Paint, Pet Food and Billie Eilish Boost Results: Earnings Wrap

(Bloomberg) -- European companies trying to break out of the Covid-19 slump this quarter got a little help from geopolitics, DIY and Billie Eilish.

Telecom gear maker Ericsson posted stronger-than-expected profit as growing global bans on its key competitor, China’s Huawei Technologies Co., helped the company gain market share. And Vivendi SA said revenue at its music and television divisions jumped, a bright spot in the quarter helped by Universal Music Group artists including Eilish and Post Malone.

Consumer trends from the pandemic also continued to drive results. Nestle SA increased its revenue outlook for the year with more customers ordering staples like coffee and pet food online, and the home-improvement push boosted paint sales at chemical firm Akzo Nobel NV.

Gold miners Fresnillo Plc and Centamin Plc, which have outperformed other basic resources stocks this year, both cut their production forecasts.

Europe’s earnings season kicked into gear on Tuesday with well-received results from disinfectant makers, computer equipment suppliers and lab equipment firms. Yet the Stoxx 600 Europe benchmark fell 0.4% and it remains 12% lower for the year, meaning the question of whether this earnings season will be strong enough to extend the rally from Covid-induced lows in March remains in focus.

Key Developments:

• European stocks eased at the open with the Stoxx 600 index down 0.3% on a drag from the consumer products and health care indexes, offsetting gains for telecoms
• Nestle’s Outlook Improves as Purina Gets Pandemic-Linked Boost
• Ericsson Reports Profit, Market Share Gains Amid Huawei Ban
• Lilly’s U.S. Plant Flagged; Cathay Cuts 5,300 Jobs: Virus Update

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

TMT

• Ericsson’s profit topped estimates as the network equipment group won market share amid government restrictions on Huawei, which helped offset the impact of the pandemic. Handelsbanken said the report looks “stellar” and the stock jumped 8.7%.
• Vivendi reported sales growth for its music and television divisions in the third quarter, indicating that its recovery is gaining traction. Analysts said the results were solid, with Universal Music the main positive. Shares rose 3.5%.
• Telia AB’s third-quarter earnings exceeded estimates and the Swedish telecoms group handed a 5G contract to Nokia Oyj in Finland. The shares dipped 0.3%.
• Norwegian peer Telenor ASA also beat projections and maintained guidance, though noted that roaming volumes have dropped significantly owing to the sharp decline in international travel. The shares climbed 3.2%.

Consumer

• Nestle raised its full-year revenue guidance as it saw strong demand for its big, established brands, convenience meals and pet food in the third quarter. Jefferies said the beat on sales was also driven by water and Nestle’s emerging-markets arm. The shares gained 0.7%.

Industrials

• French construction and infrastructure group Vinci SA confirmed its full-year guidance though it continues to anticipate a significant fall in earnings year-on-year. Analysts said its sales and net debt were both better than expected, but the stock fell 0.9% at the open.
• Chemicals group Akzo Nobel reported 54% growth in income from its paints division in the third quarter, helping group earnings to outpace expectations. Commerzbank said paints remains “extraordinarily strong,” but this will start to level out. The shares fell 1.3%.
• Door-lock manufacturer Assa Abloy AB said most of its key markets have seen a recovery, with a faster bounce back in Europe than the U.S., as its profit topped estimates. The shares slid 2.5%.
• Staffing firm Randstad NV said visibility on its outlook remains low, though it has seen ongoing positive momentum in October. Its third-quarter revenue beat estimates slightly. The stock bounced 7.5% at the open and RBC said the numbers are a “big beat.”

Materials

• Mexico-focused gold and silver miner Fresnillo cut its gold production forecast owing to the disruption to its operations caused by the pandemic. Citi said gold production was a “sizable miss” and the stock slipped 3.9%.
• Peer Centamin also cut its full-year production forecast for the yellow metal and its shares sunk 19%.
• Antofagasta Plc maintained its full-year copper production guidance at the lower end of the range as it reported declines in copper and gold production in the third quarter. Bloomberg Intelligence said the “weak” third-quarter results were tempered by a better outlook for 2021. The shares were little changed.

Health

• Industrial enzymes maker Novozymes A/S reported third-quarter earnings slightly ahead of estimates and raised its margin guidance, with strong growth in its household care and food-and-drink units. Its shares fell 0.6% in Copenhagen.
• Online pharmacy Zur Rose Group AG reported faster revenue growth in the third quarter as it continues to prove a pandemic winner. Jefferies said growth in Switzerland was well ahead of expectations and the shares gained 8.5%, now having more than doubled this year.

Energy

• Spanish utility Iberdrola SA said its Avangrid unit will acquire U.S. firm PNM Resources Inc. in a deal worth around $4.3 billion. The group’s third-quarter earnings met expectations as it increased its investment in renewables. The shares slipped 0.6%.

Financials

• Svenska Handelsbanken AB’s third-quarter profit missed expectations, weighed down by restructuring costs. Jefferies said the numbers show ongoing resilience around credit. The shares rose 1%.
• Logistics property landlord Segro Plc said its vacancy rate continues to be low and that it performed well in the third quarter. Morgan Stanley said the firm’s strong returns outlook remains intact, but the stock fell 0.6% in London.

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