Summary
- Declining profit and rising fuel costs pressure Lufthansa (LHA.DE) stock on Tuesday
- Bayer (BAYN.DE) is becoming less certain of reaching full-year targets
- Fresenius (FRE.DE) and Fresenius Medical Care (FME.DE) enjoy major price swings after earnings release
European stock market indices are trading lower on Tuesday morning. The UK FTSE 100 (UK100) is the sole exception as it is being buoyed by weaker GBP. When it comes to Germany, earnings are at the top of the agenda as numerous DAX members released quarterly reports today. Unfortunately, investors does not seem to be appealed by them and the index is one of the biggest laggards on the Old Continent at press time.
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The German DE30 once again failed to break above the 12420-12450 pts area. Range of disappointing earnings reports from major German firms is sending the index significantly lower at the beginning of Tuesday’s session. The 12300 pts handle is the support level to watch in case the downward move is extended. Source: xStation5
Earnings reports trigger major price swings on Lufthansa, Fresenius and Fresenius Medical Care
Lufthansa (LHA.DE) is the worst performing DAX stock on Tuesday morning. The company released earnings report for Q2 and it showed that EBIT has declined around 25% against the previous year. A point to note is that the company suffered €255 million higher fuel costs. Spare for this increase, the EBIT would actually be higher than a year ago. Lufthansa expects struggles to continue at least until the end of this year as European carriers continue to fight the price war and trade war is putting pressure on the cargo business.
Fresenius (FRE.DE) and Fresenius Medical Care (FME.DE) can be found among top moving DAX members at the beginning of Tuesday’s session. Both companies released earnings reports for the second quarter of the year today. Fresenius saw slightly higher than expected revenue of €8.779 billion and EPS of €0.862, 3.9% higher than the median estimate. Fresenius Medical Care also saw higher than expected EPS at €0.92 but disappointed in terms of sales. Revenue at €4.284 billion was 1.23% lower than forecasted.
DAX members at 08:55 am BST. Source: Bloomberg
Other company news
Bayer (BAYN.DE) released a statement today saying that achieving full-year targets and forecasts is getting more and more “ambitious”. The company provided two reasons for weaker performance. Firstly, unfavourable weather conditions in the United States and Europe this year had a negative impact on sales of its agricultural unit. Apart from that, Bayer said that number of plaintiffs in the Roundup case is growing and stands at around 18400 now. It is more than the company expected and may potential fines may also be bigger than expected. Let us recall that Bayer forecasted full-year revenue of €46 billion and EPS of around €6.80.
Deutsche Bank (DBK.DE) will begin auctioning of its equity derivatives business in the middle of August and will accept bids until September. Through the sale the Bank plans to free up to €10 billion of capital that will be later used in the ongoing overhaul. Apart from that the company also plans to sell cash equity and part of interest-rate trading businesses.
Lufthansa (LHA.DE) shares performed poorly in the second quarter of 2019 and earnings report released today showed that company’s business was struggling in that period as well. Today’s drop brought the price below the support zone ranging €14.60-14.90 and the stock is trading at the lowest level since March 2017. The next important price zone can be found at €10.80-11.20 - the lower limit of the trading range from October 2014-March 2017. Source: xStation5
