US & World News

Schneider Electric has raised its margin target for 2010 after the publication of a double-digit growth in sales in the second quarter thanks to the performance of emerging countries which still support the group in the second half.

In this context, the company says it should achieve in the second half of the year an increase in organic revenue "broadly comparable to that of the first half.

Schneider Electric is now an EBITA margin of around 15.5% before restructuring costs and impact of consolidation of Areva Distribution.

So far, the group anticipated an improvement in EBITA margin of approximately 14% before restructuring costs and impact of integration Areva Distribution, against 12.9% in 2009 and 16% in 2008.

Schneider, the world leader in low voltage electrical equipment and number two for medium voltage, has reported an EBITA before restructuring and integration charges of Areva Distribution of 1.301 million euros in the first half, up 44%.

Its margin is increased 3.6 points to 15.2%.

The net result has been doubled to 735 million euros.

Turnover increased by 10.5% in the first semester of € 8.571 million (6.4% organic), including 4.661 million in the second quarter, organic growth of 10.2%.

Jean-Pascal Tricoire, chief executive of the group, said he has received "the diversification of (its) end markets, industrial markets and data centers were the first to rebound."

He added in a statement that "the new dynamic economies continue their solid with double digit growth.

Schneider Action closed Thursday at 86.4 euros, giving a market capitalization of around 23 billion euros. Since the beginning of the year, the stock has gained about 5.7% after being awarded more than 54% throughout 2009.

Sequana reported a net profit of 6 million euros in the first half and confirms its target of operating performance in 2010 than that of last year.

The group diversified paper, which has returned to profitability in 2009, said in a statement that the third quarter continue its policy of raising prices, already implemented during the first six months of the year.

This price increase will allow the group to offset rising raw material costs.

"The policy of increasing operating margins and debt reduction will be continued in the second half," says Sequana.

In the first six months of the year, the stationer has reached a turnover up 3.8% to 2.14 billion euros.

Its net debt stood at 670 million euros at end-June 2010, down from 732 million a year earlier.

"The policy of increasing operating margins and debt reduction will be continued on the second half," advised Sequana.

The action Sequana closed Tuesday at 11.50 euros. It is up 44% since the beginning of the year.

Danone issued a first-half operating result slightly better than expected and has carefully noted the objective of sales growth for the full year, considering that the crisis would continue to weigh on European consumption.

The food group, which focuses on further development of emerging markets, now provides that its comparable sales will grow at least 6% when he was previously an increase of at least 5%.

He always bet on an increase in operating free cash flow in historical data at least 10% and stability of its operating margin in 2010 compared to 2009.

"We continue to invest in countries, products and brands with strong potential: Child Nutrition in Asia, fresh dairy products in the United States, Brazil, Russia, where Danone and Unimilk merger provides us with very significant growth opportunities long term, "said Franck Riboud, CEO of Danone.

In a statement, he confirms that water and medical nutrition, the group continues "to identify potential for growth in emerging markets and through new models."

At the same time, Danone has continued its efforts to improve productivity, says its chief executive.

The action Danone, with brands ranging from yogurts Actimel waters of Evian, lost 2.23% to 45.285 euros at 9:38, while the CAC 40 0.93% but took the DJ Stoxx European " Food yielded 1.13%.

Commenting on the first half, Francis Priest, CM-CIC Securities, believes they are "good bill" but noted that Danone "remains cautious on the S2 due to a persistently difficult".

The analyst believes that the decline of the title, which takes place in small volumes, reflects disappointment with the failure to raise the target group at the ROC, which the market had anticipated.

INCREASE IN VOLUME OF THE 2ND QUARTER 8.9%

On a comparable basis, the EBIT of Danone rose 2% on a comparable basis to 1280 million euros over the period January to June, showing a margin of 15.30%.His current net income was up 10.1% to 848,000,000 euros.

Turnover amounted to 4.386 million in the second quarter (+6.9%) or 8.364 million in the half. Excluding the effects of exchange rates (+7.0%) and changes in scope of consolidation (+0.1%), it grew 6.9% on a comparable basis in the second quarter.This organic growth is divided into volumes rising by 8.9% and a decrease in value by 2.0%.

Sales rose only 1.4% to 2,420 million euros in Q2 while they increased by 15.3% to 635 million in Asia and 15.9% in the rest of the world to 1331000 .

The consensus Thomson Reuters StarMine, the operating result was expected of 1.265 million euros (+5%) and turnover of 8.261 million (+9.8%), representing an operating margin of 15.3 %.

The fresh dairy products division, which represents 55% of sales in Q2, increased its sales by 6.6% to 2.436 million euros over the period. On the entire first half, the operating margin of this sector appears to 13.94% (-94 bps).The volume effect was positive at 9.3% but the negative value effect of 2.7% due to price reductions made in several countries, Danone said.

The division "Water" (19% of sales) has seen its sales grow by 4.8% to 828 million while its margin declined 75 basis points over the first half to 13.70%.

Sales of the "Child Nutrition" (19.5% of sales) rose 8.7% to 857 million (margin down 27 bps in the first half to 19.19%).

Finally, those of the pole "medical nutrition" increased by 10.8% to 265 million (margin decline of 86 bps to 19.90% in the first half).

Free cash flow from operations increased 34.9% to EUR 858 million, or 10.3% of sales in the first half, against 636 million and 8.5% of sales from the same period of last year.

In turn, capital expenditures totaled 275 million euros, or 3.3% of turnover. This level is below the annual forecast, ranging from 4% to 5% in sales due to a timing effect, Danone said.

Net debt amounted to 3180 Danone million euros in the first half.

* Danone Graph comparing to its competitors:

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So few banks have failed this test of strength by 91 European institutions passed that investors should focus on groups which narrowly passed the test when markets open Monday.

Only seven European banks have failed these tests, including five Spanish settlements, and may need to raise 3.5 billion euros of capital, significantly less than expected.

However, quality testing, to assess the resilience of banks to a new recession over the next two years, has been criticized, including some judging too easy.

The results of these tests has also been somewhat overshadowed by a plethora of data on European economies suggesting that banks may face less severe economic pressures and defects on smaller loans previously imagined.

Accordingly, investors should make their own judgments on a case by case, largely due to additional data from tests such as those for the portfolios of sovereign debt, to determine what could be the next sector weaknesses.

QUESTIONS ON THE SEVERITY OF SELECTED SCENARIOS

"With so few banks have failed, investors will question whether the economic scenarios have been sufficiently severe," said Jon Peace, an analyst at Nomura.

"It is natural for investors to consider the margin with which banks have gone," he adds, citing the large margin of success of Scandinavian and British institutions, while banks Greek, Spanish and Italian 's have come out with more difficulty.

Then he was asked banks to manage to maintain a solvency ratio of less than 6% to pass the test, Sept. 10 institutions reported a Tier 1 ratio between only 6 and 7%.

Among these facilities include Deutsche Postbank, Piraeus Bank, Allied Irish Banks, Monte dei Paschi di Siena, Banca UBI, Bankinter and eight small Spanish settlements.

If an objective test was to facilitate the financing contracts with banks recently met with difficulties in this area, schools still considered too risky could nevertheless continue to have problems, except to raise more capital.

"History is not necessarily complete, and if financing costs do not improve for some banks, then we would not be surprised to see additional resistance tests (carried out) by some central banks to future, "warns Jon Peace of Nomura.

As investors take position on the results of resistance testing Monday at the opening of markets, central bank governors and heads of Supervisors will meet in Switzerland to discuss the reform proposals on the strengthening of the capital own banks.

But after their success in tests of strength, European banks may find it difficult to argue that they can apply a stricter financial regulation.

"Banks are ready to begin implementing the new rules are necessary to strengthen the capital reserves and liquidity management of banks," also told Reuters Insider, after the publication of results of resistance testing, Vitor Constancio, Vice-President of the ECB.

The Dutch chemical group Akzo Nobel announced that it will continue to monitor its costs despite having already reached its 2011 margin target and announced quarterly results exceeded expectations.

Around 7:15 GMT, Akzo Nobel has risen by 3.33% to 45.765 euros, while the index grouping the European chemical values yielded 0.34%.

The first painting company in the world said it had reached its goal in the second quarter EBITDA margin for 2011, set at 14%.

Its earnings before interest, taxes, depreciation and amortization (EBITDA), excluding items, rose to 614 million euros, thanks to rising demand and cost reduction.

The nine analysts polled by Reuters had expected a net profit of 576 million euros. During the same period the previous year, the group had reported an EBITDA of 506 million euros.

"The developed markets remain difficult. The pressures on prices of basic materials and shortages are expected to continue in the third quarter.We will keep a watchful eye on the market environment and the costs will continue to be managed aggressively, "said Chief Executive Hans Weijers, in a statement.

The chief financial officer Keith Nichols said it expected an increase in material prices between 4% and 5% this year but it believes that the situation should start to improve from the end of the third quarter, which should not threaten margins.

Akzo Nobel said it would inform investors of his future ambitions September 28 in London.

In the second quarter, its revenue increased 13% to 3.9 billion euros, exceeding analysts' expectations which projected sales of between 3.58 and 3.8 billion euros.

U.S. rivals PPG and Sherwin-Williams also beat the consensus in the second quarter but they were cautious for the remainder of the year.

His rivals in the Benelux, DSM and Solvay, must publish their quarterly Thursday and Aug. 3, respectively.

Crude prices have come down on Wednesday after the announcement of an unexpected rise in crude inventories in the U.S. and very cautious statements of the President of the U.S. Federal Reserve on the economic situation.

On the New York Mercantile Exchange, crude for delivery in September ended a decline of $ 1.02, or 1.31%, to 76.56 dollars a barrel.

U.S. crude reserves rose 400,000 barrels last week, when economists expected a drop instead of 1.4 million barrels.

In addition, the chairman of the Fed Ben Bernanke said Wednesday that the Fed was ready to take additional measures as necessary to sustain growth given the high level of uncertainty.

Accor announced Tuesday an increase of 5.1% of its turnover in the hotel industry in the first half on a comparable basis, driven by the high and mid-range.

The fourth group behind global hotel InterContinental, Marriott and Hilton and Starwood publish its first financial data since the demerger of its business of prepaid services, Edenred, July 2.

The total turnover of the group were up by 6.1%, representing a growth of 4.7% on a comparable basis, to 2.849 million euros.

On the only hotel business, which include brands Ibis, Sofitel and Motel 6 in the U.S., net sales increased 7.5% as reported at 2.723 million.

In the second quarter alone, the organic growth of the hotel was up 8.2% at constant scope and exchange rates.

"In most countries, especially in Europe, the recovery began in the first quarter accelerated in the second quarter, thanks to a favorable base effect," said Accor in a statement.

The group claims to have earned a higher "backed" by its occupancy rate in the upper and mid-range and higher average prices of its main markets, France, Germany and the United Kingdom.

Hotel groups noted an improvement in demand, the slow economic recovery that encourage consumers to resume their journeys.

Marriott International issued last week an increase in profit in the second quarter, benefiting from increased prices of its rooms in North America.

Accor announced the sale in early July Newrest 60% of its business catering on trains of the Compagnie des Wagons-Lits (CWL).

Edenred Monday announced an increase of 4.7% of its turnover in the second quarter, growth of Latin American operations have helped offset a more difficult economic environment in Europe.

The shares closed up 0.8% to 23.1850 euros, giving a market capitalization of 5.28 billion. It fell 39% since the beginning of the year.

ZenithOptimedia noted for his third consecutive growth forecast for global advertising market this year after surprisingly strong spending by advertisers in the U.S. and Europe in the first half.

The agency purchases of space, a subsidiary of Publicis, now expects growth of 3.5% in 2010 against 2.2% previously, considering that all regions should show some growth, even Europe West.

For France, ZenithOptimedia has raised its forecast to 1.7% in 2010 against 1.1% previously, largely thanks to television which has greatly benefited from the opening to competition of Paris and gambling Online.

"The bulk of the upward revision is in North America and Western Europe (…), But these regions grow more slowly than most emerging countries, "ZenithOptimedia said in a statement, adding that emerging countries should support the growth of the global advertising market in the coming years.

The agency expects growth of 2.4% in 2011 and 2.9% in 2012 in industrialized countries, compared to respective rates of 9.1% and 9.8% expected in emerging markets, with support from Asia-Pacific and Latin America.

For the global market, ZenithOptimedia has raised its growth forecast from 4.1% to 4.5% this year and confirmed its expectations of a 5.3% rise in 2012, after a fall of 10.3% in 2009.

ZenithOptimedia now expects a solid growth of 2.2% in Western Europe this year, despite concerns about the debt of countries in the euro area, against 0.4% previously.It anticipates a gradual increase in advertising spending in 2011 and 2012, according to the request after the entry into force of austerity plans.

HEXAGON A CONTRARIO IN 2011

In France, where business confidence is wavering, the agency expects a slowdown in market growth in 2011 and 2012, unlike the global trend.

The strongest contrast in the forecast from ZenithOptimedia North America, where the agency now expects growth of 1.3% instead of down 1.5%, benefiting from a strong recovery in demand and consumer confidence.

Television has gone through the crisis relatively well advertising, consumers tend to spend more time at home with the development of new technologies such as HDD recorders. Even more dominant in emerging markets, the television should represent 40.8% of the global advertising market in 2012 against 39.2% in 2009.

Internet advertising spending, third medium after television and press, expected to reach 17.1% in 2012 against 12.7% in 2009 to promote the growth of mobile internet and social networks.

JPMorgan Chase reported better than expected results in the second quarter with a decline in provision for credit losses, something that gives hope to investors that things return to normal in the bank.

However, the action declined substantially over 2% as investors aggrieved by his assessment of economic conditions.The KBW bank index was weakening even more, 2.45%.

Moreover, the bulk of quarterly earnings from revenue sources that are not stable, such as reduced bad debt provisions, while in some segments, like the conventional mortgage, there are more and more bad debt, which bodes ill for banks such as Citigroup and Bank of America, which publishes Friday.

Income trading at JPMorgan has declined but it is better than expected, which is perhaps a positive sign for banks such as Goldman Sachs Group and Morgan Stanley, who announce their quarterly results next week.

"The results are just adequate and there is a little less than it seems," said Doug Kass (Seabreeze Partners Management).

The outstanding loans of the bank has continued to decline, showing it is reluctant to risk new loans yet.She says she can not yet assess how the reform of financial regulation will affect its accounts, information, precisely, investors were waiting impatiently.

ONE LESS OPTIMISTIC DG

The CEO Jamie Dimon appeared less optimistic about the future than it was in the first quarter, when he said that the economic recovery of the United States could be solid.

"It is too early to measure the improvement that we observe from now" in the consumer credit, which yields "are unacceptable", he has merely stated Thursday.

"We do not know what will happen to house prices and we believe we are not alone," he later told analysts.

The bank reported a net profit of 4.8 billion dollars (3.7 billion euros) or $ 1.09 per share, against 2.7 billion (28 cents per share) for the corresponding period last year.

Net income for the investment bank fell 6% to $ 1.38 billion. The second quarter was marked by markets that have evolved sawtooth, alternating example falls in the stock exchanges with peaks rising in the bond market.

The income earned by the JPMorgan bond, commodity and currency has dropped 28% to 3.56 billion.The bond trading has been a major driver of earnings of all major banks.

The bank posted a windfall of $ 1.5 billion, or 36 cents per share, due to the reduction in provision for credit during the quarter.Excluding this benefit, the result announced by JPMorgan – 73 cents – more than analysts' consensus that emerged at 67 cents per share, according to Thomson Reuters I / B / E / S.

The bank does not renew every quarter this year discount stores but Jamie Dimon said it was the thing that needed to be done during this quarter.

He said that the bank has a solid liquidity, having repurchased $ 500 million of its shares in the first half, but noted that the bank would be more certain of its capital before increasing its dividend.

Many banks want to raise the dividend but regulators see it a bad eye, which makes more likely redemptions.

The bank said its losses on consumer loans, mortgages, credit cards and other debts had declined in the second quarter both compared to the first three months of the year versus the second quarter 2009.

JPMorgan has finally reported a charge of $ 550 million charge related to the British banking bonuses. She had previously launched a warning on that charge, saying it would be an "important" in the quarter.

Despite advances in EU Member States towards the Parliament, the reform of the European financial supervision remains blocked until at least early September, we learned from diplomatic and parliamentary.

On Tuesday, however, a new compromise between the bloc on this reform, in gestation for over a year, had hinted at an early agreement.

But further discussions held Wednesday morning between representatives of governments, the Parliament and the Commission were ultimately unsuccessful and the participants decided to cancel the meetings scheduled next week to do again until the fall.

"There will be no further talks before late August or early September and I think we can say that the talks failed, it was said parliamentary sources.

"The core issue is Article 6 which concerns the principle of direct supervision exercised at European level by the new supervisors," the source said, adding that the objective was to find a consensus with all states, including Great Britain.

A second source later confirmed the postponement of talks and held that "one or two additional steps the council (of EU ministers) in the direction of the European Parliament would be required to obtain an agreement."

In a statement to Reuters, the EU Internal Market Commissioner, Michel Barnier, said the objective was to find "a dynamic and balanced compromise.

"We are in the final straight but there is still some way to go," he said.

TECHNICAL MEETINGS

Without result, Wednesday's meeting helped to bring some positions of Parliament and Member States.

This applies to certain powers given to the European Council of systemic risk and the three new authorities in supervising the banking, insurance and markets.

These could permit, under certain conditions, products or financial practices, such as short sales.They would also be binding mediation in cases of disagreement between two supervisors.

The principle that the authorities could apply directly to a settlement without going through the national supervisor, in emergencies, is also acquired, as it does not undermine the budgetary sovereignty of States.

Moreover, these emergencies could be declared by the authorities but would instead be covered by the European Parliament alongside the Member States.

In contrast, the principle of supervision at European level for the European entities of pan-European nature, such as clearing houses, remains a problem.

A source close to the discussions, meetings at technical level should be organized in the coming days to work on these issues.

The Belgian presidency of the EU should work to include this item on the agenda of the meeting of ambassadors of Twenty-seven of the next week to lay the groundwork for negotiations in September.

The objective remains that the states and the Parliament adopt these texts in the first half of September so that authorities can start to work as planned on 1 January 2011.