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Carmakers’ Malaise, UBS’s Next Step: EMEA Earnings Week Ahead

(Bloomberg)

(Bloomberg) -- A moment of truth beckons for carmakers Stellantis NV and Aston Martin Lagonda Global Holdings Plc, both of which slashed their forecasts in the run-up to this week’s earnings reports.

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While much of Fiat and Peugeot-owner Stellantis’s malaise lies in the US, where demand is weak and inventory is surging, Aston Martin’s troubles are in China, the source of a broader industry downturn.

Bank earnings continue with reports from UBS Group AG, BNP Paribas SA and Societe Generale SA. Eighteen months after UBS’s takeover of Credit Suisse, Chief Executive Officer Sergio Ermotti is starting to think about what comes next for the Swiss behemoth.

German chemicals giant BASF SE, plagued with higher energy costs and a persistent slump in China, is preparing its agricultural unit for a possible listing as it pushes ahead with an overhaul.

Margin pressure may weigh on BP Plc, Shell Plc and TotalEnergies SE. GSK Plc, Novartis AG, Royal Philips NV and Haleon Plc are also due.

Monday: Philips (PHIA NA) slashed its sales-growth forecast for the year on Monday as tepid demand from China weighs on the Dutch medical technology firm’s bookings. It expects comparable sales to grow 0.5% to 1.5% in 2024, down from a previous forecast of 3% to 5%.

Tuesday: BP’s (BP/ LN) buyback pace will be in focus after the company flagged weak oil-products trading in the third quarter and lower margins from processing crude. It also expects net debt to have risen. This, combined with weaker macroeconomic prospects in 2025, points to quarterly repurchases of $1.25 billion to $1.5 billion, down from the current $1.75 billion pace, according to Bloomberg Intelligence’s Will Hares.

  • BI expects Novartis (NOVN SW) to stand pat on 2024 guidance — viewed as conservative by some — given tough year-earlier comparisons. With patent expirations looming for heart drug Entresto and Promacta for blood disorders, the outlook for 2025 is moving more to the fore. “It might prove difficult to show any significant growth next year,” Stifel analyst Eric Le Berrigaud said.

Wednesday: UBS’s (UBSG SW) investment bank revenue may show signs of a seasonal slowdown, intensified by uncertainty around US elections halting deal activity, although an increase in fees could still yield year-on-year growth. The global wealth and asset management units likely benefited from volatility in equity markets, while flow trends in Asia will be a key gauge of the health of the business after an acceleration in the previous quarter, BI’s Alison Williams said.

  • Aston Martin (AML LN) shares are still reeling from September’s profit warning, which has left the company in the bottom three of the FTSE 250 Index year to date. Change is afoot under new CEO Adrian Hallmark, who may manage “a more consistent, flatter, customer order-driven sales and production trajectory,” analysts at Citi said. The company’s adherence to 2025 guidance is “ambitious,” Deutsche Bank said, adding that an invigorated range of models should support demand and pricing.
  • BASF’s (BAS GY) volume growth would need to exceed the 2.4% of the previous three months to harden confidence that earnings have bottomed, BI said. Cash flow remains a priority as capital spending will likely remain elevated until 2026. Consensus shows adjusted Ebitda up 4.2%.
  • A strong rebound in sales of shingles vaccine Shingrix is key for GSK (GSK LN) after a second-quarter shortfall. Shingrix revenue likely jumped 8.5% in the quarter, consensus shows. RSV vaccine Arexvy is also in focus, with future sales dependent on the frequency of booster vaccinations, according to BI. New data last week showed its promise for a broader group of adults at risk of the respiratory disease.

Thursday: Stellantis (STLA US) has flagged a 36% decline in shipments in the key North American market in the third quarter. The ousting of finance chief Natalie Knight just 12 months into the job and other brand COO changes probably won’t improve sentiment, BI said. The shake-up leaves a tough road ahead for CEO Carlos Tavares, whose contract runs until 2026.

  • Shell’s (SHEL LN) third quarter may turn out to be its weakest this year as it contended with the lowest oil realizations of 2024, at below $80 per barrel, BI said. While the company forecast continued strong performance from its natural gas and upstream businesses for the quarter, it expected to lose money in chemicals. Buybacks for the final quarter should hold at $3.5 billion, in line with guidance, BI said. CEO Wael Sawan has vowed to take a “ruthless” approach in driving shareholder returns.
  • TotalEnergies’ (TTE FP) adjusted net income probably dropped more than 8% sequentially to $4.3 billion. Upstream earnings may be pressured by falling liquids prices, while a drop in European refining margins will likely weigh on downstream, according to BI. The company is nonetheless expected to maintain its share buyback pace of $2 billion per quarter.
  • Equities trading is expected to drive BNP Paribas’ (BNP FP) third-quarter revenue, according to BI’s Uzair Kundi. Consensus points to almost €900 million in revenue from the business, up 15.5% from a year ago, and more than €1 billion in revenue from fixed income, currencies and commodities, a 5.1% increase. Société Générale (GLE FP) will need a boost from its French retail unit, though consensus of 16% higher revenue from the business may be ambitious, Kundi said.
  • Haleon’s (HLN LN) results might trigger a “pause in the positive narrative,” Citi analysts said, pointing to worsening currency headwinds and organic sales growth skewed toward the fourth quarter. The purchase of shares from Pfizer Inc. bolsters confidence that cutting non-core businesses could help boost margins and reach 2024 sales growth guidance, according to BI’s Diana Gomes.

Friday: No major earnings of note

--With assistance from Tuhin Kar, Paula Doenecke, Valentine Baldassari, Laura Alviž, Jenny Che and Tiffany Tsoi.

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