European Earnings: Drinking It All In
Telecommunications, consumer goods, banking and the drinks business have quarterly earnings in common, as a flurry of companies, such as Deutsche Telekom, Unilever, UniCredit and Diageo all reported results Thursday.
Deutsche Telekom Slightly Beats Expectations
Deutsche Telekom posted flat first-quarter core profit, meeting expectations, as revenue at its fixed-line and broadband unit declined while its mobile business struggled with the impact of currency swings and price wars.
Adjusted earnings before interest, taxes, depreciation and amortization (EBITDA) reached 4.7 billion euros ($7.3 billion) on sales of 15 billion, down 3.1 percent, the company said in a statement.
Analysts had on average seen adjusted EBITDA at 4.6 billion euros and sales at 15.1 billion, according to a Reuters poll.
Deutsche Telekom confirmed its outlook for a core profit of around 19.3 billion euros this year and free cash flow of 6.6 billion.
"Over the first three months of this year we laid strong foundations for the rest of the year," Chief Executive Rene Obermann said.
Unilever Sales Top Forecasts
Unilever, the maker of Dove soap, Sunsilk shampoo and Knorr soups, beat forecasts with a 7.2 percent rise in first-quarter underlying sales and forecast annual sales would top its own target range.
The rise in underlying sales for the first three months of 2008 at the world's third-largest consumer goods group topped analyst forecasts which ranged from 4.8 to 6.4 percent and a 5.7 percent consensus.
Quarterly earnings per share at Anglo-Dutch Unilever also beat forecasts with a 35 percent rise to 0.47 euros, boosted by disposal profits, against forecasts of 0.23 to 0.38 euros and a consensus of 0.30 euros.
"While it is early in the year, we now expect underlying sales growth in 2008 to exceed our 3 to 5 percent target range," said group Chief Executive Patrick Cescau in a statement.
Analysts said they expected Unilever shares to rise after the strong first-quarter and the poor recent share performance.
Although Unilever's 7.2 percent quarterly underlying sales rise beat forecasts, it still lagged European food rivals with Nestle reporting a 9.8 percent increase and Groupe Danone a 11.4 percent jump.
UniCredit's Profit Warning
Europe's third-largest bank UniCredit expects 2008 earnings to reach a maximum 0.56 euros per share, broadly flat with 2007, it said, after first-quarter income halved amid market turmoil.
UniCredit said in a statement its markets and investment banking division had a pre-tax loss of 696 million euros ($1.08 billion) in the first quarter, contributing to a 51 percent fall in net profit to 1 billion euros.
The bank, Italy's biggest with a market value of over $100 billion, had already stepped back from an indicated EPS of 0.66 euros for this year in March, as market volatility cast uncertainty over its investment banking.
On Thursday, UniCredit said its Core Tier 1 ratio -- a key measure of a bank's strength -- stood at 5.5 percent and it expected this figure to reach 6 percent at the end of 2008.
UniCredit said earnings per share for 2008 should be between 0.52 euros and 0.56 euros.
Its commercial banking division boosted net profit 15 percent, helped by a 25 percent increase in revenues in its central and eastern European business.
UniCredit said total income was 6.449 billion euros in the first quarter, down 16.5 percent from a year ago.
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Diageo Sales Rise
Diageo, the world's biggest alcoholic drinks group, said on Thursday third-quarter sales grew 7 percent, and it maintained its full-year profit forecast.
The London-based group, which makes Smirnoff vodka, Johnnie Walker whisky and Guinness beer, said it expects to see a 9 percent rise in underlying operating profit for its current financial year to end-June 2008.
InBev's Earnings Disappoint
Belgian brewer InBev, the world's second-largest by volume, reported lower than expected first-quarter earnings as Brazilian beer sales fell and commodity costs rose, but forecast a better second half.
InBev shares, under pressure last week after downbeat comments at its shareholder meeting, were off 5.9 percent at 49.89 euros.
The DJ Stoxx European food and beverage index, was 1.0 percent higher.
The maker of Stella Artois and Beck's said EBITDA (earnings before interest, tax, depreciation and amortization) was 982 million euros ($1.52 billion), against 962 million euros a year earlier, but only a like-for-like increase of 0.7 percent.
The average forecast in a Reuters poll of eight analysts was 1.06 billion euros.
Worldwide volumes fell by 0.4 percent, although revenue rose 4.8 percent to 3.20 billion euros, albeit less than the 3.23 billion euros analysts had expected.
"We are obviously not proud of the first quarter results," Chief Financial Officer Filipe Dutra told a conference call.
"We knew the first half and especially the first quarter would be a tough one... but volume-wise it turned out to be worse than expected mainly due to industry figures in Brazil."
-- Reuters contributed to this report