Company Earnings Round-Up: Credit Agricole

on Nov 9, 2012

(09.11.2012) Credit Agricole reported a large third quarter loss, mainly due to the cost of selling its Greek operation Emporiki. The French bank registered a net loss of €2.85 billion (£2.27 billion) after its decision to shutdown operations in unfavourable markets.

Even when one-time factors are ignored, including the sale of the Cheuvreux brokerage and a writedown on a stake in Spain’s Bankinter, the bank still fell below analysts’ expectations of €786 million (£626 million) delivering a “normalised” net income of €716 million (£571 million). “The results are quite disappointing,” said Yves Marcais, a trader at Global Equities. “You have to look at the numbers stripping out all the exceptional items to analyse them properly, but even then they look weak.”

The Greek saga, which resulted in a €1.8 billion (£1.4 billion) loss for Credit Agricole, could tip the bank into a second consecutive annual loss, after 2011’s €1.5 billion (£1.2 billion) loss which forced it into not paying dividends. Today the bank said no decision has been taken on this year’s dividends.
According to Jean-Paul Chifflet, chief executive, France’s third largest bank by market value is on track to reach a core tier 1 ratio of 10 percent required by the new Basel III rules by the end of 2013.

On 5 November Credit Agricole announced it completed the sale of the remaining 80.1 percent stake in its Hong Kong-based brokerage CLSA to Citic Securities for $914.7 million (£574 million). Citic Securities, China’s biggest brokerage by market value and revenue, said four months ago it would acquire CLSA in two stages for a total of $1.25 billion (£784 million). In July the brokerage purchased a 19.9 percent stake for $310.3 million (£194 million) and judging by Monday’s announcement, it will soon own CLSA entirely. Agricole hopes the sale will help it patch its balance sheet up and meet Europe’s new stringent banking rules.

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Shares in the bank have fallen by 8.24 percent to €5.43 in today’s trading session on the Paris Stock Exchange.

**_14.45 GMT Update:_**
**JC Penney Loses Customers Before Key Christmas Season**
JC Penney (NYSE:JCP) reported a third-quarter loss of $123 million (£77.1 million) or 56 cents (£0.344) a share, compared to a loss of $149 million (£93.6 million), or 67 cents (£0.42) a share, a year earlier. This was above the 7-cent loss forecasted by a Bloomberg survey of eight analysts.
Same-store sales fell 26.1 percent suggesting that the Plano, Texas-based company’s struggles to attract customers continue. According to Forbes, this is a key metric for retailers because it strips away volatile results from newly opened or closed stores. The drop in same-store sales also raises concerns on how JC Penney will perform during the crucial Christmas shopping season, a period when retailers see a significant rise in sales. “I am sure many of you are wondering how we’re going to make it through the next eight weeks,” chief executive Ron Johnson said.
Mr Johnson, the former Apple retail chief who last year joined JC Penney as CEO, attempted to transform the stores into collections of branded shops but instead lost a considerable amount of customers. He has worked hard to win back shoppers through offers such as 30 percent discounts off clearance units, $10 in-store coupons, free family portraits and even free children’s haircuts. “They’re in such a promotional category and their competition clearly isn’t everyday low price, and so they need to play ball and they need to provide a catalyst for people to shop,” Erika Maschmeyer, an analyst at Robert W. Baird & Co. in Chicago, said in a telephone interview before the report. “People will be interested to hear what kind of impact those promotions have.”
Shares in JC Penney reached a year low of $19.25 in mid-July but rebounded in September and October. The latest financial results sent the stock to a Friday opening price of $19.73.
**_15.45 GMT Update:_**
**Disney Meets Analyst Expectations Boosted By ESPN and Theme Park Revenue**
For the fiscal quarter ended 29 September, the Walt Disney Company (NYSE:DIS) reported a profit of $1.24 billion (£779 million), or 68 cents (£0.427) a share, a 14 percent increase from $1.09 billion (£685 million), or 58 cents (£0.364) a share for the same period in the previous year. Revenue increased by the modest 3 percent to $10.78 billion (£6.77 billion). As usual ESPN, the sports television network, provided the biggest boost for Disney – operating income of the cable television division rose by 9 percent to $1.38 billion (£867 million). The growth was mainly a result of lower marketing costs and higher fees paid by cable providers.
Disney’s film division operating income fell 32 percent even though the studio had a blockbuster DVD release in “The Avengers”. The revenue drop came as a result of the weak performance of animated film “Brave” and high marketing costs for “Frankenweenie”, which flopped at the box office. The theme park division gained higher revenue from passengers spending more time on Disney cruise ships plus higher attendance at parks in Hong Kong, Paris and California.
!m[](/uploads/story/759/thumbs/pic1_inline.png)In the conference call with analysts Jay Rasulo, Disney’s CFO, outlined a number of challenges the company will be facing that will pressure the results for its fiscal first quarter from October to December. Among these, sports rights’ costs will increase by $170 million (£106 million) while home video sales decline by $150 million (£94 million).
Last week the company unveiled a $4.05 billion (£2.54 billion) purchase of Lucasfilm from producer George Lucas with three new films planned to join the lucrative franchise, starting in 2015. The deal extends Disney’s chief executive Robert Iger’s acquisition strategy, which included buying Pixar from Steve Jobs in 2006. Also in 2009, the company bought Marvel Entertainment, the comics giant behind “The Avengers”, for more than $4 billion (£2.51 billion).
Shares in the company have lost 6.06 percent in Friday’s trading session falling to $47.02.
“Disney has so many good things going for it that any weakness in the stock would be a buying opportunity,” said Morningstar analyst Michael Corty as quoted by Reuters.


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