ABB Swings to 4Q Loss
Topic of the day
ABB Ltd. said Thursday that it swung to a loss in the fourth quarter while revenue rose. The Swiss engineering company said quarterly net loss was $79 million compared with a profit of $325 million in the same period last year. Its operational earnings before interest, taxes and amortization increased 16% to $825 million. ABB's revenue rose 2% to $7.18 billion, while the company's orders for the quarter rose 2% to $7.00 billion. The company proposed an ordinary dividend of 0.80 Swiss francs ($0.89) a share for 2020, which is subject to shareholder approval at the annual general meeting. Analysts had forecast ABB's net income at $104 million, operational Ebita at $768 million, and revenue at $6.94 billion for the quarter, according to a consensus provided by the company. ABB said market conditions improved in comparison to the third quarter, with orders staying broadly stable after a strong performance by the company's industrial automation's marine business. Strong performances by ABB's electrification and motion businesses supported operating margins.
After initial gains, the SMI closed down 0.3 percent on 10,776 points Wednesday, ending its recent strong recovery. But traders said sentiment remained upbeat, due to mostly positive surprises in US firms’ quarterly reports and hopes of a new US stimulus package. Also, Moderna will supply far more Covid-19 vaccine doses to Switzerland than previously planned, the AstraZeneca vaccine showed a strong effect if the second dose was given after three months, and Russia’s Sputnik V vaccine got positive feedback in a British medical journal – thus potentially expanding the vaccine portfolio. ABB rose 0.7 percent after Siemens revised its fiscal 2020/21 forecast up. ABB will release Q4 2020 figures Thursday, as will Roche, which slid 0.7 percent. Novartis fell 0.5 percent and Nestle 0.3 percent. Reuters reported Nestle is holding talks with private equity firm One Rock Capital Partners to sell its North American bottled drinking water business, worth allegedly USD 4 billion including debt.
European stocks trade mixed, though news of a potential new government in Italy lifts Italian stocks and higher crude prices boost oil shares. The Stoxx Europe 600 and the DAX edge higher, the CAC-40 is flat and the FTSE 100 drops 0.1%. Italy's FTSE MIB gains more than 2%, with banking stocks such as Intesa Sanpaolo, Unicredit and Poste Italiane rising, after former ECB chief Mario Draghi agrees to try to form a new administration in Rome. Shares in Publicis Groupe SA jumped Wednesday after the French advertising giant posted net revenue for the fourth quarter of 2020 and some metrics for the full year ahead of estimates, and also declared a dividend. Publicis shares rose more than 6% at market open in Paris. At 1030 GMT, Publicis shares traded 3.3% higher at EUR45.25. Publicis said net revenue in the fourth quarter fell to 2.60 billion euros ($3.13 billion) from EUR2.87 billion in the fourth quarter of 2019. The German engineering conglomerate's free cash flow and earnings per share are above expectations, Berenberg says. Free cash flow of EUR972 million came out 18% ahead of expectations, as did earnings per share of EUR1.72 against Berenberg's estimate of EUR1.4 and consensus of EUR1.08. Siemens's prediction of "clear growth" at its digital industries business for the year ending Sept. 30, 2021, could mean between 6% and 10%, Berenberg says, in comparison to estimates of 6%.
U.S. stocks edged ahead for the third straight session as investors continued to turn their attention back to an improving economic outlook and past the recent drama involving GameStop and a handful of other stocks. The S&P 500 climbed 0.1% after wavering earlier in the day. The Dow Jones Industrial Average also was up 0.1%, while the tech-heavy Nasdaq Composite Index slipped less than 0.1%. Stock markets have rallied this week, shaking off concerns about stretched valuations, the threat of new coronavirus variants and a sharp run-up in silver and a group of stocks popular with day traders. Investors have focused instead on better-than-expected corporate results, progress in coronavirus vaccinations and bets that President Biden will deliver more fiscal spending in coming weeks. Kraft Heinz Co. is nearing a deal to sell its Planters snack business to Skippy peanut butter owner Hormel Foods Corp., according to people familiar with the matter. A deal, valuing the century-old brand at around $3 billion, could be announced as soon as next week, assuming the talks don't fall apart, the people said. Planters primarily sells nuts and snack mixes, with labels featuring the tophat-wearing and monocled Mr. Peanut mascot. Google parent Alphabet Inc. posted record profits for a second straight quarter during the pandemic, sending shares surging 8% to a 52-week high in after-hours trading Tuesday. The search-engine behemoth reported net income of $15.23 billion, or $22.30 a share, compared with net income of $10.67 billion, or $15.35 a share, in the year-ago quarter. The company reported $11.25 billion in net income last quarter. Revenue after removing traffic-acquisition costs improved to $46.43 billion from $46.08 billion in the year-ago period.
The stock markets in East Asia and Australia show significant discounts in late business on Thursday. The three-day upward trend has thus come to an end. Among other things, trading is pointing to a tense liquidity situation in China. Recently, the Chinese central bank had unsettled investors with its money market policy. The stock exchanges in Seoul and Hong Kong are the worst off. In South Korea, the Kospi fell by 1.5 per cent, weighed down by technology and internet stocks.
U.S. Treasury yields edged higher still in Asia, as more bond traders grew confident that the coronavirus vaccination rollout and further fiscal aid from Congress would sustain the economic recovery in 2021. On Wednesday, the 10-year note yield rose 2.4 basis points to 1.131%, while the 30-year bond yield climbed 3.2 basis points to 1.911%, its highest since the middle of last February.
CS rises the Infineon target to 28 (22,50) EUR - Underperform
Citi rises the Siemens target to 165 EUR - Buy
UBS lowesr the Novartis target to 95 (96) CHF – Buy
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