Stockholm shares lower midmorning, led by Trelleborg after cartel probe news

Stockholm shares lower midmorning, led by Trelleborg after cartel probe news

	Published : Tue, 26 Jun 2007 09:55 By : Agencies Print this Story

STOCKHOLM (Thomson Financial) - Stockholm shares were lower in midmorning trade on continued profit-taking, with Trelleborg leading the market down after the company said the costs from a cartel probe could wipe out its 2006 profits.

At 10.30 am, the OMX Stockholm index was down 0.96 pct at 404.23, while the OMX Stockholm 30 was down 0.94 pct at 1,238.46. Turnover amounted to 5.34 bln skr.

'There is still a lot of nervousness in the market,' a dealer said.

Ericsson B was down 0.45 pct at 26.76.

Among telecom operators, TeliaSonera was up 0.70 pct at 49.90, while Tele2 B was up 0.22 pct at 112.75.

Trelleborg B was down 7.98 pct at 196. Trelleborg said the total costs from an ongoing EU and US cartel investigation could correspond to a 'predominant' part of its 2006 pretax profits of 1.193 bln skr.

Trelleborg said that in a first step it will take charges of around 75-100 mln skr in its upcoming first-half results.

The EU competition authorities and the US Justice Department have launched investigations relating to an alleged cartel for certain types of marine hoses used to transport oil. The investigations encompass several international companies, including one of Trelleborg's French subsidiaries, Trelleborg Industrie SAS.

'We knew that the investigations were going on, but that it could end in these sort of numbers, almost a billion kronor, nobody imagined. This is clearly negative news,' an analyst at a European investment bank said.

Lindex was up 5.37 pct at 88.25, after reporting better-than-expected third quarter profits, and gross margins.

'Expectations ahead of the report were very low, but in the long term I am not sure this share is worth having. I am not convinced they have sorted out their problems with collection mismatch and their supplier issues,' a dealer said.

'But they have good cash flow which may attract a private equity bidder,' he added.

Hennes & Mauritz B was up 0.25 pct at 409. Deutsche Bank upgraded shares in Hennes & Mauritz to 'buy' from 'hold' and lifted the target price for the Swedish business to 470 skr from 435 skr.

In a note to clients, the broker said the upgrade reflects H&M's success in online and mail-order business and the fashion chain's strong entrance in the Chinese market.

It added that it estimates the online/mail-order sales to total 13 bln skr by 2012 and highlighted the company's plans to expand the online business internationally.

Furthermore, the broker believes that H&M will be able to unlock significant margin expansion potential in central and eastern Europe thanks to lower personnel costs.

Nordea was down 1.29 pct at 107.50. Nordea's CEO told Svenska Dagbladet that the bank will concentrate on its own projects in the next 3-4 years and may consider mergers after this time.

Among other heavily-traded shares, SCA B was down 0.87 pct at 113.50, Handelsbanken A was down 1.26 pct at 195.50, and Scania B was down 2.91 pct at 167.

TF.TFN-EuropeStockholm@thomson.com

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