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TELCOM SECTOR DRAGS EUROPE LOWER.

European markets are treading in negative territory, dragged down by telecoms as Vodafone's first half results have been overshadowed by a disappointing outlook, with further investment to turnaround its struggling Japanese unit. Meanwhile, Eircom's second quarter pre-items earnings before interest, tax, depreciation and amortisation (EBITDA) has dipped to 149 million euros from 150 million euros last year but the company has not provided any further comment from an approach from Swisscom.

Elsewhere,

Burberry's first half pre-tax profits have dipped to 78.1 million pounds from 79.4 million pounds last year, while Bulgari's third quarter net profit has declined due to higher operating costs associated with the opening of new stores and the restructuring of its U.S. fragrances distribution network.

Amongst financial plays, Skandia's third quarter net profit has risen on the back of increased fee income and a rise in funds under management, while Schroders' nine month pre-tax profit has grown to 187.1 million pounds from 159.1 million pounds last year. Banche Popolari Unite's nine-month profits have risen, boosted by capital gains while Commerzbank has agreed to acquire stakes in Eurohypo from Deutsche Bank and Dresdner Bank.

In macroeconomic news, Germany's ZEW economic expectations index has declined to 38.7 in November from 39.4 in October, short of market forecasts.

London's FTSE-100 Index is down by 34.00 points or 0.62% to 5436.00, while Paris's CAC-40 Index has fallen by 5.70 points or 0.13% to 4542.75. Frankfurt's DAX Index is lightly weaker, by 2.27 points or 0.04% to 5090.16 and Milan's S&P MIB Index has slipped by 43 points or 0.13% to 33,647. The pan-European blue chip Dow Jones Stoxx 50 Index has declined by 16.72 points or 0.51% to 3279.07.

* Vodafone has announced first half earnings before interest, tax, depreciation and amortisation (EBITDA) of 6.711 billion pounds compared to 6.320 billion pounds in the same half last year. Operating profit has declined to 4.477 billion pounds from 4.759 billion pounds, on revenues of 18.251 billion pounds from 16.742 billion pounds last year. The board approved a 15% increase in the interim dividend to 2.20 pence per share and also indicated that it was targeting a 50% dividend pay-out ratio for the 2007 financial year. It also approved a 6.5 billion pounds share purchase programme target for this financial year, up from the 4.5 billion pounds target announced in May. However, the shares are sharply lower after the firm warned of a possible slowdown in revenue growth and profit margins next year due to higher wireless penetration and regulator-enforced cuts to termination rates.

* Irish telecommunications firm Eircom Group has announced second quarter pre-items EBITDA of 149 million euros compared to 150 million euros last year. Operating profit has risen to 81 million euros from 73 million euros in the prior year, on revenues of 403 million euros from 399 million euros last year. The company did not make a further comment with respect to Swisscom's approach.

* Shares in Alcatel are trading higher after the company was selected by Telstra as one of its key strategic partners for the operator's Internet Protocol network transformation project. As part of the proposed five-year agreement -worth 2.18 billion euros- Alcatel will provide Telstra with comprehensive network solutions and end-to-end integration capabilities.

* Burberry's first half pre-tax profits have dipped to 78.1 million pounds from 79.4 million pounds in the same half last year. Operating profit declined to 75.8 million pounds from 77.6 million pounds before, on turnover of 354.9 million pounds compared to 347.5 million pounds last year. The interim dividend has been raised to 2.5 pence from 2.0 pence.

* Drinks group Diageo has left its full-year guidance unchanged, adding that organic operating profit growth could be similar to last year, even allowing for higher growth in marketing spend and higher pension costs.

* Luxury goods maker Bulgari has recorded a third quarter net profit of 26.3 million euros compared to 28.5 million euros in the same quarter last year. Operating profit has declined to 31.9 million euros from 35 million euros in the prior year, on revenues of 218.1 million euros compared to 202.3 million euros last year. The group said it had been hit by higher operating costs associated with the opening of new stores and the restructuring of its U.S. fragrances distribution network.

* Northern Foods has swung to a first half pre-tax profit of 16.9 million pounds compared to a loss of 10 million pounds in the same half last year. Sales rose to 700 million pounds from 680.7 million pounds in the prior year and the company set an interim dividend of 3.40 pence from 3.35 pence before. It added that its programme for transformation was well underway and had made encouraging progress in the last 12 months.

* Swedish insurer Skandia has recorded a third quarter net profit of 346 million Swedish kronor compared to 313 million kronor during the same period a year ago. Operating profit has grown to 2.277 billion kronor from 655 million kronor last year and revenues have risen by 16% year-on-year to 4.238 billion kroner, as it benefited from increased fee income and a rise in funds under management.

* Asset manager Schroders said its pre-tax profits in the third quarter had declined to 63.6 million pounds compared to 86.5 million pounds in the same period last year, which included a one-off private equity gain of 47.8 million pounds. Pre-tax profit for the nine months to end September 2005 was 187.1 million pounds compared to 159.1 million pounds last year. From an opening position of 112.1 billion pounds at 30 June 2005, funds under management rose by 5.5% in the quarter to 118.3 billion pounds.

* Banche Popolari Unite (BPU) has announced net profits of 593.7 million euros in the nine months to September from 316.7 million euros a year earlier, boosted by 227.0 million euros in capital gains. This mostly comes from the divestment of its Carifano unit and the sale of its 9.23% stake in the Banca Popolare Commercio e Industria unit. Operating profits have risen to 925.3 million euros from 594.4 million euros last year, on revenues of 1.933 billion euros compared to 1.861 billion euros last year. The bank's performance was reinforced by lower operating costs and a reduction in loan provisions and writedowns.

* Swedish clothes retailer Hennes & Mauritz's sales have grown by 10% year-on-year in October.

If you have any questions, e-mail James Sang at james.sang@tfn.com. For more information, visit www.thomsonfinancial.com.
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Title Annotation:revenue report
Publication:Worldwide Telecom
Geographic Code:4E
Date:Dec 1, 2005
Words:1137
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