(Bloomberg) — The picture emerging at the height of earnings season is patchy at best, with German chemicals maker BASF SE –- a bellwether of global industrial demand –- reporting a loss and forecasting no significant improvement in earnings in the third quarter, while some retail companies beat low expectations.
European companies’ second-quarter reports so far have been good enough to justify the stock market’s rally from the lows in March, though it’s not clear they’re providing fuel for further gains.
“Global stock markets appear to be starting to get a little wobbly as the latest earnings numbers start to paint a picture of a global economy that could start to face a challenging time in the weeks and months ahead,” said Michael Hewson, chief market analyst at CMC Markets U.K. A resurgence of virus cases globally “is prompting the realization that hopes of a V-shaped recovery are starting to look like pie in the sky.”
Elsewhere on one of the busiest days of second-quarter earnings, Kering SA, the owner of the Gucci luxury brand, showed how those with plenty of money are still ready to spend, as long as they don’t have to visit a shop. And U.K. high street bellwether Next Plc topped expectations thanks to strong online sales and an outperformance from its reopened stores.
Deutsche Bank AG reported that its fixed-income results soared in a boost to its turnaround efforts, while its other units are struggling with negative interest rates. And consumer-focused rival Banco Santander SA reported a 12.6 billion-euro ($14.8 billion) impairment charge due to the pandemic.
European stocks are little changed, as gains for retail and real estate shares were offset by declines in autos and chemicals stocksSanofi’s Outlook Improves as Key Drugs Offset Covid DisruptionGucci Owner Sees Online Leading Recovery After Sales PlungeSanofi, Glaxo to Supply U.K.; China Cases Up: Virus Update
Here’s the top virus-related earnings news for today by sector.
Deutsche Bank reported its biggest gain in fixed-income trading in nearly eight years, bolstering its turnaround efforts. Catch up with the live blog for Deutsche Bank’s earnings here. DWS Group, the bank’s asset management arm, reported second-quarter net inflows ahead of estimates and said it remains committed to cutting costs. Deutsche Bank shares rose as much as 3.6% while DWS bounced as much as 3% before both pared those gains.Barclays Plc warned that consumers and business in the U.K. face mounting challenges as it put aside more provisions for bad loans than expected, offsetting a strong quarter for its investment bank.The stock fell as much as 5.4%. You can catch up with the live blog for Barclays’s earnings here.Banco Santander’s impairment charge related to the virus pushed the Spanish lender to a huge loss for the second quarter. The impairment was related to lower anticipated cash flow in its U.K., U.S. and Polish arms and its consumer finance division. Jefferies noted weakness in net interest income and fees. The bank fell as much as 5.8% in Madrid.
Kering said it is seeing signs of a recovery, led by sales online, after revenue for the Gucci owner plunged in the second quarter, albeit by less than estimated. E-commerce sales surged 72% in the period. Bernstein said its earnings topped estimates and its shares rose as much as 6%.Salvatore Ferragamo SpA said it has seen an improvement in sales trends in July after reporting a 47% decline in first-half revenue. Analysts said the sales look disappointing and consensus is likely to be downgraded, but the stock rose as much as 1.5% in Milan.
French grocer Carrefour SA’s first-half results beat expectations thanks to better-than-expected performances in Spain, Belgium and Brazil, as strict lockdown measures eased in the aftermath of the pandemic. Citi said the Latin American operations were the star. Carrefour rose as much as 2.4% in Paris.U.K. fashion retailer Next’s sales fell by 72% in the second-quarter, not as bad as the 78% decline estimated and with online sales growing. Sales in the quarter were “significantly ahead” of its internal expectations, the company said. Berenberg said the sales beat was driven by online transactions and reopened stores outperforming. Next shares surged in London, rising as much as 10%.German sportswear group Puma AG’s second-quarter loss was narrower than analyst estimates, with sales and gross margins slightly ahead of expectations. Chief Executive Officer Bjorn Gulden called it the “most difficult quarter” of his career and said the threat of more major lockdowns in coming months is “very high,” making it impossible still to provide a 2020 outlook. Morgan Stanley said the update looks in line but Puma shares fell as much as 3.7%.French pens and shavers maker Societe BIC SA reported a 22% slump in comparable sales growth for the second quarter, citing weak underlying trends worsened by an uneven Covid-19 pandemic impact. BIC rose as much as 7.1% in Paris. Alphavalue said the results showed better-than-expected cost management.
Sanofi raised its 2020 earnings forecast as sales of key drugs like eczema and asthma medicine Dupixent surged, helping to offset any disruption from the pandemic. The French drugmaker also entered into a pact with GlaxoSmithKline Plc to supply Covid-19 vaccine doses to the U.K. Goldman Sachs said the results got a boost from better cost controls. Sanofi rose as much as 1% in Paris.Medical device maker Smith & Nephew Plc said first-half business was affected by lockdowns, though it noted an improvement in the second quarter as elective surgeries restarted in the U.S. and most European countries, and said China returned to growth in the period. The stock dropped as much as 6.4%.
BASF said it doesn’t expect a significant improvement in third-quarter earnings and said it is still not providing guidance for 2020 owing to the pandemic. Second-quarter sales fell by 12% and the chemicals giant swung to a loss. Baader said the outlook may be taken poorly and the stock fell as much as 5.4%.Polymers and plastics maker Solvay SA’s second-quarter earnings topped expectations despite a hit to sales from weakness in aerospace, autos, oil and gas and construction end markets. It anticipates a challenging third quarter before an improvement thereafter. Solvay shares fell as much as 2.8% and Citi said the investor focus will be on how sustainable the cost cuts Solvay is pursuing are.
Electrical power products manufacturer Schneider Electric SE reinstated its 2020 targets and resumed its share buyback program as its organic revenue forecast for the year matched estimates. Its shares rose as much as 4.7% with analysts praising its margins.Irish packaging firm Smurfit Kappa Group Plc reinstated its dividend and said it remains confident in its outlook after reporting a fall in first-half revenue and profit. CEO Tony Smurfit said July has been surprisingly good. Its shares jumped 5% in Dublin and analysts said its earnings and box volumes look strong.Dutch oil storage firm Royal Vopak NV’s second-quarter revenue missed estimates and the firm said it cut its cost base in the first half in response to the pandemic disruption. Vopak fell as much as 5.5% in Amsterdam with analysts noting weakness in its chemicals unit and slower delivery of growth projects.
Aston Martin Lagonda Global Holdings Plc reported a wider first-half loss and free-cash outflows of 371 million pounds ($481 million) as the British carmaker invested in the launch of its all-important DBX sport-utility vehicle. Early signs from China, a key market for sales, are positive. Covid-19 has meanwhile slowed its efforts to reduce dealer stockpiles of its sports cars. The stock rose as much as 11% and Citi said the numbers were marginally ahead of expectations.
Travel & Leisure
Wizz Air Holdings Plc’s first-quarter revenue beat the average analyst estimate as Europe’s third-biggest discount airline also maintained strong market and liquidity positions after a period that marked “one of the most challenging times in the history of aviation,” according to Chief Executive Officer Jozsef Varadi. Wizz shares rose as much as 5.7% and UBS said the quarter was better than anticipated.Spanish airport operator Aena SMA SA said it remains difficult to forecast any trends in traffic given the complexity of the virus crisis as it reported a 65% decline in first-half passenger numbers and swung to a loss. The stock fell as much as 3.3% with Berenberg saying its performance on costs was good but the uncertainty on traffic remains high.
U.K. homebuilder Taylor Wimpey Plc recorded its first half-year loss since 2009 as the coronavirus lockdown shuttered construction sites and stalled activity in the property market. The loss includes 39 million pounds in additional costs that were directly a result of the pandemic, and total home completions plunged by 58% in the period. The stock slumped in London, falling as much as 7.9% and dragging other homebuilders lower.
Chip-maker AMS AG’s second-quarter earnings beat estimates and it anticipates sales will grow in the third quarter. Osram Licht AG, the lighting company AMS is acquiring, said profit fell by less than expected due to cost cuts. AMS shares fell as much as 7.3%, while Osram rose as much as 5%.Chip-equipment maker ASM International NV’s third-quarter revenue forecast beat estimates and the firm said it expects its fourth-quarter revenue to hit at least the same level. The stock slipped by 2.4%.IT services firm Capgemini SA said its first-half revenue rose and it continues to anticipate a gradual recovery for trading in the third and fourth quarters of 2020. Goldman Sachs said the results showed Capgemini’s resilience and the stock rose as much as 4.9% in Paris.
Telefonica Deutschland Holding AG’s second-quarter earnings came in marginally below estimates but it confirmed its 2020 outlook and said its network expansion plans remain on track. The stock fell as much as 8.6%.
French broadcaster Television Francaise 1 SA said its second-quarter advertising revenue fell by 41%, though it said some advertisers have started to return since lockdown restrictions were eased. Peer Metropole Television SA’s advertising sales in the quarter fell by 26%. TF1 shares rose as much as 4.2% while M6 surged as much as 9.3%.
Jupiter Fund Management Plc said investors were starting to return to the asset manager despite a challenging first half. While clients pulled 2 billion pounds in the six-month period, the second quarter saw a return to moderate inflows driven by its fixed-income strategy and the reversal in markets. The stock rose as much as 3.9% and Citi said its profit came in 6% ahead of consensus.
French testing and inspection firm Bureau Veritas SA’s first-half revenue beat expectations, though it swung to a loss for the period. It said around a fifth of its revenue, in certification and consumer products, was severely hit by virus lockdowns. The share fell as much as 4.5% in Paris.
Metals & Mining
Rio Tinto Plc raised its dividend despite a decline in first-half earnings as strong iron ore prices helped to offset the pandemic’s impact on copper and aluminum. The group said demand for iron ore in China has remained strong. The stock rose as much as 1.8% in London.
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