European Earnings: Alcatel-Lucent Drops 7% on Results

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Earnings out of Europe were mixed Wednesday as telecom giant Alcatel-Lucent cuts its telecom market forecast and reported a bigger-than-expected first-quarter net loss.

Alcatel Lucent

The French-based company cut its global telecom equipment forecast on Wednesday saying it expected the market to be flat this year and forecast its own full-year sales to fall between 2 percent and 5 percent.

In February, the French-American telecom equipment supplier expected sales generated in the global carrier market to be flat to slightly up in 2008.

"We remain prudent about the economic environment," Alcatel-Lucent Finance Director Hubert de Pesquidoux told journalists in a conference call.

"We have seen a few customers that could potentially delay their capital expenditure programs."

But Alcatel-Lucent said it expected revenues to rise between 4-6 percent in the second quarter against the first.

Alcatel-Lucent posted a net loss of 181 million euros ($281.9 million) in the three months to March 31 against a loss of 8 million euros in the same period last year.

Excluding the impact of purchase price allocation costs of 86 million euros related to its acquisition of Lucent, the net loss came to 95 million euros which compared with a profit of 199 million euros in 2007.

Analysts expected a reported net loss of 159 million euros based on the average of 11 forecasts compiled by Reuters Estimates.


Also in France, drug makerSanofi-Aventis's sales and profits fell less than expectedin the first quarter but it said that saredutant, an experimental antidepressant, had failed in a clinical trial.

The setback leaves uncertain the future of saredutant, one of several new drugs Sanofi had hoped to file for approval this year, although the company said pooled results from other studies could still prove the medicine to be beneficial.

Net sales fell 3.3 percent to 6.937 billion euros ($10.81 billion) and operating profit was down 7.2 percent to 2.522 billion euros, hit as expected by generic competition to sleeping pill Ambien IR and a weak dollar.

Excluding the effect of exchange rates, the profit fall was about 1 percent.

Sales had been expected to fall to 6.877 billion euros and operating profit to 2.422 billion, according to a Reuters Estimates poll of analyst forecasts.

Adjusted net income excluding selected items came in at 1.883 billion euros, or 1.43 euros per share.

After minority interests, net profit fell 12 percent to 1.41 euros per share or 1.863 billion euro, against a forecast 1.834 billion.

Sanofi said it was maintaining its forecast of around 7 percent in adjusted earnings per share growth in 2008, calculated at a constant 2007 euro/dollar rate of $1.371.


Net income at German industrial group Siemens dropped by two-thirds in the January-March period due to discontinued operations and project delays, it said, missing market expectations.

Net income fell 67 percent to 412 million euros, below the 451 million average from a Reuters poll of 19 analysts.

Operating profit fell to 1.2 billion euros ($1.87 billion) from 1.78 billion a year ago.

New orders rose 15 percent to 23.4 billion while sales inched 2 percent higher to 18.1 billion.

Analysts on average had expected an operating profit of 1.016 billion euros on sales of 19.28 billion in the company's fiscal second quarter.

The German conglomerate, which is battling multiple corruption investigations, said it expected revenue, excluding acquisitions, to grow twice as fast as global economic growth in its current fiscal year.

But full-year group profit from operations and income from continuing operations will remain flat, it said.


British Sky Broadcasting (BSkyB) met forecasts with 56,000 net new customers in the third quarter and said it was on track for the full year despite a tough consumer environment.

Churn, or the percentage of total customers who dropped their subscription, at 10.5 percent was the lowest for the third quarter for four years, while the average revenue per user increased to 424 pounds ($841), which was ahead of forecasts.

The Pay-TV company added 229,000 net new broadband customers to give it a total of 1.43 million customers and it had 1.1 million telephony customers within its 8.9 million total subscribers.

"The success of our strategy is reflected in our financial performance. Revenue growth of 10 percent, increased quarterly profitability and reducing broadband losses put us on track to achieve our targets," Chief Executive Jeremy Darroch said.

BSkyB reported nine-month adjusted operating profit of 521 million pounds ($1.03 billion) and revenues up 10 percent at 3.71 billion pounds.

Analysts had been expecting 60,000 net additions in the third quarter and in the first nine months an adjusted operating profit of 518 million pounds and revenues of 3.72 billion pounds, according to a poll of nine analysts and a Reuters Estimates poll.


First-quarter net profit at Swiss specialty chemicals company Clariant halved to 41 million Swiss francs ($39.54 million) due to higher raw materials costs, but met expectations.

Clariant, which has suffered from high oil prices like its local rival Ciba, confirmed its full-year forecast, expecting an improved operating margin in 2008 and continuing strong cash flow from operations.

Both Clariant and Ciba are relatively cheap and have been the subject of takeover talk as they try to refocus their businesses and raise prices to offset higher costs.

Clariant, which makes pigments for products from textiles to cars, trades at about 7 times forecast 2009 earnings, roughly in line with Ciba.

Its first-quarter sales were slightly lower at 2.11 billion francs compared to 2.16 billion a year ago.

Clariant had been expected to post net profit of 41 million francs, according to a Reuters survey of 9 analysts, and sales of 2.15 billion.

Pernod Ricard

Pernod Ricard, the world's second-biggest wines and spirits group, reported a 1 percent decline in third-quarter sales on Wednesday but kept its full-year profit growth target.

The maker of Chivas whisky and Mumm champagne said sales fell to 1.378 billion euros ($2.15 billion), with turnover impacted by the weakness of the U.S. dollar against the euro.

According to Reuters Estimates, analysts had on average expected third quarter sales of 1.42 billion euros.

The company said that on a like-for-like basis excluding the impact of foreign exchange rates and acquisitions and disposals, third-quarter sales rose 7.1 percent.

"Sales for the first nine months of the 2007/08 financial year enable us to confirm our 2007/08 full-year guidance for growth in operating profit from ordinary activities, on a like-for-like basis of at least 12 percent," Chairman and Chief Executive Patrick Ricard said in a statement.

Pernod added, however, that foreign exchange rates would have an impact of between 100 million and 110 million euros on its full-year operating profit.


And Norwegian telecom operator Telenor reported first-quarter core earnings that were below forecast, but stuck to its guidance for the full year.

First-quarter earnings before interest, tax, depreciation and amortization (EBITDA) rose to 7.12 billion crowns ($1.39 billion) from 7.04 billion a year earlier and were below an average forecast of 7.34 billion in a Reuters poll of 16 analysts.

The company reiterated its guidance for 2008 revenue growth of around 5 percent, an EBITDA margin before other income and expenses above 31 percent and capital expenditure equal to about 20 percent of revenue.

-- Reuters contributed to this report  

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