Stockholm shares lower as Atlas Copco, Swedbank dive offsets Volvo gains UPDATE

Stockholm shares lower as Atlas Copco, Swedbank dive offsets Volvo gains UPDATE

	Published : Wed, 24 Oct 2007 16:50 By : Agencies Print this Story

(Updating with full report)

STOCKHOLM (Thomson Financial) - Stockholm shares closed lower hit by a late sell off amid Wall Street weakness, with Atlas Copco and Swedbank diving after their third quarter results, and offsetting good gains by Volvo after its outlook statement.

The OMX Stockholm index closed down 1.13 pct at 376.16, while the OMX Stockholm 30 finished 1.41 pct lower at 1,158.83. Turnover amounted to 34.183 bln skr.

Volvo B was the day's main winner closing up 4.97 pct at 121.50 after the company reported stronger than expected third quarter sales and orders, upped its 2007 forecast for the European truck market, and said it expects the North American market to return to growth in 2008.

Volvo's third quarter profit after financials of 4.571 bln skr was slightly below consensus forecasts of 4.897, but analysts said this was due to unexpected net financial items related to hedging and interest payments, and that underlying profits were broadly in line with forecast.

'People are happy to hear that Europe is strong and is expected to remain so for some time. That's important to earnings,' Mats Liss, an analyst at Swedbank said.

Scania B closed up 0.30 pct at 164.50, in Volvo's wake.

Atlas Copco A closed down 6.84 pct at 105.50, as the market punished the company for releasing slightly worse than expected third quarter pretax, a day after Alfa Laval's stellar report.

Pretax came in at 2.708 bln skr, up 30 pct from a year earlier, but below market expectations for 2.842 bln skr, according to SME Direkt.

Analysts said unofficial expectations were even higher.

'It was broadly in line but it's not good enough for the market. It's all about expectations, and considering that Alfa Laval came in with such strong numbers yesterday I think a lot of people had been hoping for something better,' said Anders Idborg, engineering sector analyst at Carnegie.

Other engineering stocks also took a hit after yesterday's rally with Sandvik closing down 3.70 pct at 130.00, and SKF B down 2.87 pct at 127.00.

Swedbank A shed 6.79 pct to close at 199.00. The bank's reported nine-month operating profit amounted to 11.476 bln skr, exactly matching market expectations, as recorded by SME Direkt.

However a 70 pct jump in loan losses at Swedbank's Baltic banking operations raised fears of a hard landing in this sector which now accounts for 28 pct of group profits.

Among the other banks, Nordea closed down 2.11 pct at 106.50, Svenska Handelsbanken A down 0.25 pct at 200.00, and Skandinaviska Enskilda A down 4.25 pct at 191.50.

Ericsson B closed up 0.63 pct at 19.14.

Among the telecom operators, TeliaSonera closed up 0.89 pct at 56.75, and Tele2 B up 2.01 pct at 139.75.

Tele2 reported weaker-than-expected Q3 EBITDA, with the important Russian and Baltic operations performing worse-than-expected, but with management calming investor fears at a bullish press conference.

'The guidance for Russia remains intact and management seems very comfortable with it,' one analyst said, referring to comments by management at the press conference, adding that management also seemed very optimistic about the developments in Comviq (Swedish mobile operations).

'To sum up, we are more comfortable with the results after hearing these comments, and in particular the comments about Russia,' the analyst said.

Yellow pages maker Eniro closed up 2.22 pct at 80.75, despite reporting weaker-than-expected headline EBITDA.

'If you look at median expectations, they were in line or a touch better. Organic growth of 3 pct was also strong,' an analyst said.

Nordic and Baltic bourse owner OMX, closed flat at 266.50, as the company's better-than-expected third quarter results garnered no interest from investors.

'The results are not important when it comes to OMX. The share price is driven by other things than profitability. The valuation is extremely expensive and whether it is trading at a P/E of 40 or 45 is unimportant,' one analyst said.

'The important thing is who is buying the share and at what price?' the analyst said.

Cosmetics firm Oriflame closed up 3.65 pct at 383.50, after reporting weaker-than-expected Q3 results, but with organic sales growth strong.

'Oriflame posted relatively robust Q3 results today. However, it appears we underestimated marketing costs and costs associated with the annual conference,' Merril Lynch said in a note.

It said the company's hike in its organic sales growth target will lead to a material change to consensus 'as most are already at these figures'.

Elsewhere in the market, Hennes & Mauritz B closed down 2.15 pct at 409.50,

Boliden down 2.08 pct at 117.75, and Investor B down 2.79 pct at 157.00.

TFN.Stockholm@thomson.com

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