Autos Rebound, Lockdown Boost for Network Gear: Earnings Wrap

(Bloomberg) — Some slivers of light emerged for the car industry as the first week

(Bloomberg) — Some slivers of light emerged for the car industry as the first week of earnings season wrapped up for European companies, while the benefits of working from home showed up in results from telecom equipment company Ericsson AB.

German car manufacturer Daimler AG said Friday it saw a gradual recovery in orders in the latter part of the second quarter and rival Volkswagen AG predicted the rebound in China’s car market will pick up pace. Swedish truck maker Volvo AB, however, said it expects a hit to demand in the short and medium term.

Daimler and Volkswagen both bounced at the open, making autos the best performer in the Stoxx Europe 600 Index in early trading.

Network equipment provider Ericsson AB, meanwhile, benefited as its telecom industry customers kept spending to shore up their networks for the onslaught of home-working and streaming.

Results from a slew of Nordic banks and industrial companies also are providing an early guide on whether corporate outlooks for the second half will be sufficiently optimistic to prop up the rally in stocks seen since the initial slump as the pandemic hit.

For now, the news has been good enough: The Stoxx 600 is up about 1.5% on the week and has surged 33% since its March low. Still, investors are counting on the European Union to make progress on a stimulus package this weekend to underpin the corporate recovery. And strategists surveyed by Bloomberg predict the market will finish the year lower on worries about rising virus cases globally and a flare-up in U.S.-China tensions derail the nascent economic recovery.

Key Developments:

European stocks opened higher, extending their weekly gain with the European recovery fund in focusDaimler’s Late-Quarter Recovery Limits Loss to $1.9 BillionEricsson Beats Forecasts as Carriers Keep Spending in PandemicIndia Exceeds 1 Million Cases; Tokyo Hits Record: Virus Update

Here’s the top virus-related earnings news for today by sector.

Autos

Daimler said it lost less money than analysts had expected in the second quarter, helped by a recovery in demand late in the period. Mercedes-Benz deliveries in China hit a record in the quarter and retail sales of its cars edged higher in June, echoing the gradual recovery rival Volkswagen has also reported and its optimism on the outlook in China. Daimler shares opened 4.3% higher, with Volkswagen up 2.5%.

Industrials

Volvo’s sales and profit slumped in the quarter, after truck order intake fell by about a third because of the pandemic. The Swedish commercial-vehicle maker anticipates a hit to demand in the short and medium term. The company last month announced plans to cut about 4,100 positions in the second half. Volvo shares opened 5.5% higher.Door locks manufacturer Assa Abloy AB’s profit beat analyst estimates and it said its financial targets for the year are still valid. Barring any second wave of lockdowns, it anticipates a gradual improvement in performance. The shares jumped as much as 4.8% at the open.Defense firm Saab AB said sales and profit rose in the second quarter but it couldn’t confirm its previous guidance for the year at this stage. Its defense arm saw a surge in orders in the quarter, while the civil arm was hit hard by the pandemic. Citi said the cash performance in the quarter should be well-received and the shares opened 4.8% higher.

Chemicals

Norwegian fertilizer maker Yara International ASA said its industrial division saw weaker demand in the quarter but said the nitrogen fertilizer market remains robust. It plans to launch a share buyback and reported net income slightly below analyst estimates. The stock rose as much as 3.2% at the open in Oslo.

Telecoms

Ericsson maintained its targets as it said second-quarter sales and profit both beat expectations. Its phone company clients have kept spending through the pandemic as their networks come under strain from the surge in home working and streaming. Handelsbanken said the results are “rock solid” and profit margin at the networks unit was strong. Shares surged at the open, rising as much as 9.5%.Telia AB’s second-quarter earnings beat expectations with sales broadly in line. Service revenue took a hit from the virus, with roaming, pay-TV and advertising revenues all lower, but the beat was driven by cost controls. Goldman Sachs said the beat and guidance are “encouraging” and Telia shares opened 2.7% higher.

Banks

Nordea Bank Abp set aside much larger loan loss provisions than anticipated and reported a fall in fee and commission income. It maintained its cost targets for 2020 and said the credit quality in its loan book remains strong. The bank front-loading its provisions may be taken well, Goldman Sachs said. The shares fell 1.1% in early trading.Danske Bank A/S said it saw a rebound in lending activity in the second quarter as its net income beat estimates significantly. It maintained its full-year income target and said it will continue cutting jobs into 2021. The shares rose 3.7% at the open in Copenhagen.Swedbank AB’s second-quarter net income topped estimates owing to higher volumes of activity, and it set aside 1.2 billion krona to cover potential loan losses, in line with expectations. It is also reviewing options for its merchant payment business. The net interest income beat and lower-than-expected impairments are both positive, Handelsbanken says. The stock rose 5.4% at the open.

Consumer

Home appliances group Electrolux AB reported a narrower-than-expected quarterly loss, while sales were in line with forecasts. It said it still sees negative full-year demand in most of its main markets but that the pace of recovery will vary greatly between regions and in many European countries it was faster than predicted in the latter part of the quarter. The stock slumped 3.9%.Smokeless tobacco products maker Swedish Match AB profit topped analyst estimates and it said shipments of its Zyn nicotine pouches in the U.S. in the first half of the year are already exceeding total shipments for 2019. Zyn capacity expansion projects in both the U.S. and Sweden are moving ahead according to plan. The stock jumped as much as 6.7% at the open, touching a record high.

Travel & Leisure

Online casino developer Evolution Gaming AB’s earnings beat estimates as it benefited from sports event cancellations cutting the number of options for customers wanting to place bets. Evolution is one of the best performers in the Stoxx 600 in 2020, up 137% through to Thursday’s close. It opened down 0.2%.

Media

Norwegian classifieds firm Schibsted ASA’s second-quarter earnings topped expectations significantly as it said trends have improved over the course of the second quarter. Advertising revenue was lower in its media arm but cost-cutting helped to ease the impact on its bottom line. The stock bounced as much as 6.6%.

Health Care

Online pharmacy Zur Rose Group AG, Switzerland’s No. 2 top-performing stock this year, reported first-half results that were “weak,” according to Zuercher Kantonalbank. This shows that Zur Rose, one of the winners from the coronavirus pandemic, wasn’t able to benefit as much as expected from the crisis, ZKB said.

Basic Materials

Rio Tinto Plc said the uneven global recovery from the pandemic, and concern that a second wave could hit, is weighing on the outlook across commodities markets. The miner shipped more iron ore in the second quarter to capitalize on higher prices, but produced less copper amid a supply crunch for the metal. Rio shares rose 0.7%.

For more articles like this, please visit us at bloomberg.com

Subscribe now to stay ahead with the most trusted business news source.

©2020 Bloomberg L.P.

Source Article