News – Business & Economi

Several large European companies have released information Thursday surprisingly positive, triggering a sudden resurgence of investor confidence after months of pessimism fueled by the debt crisis and fears of an implosion of the euro area.

With these new found reassuring, have added good indicators for the month of July: further decline in unemployment in Germany and strong growth of economic sentiment in the euro area.

Economists point out however that this resurgence in good mood after the dark days of rumors of a default by Greece and other countries in the euro area should not be forgotten that economic recovery will be gradual given the austerity measures by several governments.

Among the big names who released Thursday, Publicis third global advertising agency, has raised its expectations for 2010 after having exceeded expectations in the first half to gain the favor of budgets and increased costs to its customers.

"Publicis has strengthened during the crisis," said chief executive Maurice Levy to the press.

"We really feel at the end of the economic crisis, or even having put completely behind us," he added.

These words are not isolated.

The Dutch group Randstad specializes in the interim, number two worldwide in its sector, said he did not see any sign of relapse of the economy.Companies are hiring, he said, particularly in Germany and France.

"GROWTH AROUND"

"We are seeing growth everywhere. Even in Greece, we see a normal development. We do not observe any signs of relapse," said Reuters chief financial officer, Robert-Jan van de Kraats.

The American Manpower, which carries the majority of its sales in Europe, acted last week did not see a downturn.

In the pharmacy, the French Sanofi-Aventis posted a higher quarterly earnings expectations – after Friday lowered its target EPS for 2010.His British rival AstraZeneca has posted higher profits.

The European chemical groups that have published their quarterly accounts have emerged Thursday globally strong results in favor of volume growth.BASF, the world first chemist, reported second quarter operating earnings adjusted for exceptional almost doubled to 2.2 billion euros, exceeding the consensus that gave it to 2.03 billion.

In Switzerland, Clariant has raised its annual recovery of the industrial sector and a weaker euro has boosted demand and that allowed him to reach a net profit in the second quarter, well below the consensus, however.

The German conglomerate Siemens Electrical has released an operating profit up 40% for its third fiscal quarter thanks to cost cuts and the weaker euro.

All these new feed more optimism among investors in Europe they appear a little less convinced of the strength of economic recovery in the United States.

The team responsible for global strategy at the UBS bank, raised its recommendation on Europe to "neutral", while she advised previously underweight assets of the region.

UBS said that the Ifo business climate in Germany, a closely watched index, in July recorded its biggest increase in 20 years, growth in gross domestic product in the United Kingdom grew at a rate twice higher than expected second quarter and the results of stress tests performed on the European banks have brought relief.

At the Deutsche Bank economist Gilles Moec wants cautious.

"There is no major change in the table macroeconomic background: we started to slow growth," said he.

LVMH Tuesday reported a strong rebound in sales and profitability in the first half, driven by the performance of Louis Vuitton and the resumption of activities that had been during the crisis, heavily penalized by destocking.

After Hermes and Burberry, the giant figures confirm global luxury goods sector recovery in the first quarter after suffering in 2009 the largest decline in its history with sales down 8%, according to estimates from Bain & Co.

LVMH saw sales reach 9.09 billion euros, a figure slightly above the consensus reached by the editor of Reuters (8.87 billion euros), growing by 16% as reported.

In comparable data, the dynamics of organic growth was confirmed, the sales growth standing at 14% in the first half, after 13% in the first three months of the year.

Full advantage of the good momentum in sales and cost reduction programs implemented in 2009, during the crisis, current operating income jumped 33% to 1.816 billion euros (1.7 billion Reuters ), advancing 2.5 points the group's operating margin to 19.9% (against 17.5% a year earlier).

Unsurprisingly, these are activities that had suffered most from the crisis and overstocks – namely wines and spirits (Moet & Chandon, Dom Perignon or Ruinart) jewelry and watches (Tag Heuer, Zenith, Chaumet and Fred ) – which recorded the highest increases in sales (+18% and +24% respectively on a comparable basis).

In fashion, leather goods, the division's most profitable group with Louis Vuitton, the main profit center of LVMH sales up 14%.

Turnover increased 10% in perfumes and cosmetics (Dior, Givenchy and Guerlain) and 13% in the selective distribution (perfumery chain Sephora, the department store Le Bon Marche, or network based DFS sales in duty by passengers).

The stock closed at 92.26 euros on the Paris Stock Exchange Tuesday, down 2.91% to an increase of 17.7% since the beginning of the year, outperforming the European diversified consumer goods advancing 13.7% over the period.

The value of trades on valuation multiples of about 18 times its estimated profits for 2011, against 16 times the industry average for non-Hermes.

European banking stocks were up, supported by the results of resistance tests conducted by the European authorities to restore market confidence.

Investors, who had initially criticized the methodology of stress tests conducted by the Committee of European Banking Supervisors (CEBS), believe that exercise helps alleviate fears about the solvency of banks.

Having suffered in mid-morning on concerns about exposure of Deutsche Bank in sovereign debt, the sector index Stoxx 600 European banks is again on the rise.

Around 12:50, the index has risen by 0.41%.

The Societe Generale and ING shares rose 2.97% respectively at 39.12 euros and 3.08% to 7.1280 euros.

The Santander, the first bank capitalization in the euro area remained stable at 10.11 euros after opening up to the Madrid Stock Exchange.

"The stress tests show that the French banks and European banks in general, are more truly threatened by a solvency risk," notes Simon Willis, NCB Stockbrokers analyst financial in a research note.

"It remains for banks to find sufficient levels of profitability, long-term effort that requires strategic reviews of activity and improvements in their organization," he says.

Analysts at Credit Suisse in turn emphasize that the publication of detailed exposure to sovereign debt will enable investors to better understand the needs to recapitalize banks and credit risks in the event of default on the debt of a State.

Of the 91 banks in the European Union subject to the tests, only seven property – five Spanish, one German and one Greek – have failed and could therefore be forced to raise 3.5 billion euros of equity.

Others were successful only just like German or Italian Deutsche Postbank Monte dei Paschi di Siena.

DEUTSCHE BANK ASSENTED

French banks BNP Paribas, Societe Generale, Credit Agricole and BPCE have all passed the test of successful resistance, which allows securities to outperform their benchmark.

BNP Paribas gained 0.86% to 50.22 euros, Crédit Agricole 0.94% to 9.44 euros.

The Franco-Belgian Dexia, which has also passed the tests, scores 2.6% to 3.39 euros.

In Germany, Deutsche Bank, which also passed the tests, is punished by investors for failing detailed its exposure to sovereign debt.The title and yielded 1.24% to 49.13 euros.

The Committee of European Banking Supervisors will also ask the German banks to explain why they did not give details Friday of their holdings of sovereign debt.

In conducting these tests, CEBS and the European Union have sought to ensure that large EU banks had sufficient capital to cope with a deteriorating economy would be worse than expected and new shocks.

Learning from the Greek debt crisis, the tests also incorporated discounts on the value of certain bonds held by banks.

The World Cup effect past the French household consumption of manufactured goods fell 1.4% in June and fell 0.9% on the entire second quarter, posting INSEE.

The disappointing figures, well below expectations, suggest a decrease in consumption of all households in the second quarter, including services and supply, which would be a first for two years.

Twenty-three economists polled by Reuters predicted an average increase of 0.2% in June, with estimates ranging from -1.8% to +1.0%.Initially announced at 0.7%, May's increase was revised to 0.6% after a decline of -1.4% in April.

Since the beginning of the year, spending on manufactured goods have registered only two months of increases in March and May The decrease of 0.9% over the entire second quarter followed a 1.9% decline in first.

"The consumer was dynamic in the last quarter of 2009 was considerably weakened when it has always been the mainstay of the business in France.It is a real concern, "said Dominique Barbet, economist at BNP Paribas.

In June, it is the consumer electronics and clothing that have seen their sales drop, taking over auto sales down sharply in early years after the decline of the "scrappage".

After a jump of 6.4% in May, largely due to purchases of televisions before the World Cup in South Africa, the post of home furnishings fell 3.6% in June, biggest drop since November 2002.

For the sole property of consumer electronics, the decline was 3.7% after a surge of 12.4% in May

DROP IN THE CAR Dyked

Spending on textiles and leather have in turn fell 5.0% in anticipation of summer sales that began June 30, five days later than in 2009, but this schedule gives hope for a rebound in July.

For the quarter, the home furnishings rose 3.0% but textiles and leather down 2.8%.

The decline in car sales for its part was contained in June (0.0% after -0.3% in May and -9.2% in April) but the decline reached 8.4% in the quarter, after already a fall of 11.5% in the first quarter.

The 0.9% decline in spending on manufactured goods in the second quarter fears of a decline in overall consumption, for the first time since the second quarter of 2008 when it fell by 0.1%, said Dominique Barbet.

Purchases of manufactured goods account for about one quarter of total household consumption of goods and services, which is much less volatile statistics and published quarterly in the national accounts framework.

In the first quarter, it had stagnated (0.0%), lower than 1.9% of purchases of manufactured goods was offset by an increase in individual consumption of energy.

INSEE, in his memo on the economy published in June, sees yet remain stalled in the second quarter before a rise of 0.3% in the next two quarters.

"The stabilization of consumer sentiment was announced yesterday is quite encouraging, but the outlook remains weak and not with this level of consumption we can expect 1.5% or 2.0% growth," observes the economist of BNP Paribas.

"Household consumption in manufactured goods grows with a horizontal trend since the first half of 2007, although movements in the car drove the second half of 2009," said Philippe Waechter, director of economic research at Natixis Asset Management.

"In relation to a consumer confidence still low, reflecting concerns about jobs and taxes, we can not imagine a rebound coming and it will penalize significantly the growth momentum in the second half."

Syngenta has lowered its targets on Thursday and now anticipates a decline in earnings this year due to a late start planting, the result of a severe winter, and the burden of taxation.

Around 8:15 GMT, the action accused the coup losing 5.21% to 229.40 Swiss francs, while the index grouping the European chemical values yielded 0.76%.

The planting season started late in the northern hemisphere, but demand has accelerated in the second quarter, especially in emerging markets, told Reuters CEO Mike Mack.

As a result, the Swiss agribusiness group, world leader in its field, now anticipates a strong second half, with good signs for the upcoming planting season in the Southern Hemisphere he added.

"We anticipate an operating profit of about that of last year but, instead, a decrease in net profit," he said.

A continuing evolution in Latin America and Asia should make it possible to Syngenta, which also produces genetically modified seeds, to offset a 13% drop in operating profit in the first half to finish the year with operating profit unchanged said Mike Mack.

Finance costs and tax rates should weigh heavier on the net profits, also said the CEO.

Net income declined 11% to 1.25 billion dollars in the first half, while the Reuters poll gave it to 1.38 billion.

Revenues increased 1% to 6.74 billion dollars, is there a little higher than the consensus (6.69 billion).

THE EMERGING TO THE DEVELOPED

Emerging markets such as Latin America and Asia-Pacific are increasingly important for the group."That was the year Syngenta could see its sales in emerging markets than those in developed markets," added Mike Mack.

Shares of agribusiness groups have declined this year due to stiff competition from cheaper Asian products and uncertainty about the regulations of GMOs (genetically modified organisms).

The slide has picked up speed after that Monsanto has sharply reduced its full-year in May and reported a 45% drop in quarterly net income in June.

German Bayer, which has a subsidiary agrochemicals, will release its second quarter results on July 28 and his compatriot BASF, also present on this segment, July 29.

The European Commission released this month a proposal under which the Member States of the European Union could soon have the ability to prohibit the cultivation of GM crops on their land without justification.

The action Syngenta trades at a PER 2011 around 12.5, below that of the U.S. Monsanto but over other European companies in the sector.

She lost about a fifth of its value since the peak reached in March this year.

Orpea announced Wednesday an increase of 16.3% of its turnover in the first half and confirmed its full-year 2012.

The manager of nursing homes and clinics completed a first half sales of 470 million euros, representing organic growth of 9.3%.

The group has enjoyed a growth of 17.2% in France, which represents the bulk of its sales.

"Orpea confirms with great serenity, its sales targets for the current year and for 2011 and 2012, respectively 960 million, 1.100 million and 1.225 million euros," says in a statement.

In the second quarter alone, sales rose 16.5%, giving an organic growth of 9.1%.

For the second half, the group, which had in March 28.073 beds, expects the opening of many schools.

The shares closed Tuesday at 31.2150 euros, giving a market capitalization of about $ 1.2 billion.

Philips has released better than expected results for the sixth consecutive quarter and raised its margin target, but not so far succeeded in convincing the market hoped for more.

Around 9:15 GMT, the Dutch electronics group fell by 2.91%, to 24.175 euros after plunging 4.3% in the first exchanges to form when the largest decline of the Amsterdam Stock Exchange.

Victor Bareno, an analyst at SNS Securities, said that the published results did not reflect "the significant increase that Philips had reported in previous quarters.

The group recorded a profit before interest, taxes, depreciation and amortization (EBITA) of 527 million euros in the second quarter, against 118 million euros last year and 486 million euros expected.

Its turnover stood at 6.2 billion euros and net profit to 262 million euros, higher than the 241 million euros expected.

Analysts had warned before the publication of Philips that investor expectations may be too large.

"The magnitude of the excess (of analysts' forecasts) compared to the previous five quarters is somewhat less strong," said Jan Hein de Vroe, an analyst at ING.

Eleven of 13 analysts surveyed by Thomson Reuters StarMine SmartEstimates lowered on average by 22.6% their earnings expectations over the past 30 days, while the stock has gained almost 7%.

The Dutch consumer electronics was confident of being able to exceed its margin target of 10% EBITA before exceptional items this year, while previously thought just to reach this goal.

The European leader in consumer electronics has reduced the cost during the crisis and the beginning of economic recovery, which helped to generate profits even in difficult times.

Philips has hoped to exceed its savings target on its structural costs in 2010 to 700 million euros.

France is open to the entry of Japanese group Mitsubishi in the capital of Areva, said Prime Minister Francois Fillon.

"I told the Prime Minister of Japan its wish, the desire to see (…) strengthen the association between Areva and Mitsubishi for the realization, inter alia, a new reactor, the reactor ATMEA and I indicated In particular, France was open to input from Mitsubishi capital of Areva, said François Fillon during a trip to Japan, according to a text sent to the press.

The French nuclear expert working on the implementation of a proposed capital increase of three billion euros, which should mark the entry in its capital of international shareholders.The operation aims to secure funding for an investment program of nearly ten billion euros by 2012.

Sovereign wealth funds from Qatar and Kuwait, as well as Mitsubishi Heavy Industries, are anticipated to participate in this fundraising.

Most members of the Federal Reserve have lowered their growth forecasts at the last meeting of the Monetary Policy Committee of the Fed FOMC minutes showed 22 and June 23 on Wednesday.

They also felt they should be prepared to take further steps to support the economy if economic conditions continue to deteriorate.

"Drawing the consequences of changes in the financial context, most participants have slightly lowered their forecasts for growth," the minutes show.

"The Committee will consider whether to adopt more supportive measures if the weather deteriorates."

Meanwhile, the Fed will continue to evaluate the methods currently available to it to drain a huge volume of loans it has injected into the financial system, says the U.S. central bank.

The Fed officials have lowered their growth forecasts for 20,110 to a range between 3% and 3.5%, whereas it previously predicted a rise in gross domestic product from 3.2% to 3.7% in May last.

The Federal Reserve expects the unemployment rate between 9.2% and 9.5% in the fourth quarter, more or less what it provided in its previous estimates.

The reflections of the Fed have weighed on the Treasury bill yield to thirty years, investors anticipating a continuation of interest rates at current levels until at least the end of the year.

"This suggests that rates will stay low for long enough and, if necessary, the Fed will try to invent new ways to support the economy," said Ward McCarthy, chief economist at Jefferies & Co.

The general tone adopted by the Fed is tinged with caution, the Fed merely saying that the recovery is underway.

It reiterated its promise to keep interest rates at a level close to zero for an extended period.

The U.S. recorded a budget deficit of 68.42 billion dollars in June, the 21th in a row, the Treasury announced.

But the deficit is down by 27% compared to 94.33 billion dollars in June 2009.

Over three quarters of the fiscal year ended September 30, the deficit amounted to 1.004 billion dollars against 1.086 billion in the comparable period of fiscal year 2009.

The latest projections for the deficit in 2010 will be given by the White House July 23 normally. In February, it expected a deficit of 1.600 billion dollars against 1.400 billion in 2009.