Siemens Swung to Loss in 3Q on Impairment Charge
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Siemens AG cut the outlook for earnings per share for the full fiscal year after it swung to a loss in its third quarter due to an impairment on its investment in Siemens Energy AG. The German industrial conglomerate said Thursday that its net loss was 1.66 billion euros ($1.71 billion) for the period ended June 30, compared with a profit of EUR1.35 billion a year earlier. Analysts had forecast a loss of EUR532 million, according to consensus estimates provided by Siemens. The company had booked an impairment of EUR2.7 billion on its investment in Siemens Energy AG during the three-month period. It also saw about EUR600 million in Russia-related charges. Siemens said revenue for the quarter was EUR17.87 billion compared with EUR16.09 billion for the year-earlier period, beating analysts’ expectations of EUR17.47 billion. Orders rose to EUR22.01 billion from EUR20.49 billion. For the full fiscal year 2022, Siemens lowered the target for basic earnings per share from net income before purchase price allocation accounting due to the Siemens Energy impairment.
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The Swiss stock market ended trading on Thursday with a minimal gain. The SMI gained 2 points to 11,157 points. At its high for the day, the index had already reached 11,205 points. Among the 20 SMI stocks, there were 15 gainers and 5 losers. 29.74 (previously: 30.06) million shares were traded. Among the individual stocks, the Zurich Insurance share went up by 1.7 per cent. The results presented for the first half of the year showed both light and shade, according to traders. Depending on the items included, the profit figures turned out differently, the operating profit was higher than expected, the net profit lower. Operationally, however, things had gone well. The shares were supported above all by a new share buyback program of CHF 1.8 billion. Sika shares rose 3.8 percent to 246.30 francs despite a price target cut by Berenberg. This was reduced to 330 from 370 francs, but the buy recommendation was confirmed.
The European stock markets closed mixed on Thursday, despite the publication of new reassuring signals on the inflation front in the United States. At the close, the Stoxx Europe 600 index gained 0.1% to 440.2 points. In Paris, the CAC 40 and the SBF 120 each gained 0.3%. However, the DAX 40 in Frankfurt was down 0.1% and the FTSE 100 in London was down 0.6%. Daimler Truck Holding AG on Thursday posted an increase in sales and net profit in the second quarter and confirmed its previously given full-year revenue guidance. The German commercial-vehicles maker said quarterly net profit was 922 million euros ($949.6 million), compared with EUR601 million a year earlier. Adjusted earnings before interest and taxes for the three months were EUR1.01 billion, compared with EUR878 million a year ago. Hapag-Lloyd AG on Thursday reported a jump in second-quarter profit as it continued to benefit from higher shipping rates. The German shipping company posted a net profit of 4.48 billion euros ($4.61 billion), up from EUR1.52 billion a year earlier. Revenue nearly doubled to EUR8.99 billion, it said. “We have benefited from significantly improved freight rates,” Chief Executive Rolf Habben Jansen said.
U.S. stocks ran out of steam Thursday, giving up gains despite additional data suggesting that inflation might be peaking. The S&P 500 fell 2.97 points, or 0.1%, to 4207.27, while the tech-focused Nasdaq Composite Index lost 74.89 points, or 0.6%, to 12779.91. The Dow Jones Industrial Average rose 27.16 points, or 0.1%, to 33336.67. All three indexes rose earlier in the day. Producer-price data buoyed investors' hopes that inflation may be easing, potentially slowing the Federal Reserve's pace of interest-rate increases. Stocks have rallied sharply from their trough in mid-June. The Nasdaq Composite on Wednesday closed up more than 20% from its low, kicking off a new bull market, though it remains down 18% year-to-date. The Russell 2000, an index of small-company stocks, flirted with the same milestone Thursday, before pulling back. Johnson & Johnson will stop selling baby powder made with talc globally in 2023, the company said Thursday. The decision comes after the New Brunswick, N.J.-based company stopped selling the product in the U.S. and Canada in 2020, citing a decline in customer demand amid safety concerns about one of its most famous products. J&J is facing thousands of lawsuits alleging the talc powder has harmed women who had used it for years. Some of the lawsuits have led to costly jury verdicts against the company. Walgreens Boots Alliance Inc. is offering signing bonuses up to $75,000 to pharmacists in some markets as the company struggles to fill jobs amid a chronic worker shortage that became acute during the Covid-19 pandemic. The Deerfield, Ill.-based pharmacy chain said it is ramping up spending on labor to alleviate the shortfall, which has dented drug sales and angered workers, some of whom have quit and posted calls on social media for the company to improve working conditions.
On the Asian stock exchanges, there is no unanimous opinion on the continuation of inflation and interest rate developments on Friday. Accordingly, the trading centres were mixed in late trading. "As long as China sticks to its 'zero-covid-19' strategy, GDP growth is likely to remain weak," warns China strategist Preston Caldwell at Morningstar. The tensions around Taiwan continue to be eyed critically. Although China officially ended the military maneuvers, the military threat is seen to continue in Taipei. In this negative mix, the Shanghai Composite is holding its ground and thus doing well. Stocks from the automotive sector tend to be weak, with BYD losing 0.8 and SAIC Motor 0.1 per cent.
U.S. Treasury yields, which largely reflect the expected path of short-term rates, have risen this year as investors anticipated high rates. In bond markets, the yield on the benchmark 10-year Treasury note ticked up to 2.886% from 2.786% Wednesday. Yields and prices move inversely.
UBS raises Munich Re target to EUR 263 (255) – Buy
CS lowers Continental target to EUR 66 (67) – Underperform
BoA lowers Vestas target to DKK 250 (255) – Buy
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