European Earnings: Germany's Highs and Lows
German companies dominated European earnings headlines Wednesday with tech heavyweight Infineon reporting a quarterly loss, but IKB, the first German subprime casualty indicating a smaller-than-expected loss.
Infineon reported a first-quarter net loss, dragged down by a continuing poor performance of its memory chip unit, Qimonda, and Tuesday's $1.58 billion writedown.
The German company made earnings before interest and tax (EBIT) of 36 million euros ($57 million) in the January-March quarter, excluding results from its memory chip subsidiary Qimonda, now reported under discontinued operations.
The chip maker made a net loss of 1.371 billion euros.
Net income from continuing operations was 19 million euros.
Sales from continuing operations fell 4 percent quarter on quarter but rose 7 percent year on year to 1.05 billion euros.
It said in a statement that it expects sales to be flat or slightly lower this quarter due to the weakening dollar, and operating earnings to be lower but positive.
Volkswagen, the fourth-biggest car maker in the world, posted preliminary first-quarter results in line with expectations and reaffirmed its full-year targets.
The German company said operating profit rose 21 percent to 1.31 billion euros ($2.09 billion), a tick better than an average forecast of 1.30 billion euros from a Reuters poll of 18 analysts.
It reiterated its forecast for higher vehicle sales, revenue and operating profit in 2008 as it rolls out new models like the four-door coupe Passat CC and the revival of the sporty Scirocco.
Quarterly revenue edged 1.4 percent higher while net profit gained 26 percent to 929 million euros.
German drugs and chemical company Merck KGAA reported a much better-than-expected 49 percent rise in first-quarter operating profit on sales growth for its key drugs.
Operating profit rose to 360 million euros ($570 million) from 241 million euros a year earlier, easily beating market expectations.
A Reuters poll of 13 analysts had produced an average operating profit forecast of 293 million euros.
The highest estimate had been 353 million.
For 2008, Merck reiterated it expected group revenue to grow between 5 and 9 percent and its operating margin -- excluding amortization and integration costs -- to be between 23 and 27 percent.
In the German banking sector, IKB's shares were higher after the subprime-hit lender said it now expects to post a smaller full-year operating loss than previously forecast, due to positive accounting effects, it said late Tuesday.
Instead of the forecast 800 million euro net loss in fiscal 2007/08, the bank now expects a loss of 200 million euros ($316.8 million).
IKB is due to present its audited first half results for 2007/08 on April 29.
German utility RWE cut its 2008 earnings forecast, saying it now expects "net income slightly below the previous year's level" after it made less than first expected from a spinoff.
It had earlier forecast a more than 10 percent increase in 2008 net profit.
RWE said in a statement that it would book net proceeds of approximately $1.2 billion from the initial public offering in New York of its American Water unit.
Its board has decided to sell 58 million of American Water's shares at $21.50 per share.
London listed, GlaxoSmithKline’sprofit fell 5 percent in the first quarter, hit by falling sales of diabetes drug Avandia and generic competition to other products, the world's second biggest drugmaker said.
But the decline was less than analysts had feared.
Meanwhile in Sweden, Sony Ericsson beat expectations with quarterly figures and said new products in the second half of the year should continue the positive momentum.
The mobile phone maker's first-quarter pretax profit fell to 193 million euros, a sharp dive from a year ago but at the high end of the company's own forecast range.
Sony Ericsson, owned by Ericsson and Sony, had warned markets last month that pretax profit would be between 150 million euros and 200 million euros, a steep fall from the 362 million euros earned a year earlier.
Analysts in a Reuters survey after the earnings warning -- which added to gloom in the whole handset sector and knocked co-parent Ericsson's shares – had forecast pretax profit of 176 million euros.
Saab's shares traded lower after the company missed first-quarter pretax earnings forecasts, hit by higher marketing costs, but stood by its full-year outlook for sales and margins.
The group reported a pretax profit of 324 million Swedish crowns ($54.79 million) compared with 380 million a year earlier and a mean forecast of 417 million in a Reuters survey of five analysts.
The Sweden-based firm repeated its full-year 2008 forecast of organic sales growth of 5 percent and an operating margin of 10 percent, excluding extraordinary items.
The group, which has sought to boost its overseas revenues in recent years in the face of shrinking defense spending in its home market, said marketing costs were to blame for the earnings shortfall.
"The lower operating income is mainly due to higher marketing expenses largely related to tenders for Gripen to a number of countries," it said in a statement.
Elsewhere, in Amsterdam TomTom reported a steep drop in quarterly profit, in line with analysts' reduced expectations.
The navigation device maker earlier this month cut its 2008 outlook and indicated that first-quarter sales had fallen from the year-ago quarter and its operating margin had tumbled.
Earnings before interest and tax (EBIT) fell to 9 million euros ($14.26 million) from 57 million euros a year ago, while the average forecast in a Reuters poll of 15 analysts was 10 million euros.
TomTom said it sold 2 million navigation devices in the first quarter for an average selling price of 117 euros.
It is the first time since the fast-growing company went public in 2005 that sales fell year on year.
Meanwhile, Swiss maker of Cartier watches, Richemont, beat expectations for full-year sales with a 10 percent rise in 5.3 billion euros ($8.4 billion).
Despite a 12 percent rise in quarterly profit, Spanish company Banco Popular still managed to miss market expectations.
-- Reuters contributed to this report