Economic Woes Weigh on Euro Earnings

Despite Tele2's forecast-beating results and Julius Baer's smaller-than-anticipated profit loss, earnings around Europe met analysts' forecasts on Wednesday.

The Good

Telecom company Tele2 reported a 29 percent rise in second-quarter core earnings, beating expectations as the Swedish group's key mobile operations strengthened.

Earnings before interest, tax, depreciation and amortization (EBITDA) rose to 2.07 billion Swedish crowns ($348 million) from 1.60 billion a year ago, the telecom operator said.

That compared with forecasts for 1.92 billion, according to the mean average in a Reuters poll of 11 analysts.

Swiss bank Julius Baer said its first-half net profit fell 2 percent to 510 Swiss francs ($502 million), beating forecasts.

The bank had expected to post first-half net profit of 488 million Swiss francs, according to a Reuters survey.

The Not-so-Good

Norwegian telecom company Telenor reported a surprise 1.5 percent fall in second-quarter core earnings and cut its 2008 revenue growth target as resurgent inflation in emerging markets crimped spending on telephony.

Earnings before interest, tax, depreciation and amortization (EBITDA) was 7.21 billion crowns ($1.43 billion) in April-June from 7.32 billion in the year-ago period.

The result missed all 16 forecasts from a Reuters poll of analysts, whose predictions had ranged from 7.31 billion to 7.64 billion crowns and averaged at 7.5 billion.

Telenor cut its 2008 financial target for revenue growth to around 3 percent from 5 percent, but said strong performance of Kyivstar, which is treated as an associated company, would keep underlying revenue growth unchanged at around 6 percent.

And the Others

Germany's software company, Software AG, stuck to its full-year revenue and margin forecasts, despite difficult market conditions.

The company posted a 7.2 percent rise in second-quarter license revenue to 61.4 million euros ($97.8 million), in line with forecasts.

Consolidated revenue rose 11 percent to 168.8 million euros during the quarter, with earnings before interest and tax (EBIT) also growing by 11 percent to almost 41 euros, just ahead of the poll forecast of 39 million.

The EBIT margin increased slightly to 24.3 percent from 24.1 percent in the year-earlier period, Software AG added.

Another telecom to report earnings was Netherlands-based KPN, who posted flat second-quarter core earnings, in line with forecasts, and raised its outlook for its home market.

The company said second-quarter EBITDA slipped to 1.267 billion euros ($2 billion) from 1.275 billion a year ago, in line with an average forecast of 1.27 billion euros in a Reuters poll of 13 analysts.

Adjusted for one-off items, EBITDA was up 3.9 percent, the telecoms carrier said.

Revenue increased to 3.66 billion euros, driven by the takeover of lower-margin IT services company Getronics and other acquisitions.

And lastly, top diamond producer De Beers reported a 10 percent rise in rough diamond sales in the first half to $3.3 billion due to strong demand and price hikes, but said it was cautious about the second half.

De Beers said its contribution to the underlying earnings of mining group Anglo American, which holds a 45 percent stake in the diamond producer, was $166 million, up from $156 million for the same period last year.

An economic downturn in the United States, which accounts for around half of all diamond jewelry sales, could have an impact on the second six months of the year, it said.

-- Reuters contributed to this report