneimittel AG the pharmaceutical sector slid 5.8% to €15.67. TUI AG the engaged in the tourism sector rose 9.6% to €5.16.

Volkswagen AG the automobile manufacturer declined 0.2% to €225.93 and Porsche SE increased 1.6% to €44.60.

Europe Markets Review

In London FTSE 100 Index closed higher 38.70 or 0.82% to 4,755.46, in Paris CAC 40 Index increased 17.15 or 0.49% to close at 3,524.39 and in Frankfurt DAX index higher 51.02 or 0.95% to close at 5,401.11. In Zurich trading SMI increased 24.23 or 0.41% to close at 5,986.72.

DAX Index Movers

Fresenius Medical Care AG & Co. KGaA led the decliners in the DAX index of 2.32% followed by losses in Fresenius SE of 1.74%, in Bayer AG of 1.48%, in Salzgitter AG of 1.24%, in K+S AG of 0.81%.

BASF AG led gainers in the DAX index with a rise of 4.08% followed by increase in Hannover Re AG of 3.64%, in MAN SE of 3.28% in BMW AG of 3.17%, in Thyssenkrupp AG of 2.63%.

CAC-40 Index Movers

Danone SA led the decliners in the CAC-40 index of 1.91% followed by losses in Sanofi-Aventis SA of 1.29%, in TOTAL SA of 0.85%, in Suez Environnement SA of 0.54%, in GDF Suez SA of 0.34%.

Renault SA gainers in the CAC-40 index with a rise of 4.97% followed by gains in Alcatel Lucent of 4.27%, in Compagnie de Saint-Gobain SA of 4.22%, in Lafarge of 3.46%, in Credit Agricole SA of 3.19%.

FTSE 100 Index Movers

Of the stocks in the FTSE 100 index, 77 increased, 25 declined and none were unchanged.

Thomas Cook Group Plc decliners in the FTSE 100 index with a loss of 4.78% followed by losses in Thomson Reuters Plc of 2.57%, in Inmarsat Plc of 2.41%, in Reed Elsevier Plc of 2.16%, in GlaxoSmithKline Plc of 1.85%.

Prudential Plc led gainers in the FTSE 100 index with a rise of 10.70% followed by increase in Petrofac Plc of 8.92%, in Eurasian Natural Resources Corporation Plc of 5.96%, in Xstrata Plc of 5.95%, in Kazakhmys Plc of 5.44%.