DE40: DAX under pressure from incoming corporate news 💡

• DAX slightly drops ahead of US PPI report
• Numerous corporate news from the German stock market
• DE40 remains in the zone of historical highs 

General market situation:

Tuesday's European trading session brings mixed investor sentiment. Germany's DAX is losing slightly on an intraday basis (-0.2%), while France's CAC40 is down 0.1%. The benchmark Euro Stoxx 50 loses 0.18%. There's a lot going on today on the corporate side, so this post will also focus on the most important stock market news coming off the German trading floor. 

Delivery Hero (DHER.DE) shares are up nearly 22% today following the announcement that Uber (UBER.US) will acquire DHER-owned Foodpanda for $950 million in a cash deal. What's more, Uber will buy back newly issued shares worth $300 million from Delivery Hero at a price of 33 euros. The deal, subject to regulatory approval, is expected to be finalized in the first half of 2025.

European companies traded mostly higher at the time of Tuesday's trading session. Source: xStation 5

Volatility currently observed in the DAX index. Source: Bloomberg Financial LP

Germany's benchmark DE40 is down 0.11% during today's session, but nevertheless remains in the zone of historical peaks all the time. In the medium term, once this barrier has been broken through, the most important support zones that could be key to maintaining the uptrend are the zone of the last peak near 18,800 points, the double peak in the zone of 18,400 points and the 50-day exponential moving average (blue curve on the chart). Source: xStation 5

News:

Rheinmetall (RHM.DE) shares are losing 3.1% in today's session as the company reported lower-than-expected earnings. The vehicle systems division performed particularly poorly, struggling with high operating costs. However, the company reaffirmed full-year forecasts, which has to do with large orders from the Bundeswehr.

FIRST QUARTER RESULTS

• Backlog €40.2 billion, +43% y/y
• Sales €1.6 billion, estimates €1.71 billion 
• Sales of vehicle systems €493 million, estimates €601.2 million
• Sales of arms and ammunition €362 million, estimate €388.3 million
• Sales of electronic solutions €287.0 million, estimate €232.7 million
• Sales of power systems €541.0 million
• Operating profit €134 million, estimate €145.6 million
• EPS €1.10, estimated €1.41

ANNUAL FORECAST

• The operating margin is expected to be 14% to 15%, in line with the company's first forecasts, analysts estimated at 15.1%
• The company continues to forecast sales of about €10 billion, estimated at €9.85 billion
• Positive business performance continues to be largely driven by cooperation with the armed forces in Germany and partner countries

Brenntag (BNR.DE) shares are losing 8.5%, the most since November 2022, following the release of first-quarter earnings that fell short of estimates. The company lowered its full-year outlook to the lower end of the range of previously presented expectations, due to price pressures. 

ANNUAL FORECAST

Ebit from operations at the lower end of the range of €1.23-1.43 billion (the range previously presented by the company), analysts had estimated €1.26 billion

FIRST QUARTER RESULTS

• Gross profit from operations €984.4 million, estimates €1 billion
• Gross profit from operations in the Essentials segment €698.1 million, estimates €643.8 million
• Gross operating profit in Specialty Products segment €286.3 million, estimate €354.9 million
• EPS 0.97 euros, estimated 1.03 euros
• Sales €4.00 billion, estimated €4.26 billion
• Operating ebit €259.7 million, estimate €280.2 million
• The company's management has communicated that market conditions in H1 will be more challenging than those that may prevail in H2 2024. However, these are forecasts. 

The company's management has communicated that market conditions in H1 will be more challenging than those that may prevail in H2 2024. However, these are forecasts. 

Hannover Re (HNR.DE) shares are losing 3.5% after the German insurer reported mixed financial results for Q1. On the other hand, it reaffirmed its net profit forecast for the full year.

ANNUAL FORECAST

• Still expects net profit of at least €2.1 billion, estimates €2.17 billion
• Still expects investment return on assets under management of at least +2.8%
• Still expects reinsurance revenues above +5%

FIRST QUARTER RESULTS

• Ebit €810.5 million, estimates €820.8 million
• Net income 558.1 million euros, estimates 567.5 million euros
• Combined non-life insurance ratio 88%, estimate 90.9%
• Net investment income 381 million euros, estimate 428.6 million euros
• Return on equity 21.3%

OTHER COMMENTS:

• “Catastrophe loss expenses in property and casualty reinsurance were below expectations in the first quarter and thus within the anticipated and booked budget".

Other news coming from German companies. Source: Bloomberg Financial LP