Log in
E-mail
Password
Remember
Forgot password ?
Become a member for free
Sign up
Sign up
Settings
Settings
Dynamic quotes 
OFFON

4-Traders Homepage  >  Equities  >  Xetra  >  Bayerische Motoren Werke    BMW   DE0005190003

BAYERISCHE MOTOREN WERKE (BMW)
Mes dernières consult.
Most popular
  Report  
SummaryQuotesChartsNewsAnalysisCalendarCompanyFinancialsConsensusRevisions 
News SummaryMost relevantAll newsofficial PublicationsSector newsTweets

Trade war looms over European company earnings

share with twitter share with LinkedIn share with facebook
share via e-mail
0
07/12/2018 | 03:11pm CEST
The German share price index, DAX board, is seen at the stock exchange in Frankfurt

LONDON (Reuters) - Investors will be watching Europe's exporters like hawks this earnings season, picking over results for signs that escalating protectionism worldwide has started to dent companies' investment plans and outlook.

Much hangs in the balance for Europe's second-quarter earnings season. While expected to deliver better profits growth than the Jan-March quarter, it may also herald more volatility for trade-sensitive sectors such as autos and industrials.

So far this year, investors have pulled $29.4 billion from European equity funds, while U.S. equities have held up better, with $18.2 billion outflows, EPFR data shows.

That's been attributed to sputtering economic data and the return of political risk after the 2017 "Euroboom". U.S. companies, in contrast, are delivering stellar earnings, turbo-charged by tax cuts.

The upcoming season hence is crucial for Europe - the hope is stronger earnings will coax money back into the region where equity valuations look relatively attractive.

But the complication is trade war.

Europe's sensitivity to higher U.S. tariffs is second only to Asia's, with the auto sector particularly in the firing line.

Overall exports to the United States accounted for 2.6 percent of the European Union's GDP in 2017, and a supply chain analysis by Bank of America Merrill Lynch found 3.5 percent of euro area value added is linked to car demand.

Germany, home to Volkswagen, BMW and Daimler, is the most at risk with 6.9 percent of GDP derived from cars.

Trump has threatened to slap tariffs of 20 percent on European cars coming into the United States, while Beijing has proposed a 25 percent tax on U.S. car factory exports, which would overwhelmingly hurt German carmakers.

The full impact of any new trade tariffs should only show up in earnings later this year, but companies could begin to change their outlook accordingly - and this is where investors' eyes will be trained.

"The earnings season will be somewhat in the shadow of trade war. Equity markets are dominated by the outlook and we know the outlook is clouded by the trade issue," said Peter Garnry, head of equity strategy at Saxo Bank in Copenhagen.

Evidence of a clear impact on companies' confidence in the future could cause sharp share selloffs - if Daimler's recent profit warning was anything to go by.

Mention of the word 'tariff' in earnings calls increased during the last quarter to levels not seen in the last decade, according to data compiled by CB Insight. It is likely to rise further this quarter.

Investors dialling into conference calls will listen out for changes to capital expenditure plans and earnings outlook.

"It feels to me at the moment we are going into an earnings season with more uncertainty than we've had for some time," Neil Campling, co-head of the global thematic group at Mirabaud Securit
ies. GRAPHIC - earnings growth europe versus us: https://reut.rs/2JdjJXH

AUTO IMMUNE

Europe's auto sector, clearly in Trump's crosshairs, has unsurprisingly been the worst-performing this year and Societe Generale's global head of flow strategy Kokou Agbo-Bloua said investors were buying derivatives protection against further share price falls.

That means the stocks will be more volatile than usual on the day they post results - options markets point to Daimler shares swinging 2.75 percent on results day, Volkswagen 2.52 percent and BMW 1.73 percent, Agbo-Bloua told Reuters.

Other areas likely to show strain from tariff threats are companies exposed to a potential tariff-driven slowdown in China, primarily in the industrials and capital goods sectors though luxury stocks are also exposed.

Artur Baluszynski, head of research at asset manager Henderson Rowe, said he would be watching forklift and warehouse technology provider Kion closely for any comment from management on tariffs.

"They might start signalling things aren't looking good for pipeline going forward because of this uncertainty," he said.

Wider market damage may, however, be limited as many a bottom line will have been bolstered by a weaker euro and a higher oil price.

"At the headline level European earnings should actually have some reasonable numbers relative to Q1 because of one massive overriding thing: currency," Campling said.

The euro lost more than 5 percent against the dollar in the second quarter, providing some relief for euro zone exporters whose revenues had been hurt by five consecutive quarters of currency strengthening.

The devaluation has helped boost expectations for euro zone earnings growth to 4 percent year-on-year for the second quarter, up from 1.6 percent in Q1, according to Thomson Reuters figures. The figure for the pan-European index is 8.1 percent.

Earnings-per-share for Q2 has been revised up 1.5 percentage points ahead of the season - a good omen because this is the main gauge of a company's profitability.

The downside though is that revisions are lopsided, concentrated in the oil sector. The top performers this year after Brent crude's 11 percent year-to-date gain, energy shares should deliver a scintillating 30 percent earnings growth, according to Thomson Reuters forecasts.

But even here some investors are preparing for the inevitable comedown.

"Since the general rule this year is that no market trend will endure, we are taking profits in the best-performing sector," said Kepler Cheuvreux strategist Christopher Potts who recently went underweight energy stocks.

ECONOMIC SLOWDOWN

The turnaround in economic expectations from last year's optimistic picture is partly to blame for the investor sentiment U-turn. While the euro zone should still grow 2.1 percent this year, business sentiment surveys as well as hard data point to a stalling recovery.

"The level is still positive for growth and still should mean we're on track for earnings expansion but the market seems to be underwhelmed by the story," said Donough Kilmurray, Goldman Sachs' EMEA head of the investment strategy group for private wealth management.

The European Commission cut its forecasts for economic growth on Thursday, citing trade tensions with the U.S. as among the top causes for its revision.

Investors willing to swallow slower growth are finding attractively priced opportunities, with European stocks at their biggest discount to the S&P 500 in more than 18 years.

And those preparing to parse company results are also wary of companies using trade to explain away underperformance. Northern Trust's Campling dubbed it this season's "excuse du jour".

No tariffs have actually kicked in yet on European exports, with the exception of metals where U.S. import duties of 25 percent on steel and 10 percent on aluminium are in place.

"It seems a bit circumstantial and too easy to give trade tariffs as an excuse for the moment, except in affected sectors such as steel," said Sylvain Goyon, head of equity strategy at ODDO BHF.

GRAPHI
C - STOXX 600 valuations relative to S&P 500:

(Reporting by Helen Reid and Julien Ponthus; Additional reporting by Sujata Rao; Editing by Toby Chopra)

By Helen Reid and Julien Ponthus

Stocks mentioned in the article
ChangeLast1st jan.
BAYERISCHE MOTOREN WERKE -1.82% 79.28 Delayed Quote.-8.70%
DAIMLER -2.35% 57.26 Delayed Quote.-19.12%
DJ INDUSTRIAL -0.03% 25058.12 Delayed Quote.1.37%
KION GROUP -2.77% 61.68 Delayed Quote.-14.31%
NASDAQ 100 -0.03% 7350.2269 Delayed Quote.14.94%
NASDAQ COMP. -0.07% 7820.1984 Delayed Quote.13.35%
S&P 500 -0.09% 2801.83 Real-time Quote.4.89%
STOXX EUROPE 600 -0.15% 385.62 Delayed Quote.-0.54%
VOLKSWAGEN -2.26% 144.66 Delayed Quote.-13.09%
share with twitter share with LinkedIn share with facebook
share via e-mail
0
Latest news on BAYERISCHE MOTOREN WERKE
07/20U.S. carmakers expected to warn of tariff pain when releasing results
RE
07/19BAYERISCHE MOTOREN WERKE : BMW Team RLL ready to rebound at Lime Rock Park.
PU
07/19COMPUTER TOMOGRAPHY IN AUTOMOTIVE CO : BMW Group uses X-ray measurements for veh..
PU
07/18BAYERISCHE MOTOREN WERKE : Three MINI Cooper S E Countryman ALL4 embark on Panam..
PU
07/18BAYERISCHE MOTOREN WERKE : Baja Aragon 2018 – Round 7, FIA Cross Country R..
PU
07/1870TH EDITION OF 24H SPA-FRANCORCHAMP : Ardennes classic features numerous BMW wo..
PU
07/17BMW Gets Rights for Potential Stake in Chinese Battery Supplier CATL -Update
DJ
07/17BMW Gets Rights for Potential Stake in Chinese Battery Supplier CATL
DJ
07/17Western Europe car sales up 5.1 percent in June - ACEA
RE
07/17China's CATL to get $420 million upfront from BMW-Brilliance battery deal
RE
More news
News from SeekingAlpha
07/20ROSS : 'Too early' to talk auto tariffs 
07/11Shanghai speeds up foreign auto investment 
07/05Clock Ticks Down To Next Tariff Round (Wall Street Breakfast Podcast) 
07/05WALL STREET BREAKFAST : Clock Ticks Down To Next Tariff Round 
07/05U.S. offers German carmakers 'zero tariffs' solution 
Financials (€)
Sales 2018 99 035 M
EBIT 2018 9 838 M
Net income 2018 7 557 M
Finance 2018 21 573 M
Yield 2018 5,09%
P/E ratio 2018 6,93
P/E ratio 2019 6,72
EV / Sales 2018 0,31x
EV / Sales 2019 0,29x
Capitalization 52 487 M
Chart BAYERISCHE MOTOREN WERKE
Duration : Period :
Bayerische Motoren Werke Technical Analysis Chart | BMW | DE0005190003 | 4-Traders
Technical analysis trends BAYERISCHE MOTOREN WERKE
Short TermMid-TermLong Term
TrendsBearishBearishBearish
Income Statement Evolution
Consensus
Sell
Buy
Mean consensus HOLD
Number of Analysts 29
Average target price 94,2 €
Spread / Average Target 19%
EPS Revisions
Managers
NameTitle
Harald Krüger Chairman-Management Board
Norbert Reithofer Chairman-Supervisory Board
Nicolas Peter Chief Financial Officer
Susanne Klatten Independent Member-Supervisory Board
Manfred Schoch Deputy Chairman-Supervisory Board
Sector and Competitors
1st jan.Capitalization (M$)
BAYERISCHE MOTOREN WERKE-8.70%61 504
TOYOTA MOTOR CORP1.92%217 525
VOLKSWAGEN-13.09%86 143
DAIMLER-19.12%73 513
GENERAL MOTORS CORPORATION-3.88%55 397
HONDA MOTOR CO LTD-16.13%53 812