Veba news:
German diversified utility
Veba AG <VEBG.F> is expected to report a clear rise in pre-tax
profit on Thursday, although any new details on a troubled
electronics unit could take the spotlight from results news.
Analysts said they would listen carefully to hear whether
Veba gives any indication on business in the current quarter at
the company's MEMC Electronic Materials Inc <WFR.N>, a maker of
silicon wafers used by the semiconductor manufacturers.
Under the weight of the semiconductor industry's painful
recesssion, MEMC in July reported a first half loss of $176
million, a development that analysts fear could hurt Veba's
bottom line.
"It will be important if Veba gives an outlook on MEMC,"
said Roland Pitz at Bayerische Hypo-Bank. "If things get worse,
it could have an effect on Veba profit."
Pitz said he has forecast Veba will report earnings per
share of 6.14 marks in 1998 and 6.75 marks in 1999, but those
targets are now under review.
"They could be under six marks because of MEMC," he said.
Pitz predicted Veba's first half sales would rise three percent
or more to over 41 billion marks, with pre-tax profit climbing
to more than 2.3 billion marks, from 1.75 billion marks.
Thomas Deser at BHF Bank forecast a similar sales figure and
2.5 billion marks in pre-tax profit.
Hartmut Moers at WestLB Research is another analyst watching
for MEMC news. "Basically there is no great change in business
at Veba from the first quarter. The only point is MEMC," he
said.
Moers sees first half sales at 40.6 billion marks. He also
gave a forecast of 1.25 billion marks in net profit and after
stakes in subsidiaries are taken into account.
At the end of July, MEMC said it would take $131 million in
restructing charges to cover the cost of closing a facility in
South Carolina and of cutting 1,500 jobs, or 19 percent of its
workforce.
Its sales and profits have been under pressure as computer
chip prices tumbled and semiconductor makers struggled with too
much manufacturing capacity.
Veba's Huels AG chemicals division owns a 52 percent stake
in MEMC.
Beyond MEMC, however, the Veba picture is quite positive,
especially in its chemicals division, oil unit and the Otelo
Communications GmbH venture it shares with RWE AG, Deser said.
"The drivers are still the same -- chemicals, oil. Otelo
revenue will certainly grow," he said.
Huels should provide earnings growth late this year and in
1999 after it completes its merger with Degussa AG <DGSG.F>, the
analysts said.
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