WEBVTT - STMicro Slumps, Dassault Aviation Up, Nestle Down

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<v Speaker 1>Bloomberg Audio Studios, podcasts, radio news, The.

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<v Speaker 2>Stock Movers Report, your roundup of companies making moves in

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<v Speaker 2>the stock market, harnessing the power of Bloomberg Data.

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<v Speaker 3>Let's look at some of the stocks on the move

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<v Speaker 3>today here in Europe. IM Caroline Hepgar with Stephen Carroll,

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<v Speaker 3>and we're joined by Bloomberg with Portia claim Malay.

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<v Speaker 1>Good morning.

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<v Speaker 3>Wow, it has been so hectic with so many European

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<v Speaker 3>companies reporting. Let's start with st micro Electronics shares really plunging.

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<v Speaker 1>Yeah.

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<v Speaker 4>Absolutely, This is really a story of a tech company

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<v Speaker 4>taking a massive hit for not meeting those sky high expectations.

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<v Speaker 1>And that's quite a familiar story at these days.

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<v Speaker 4>So st Micro's print this morning was actually quite positive.

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<v Speaker 1>It expects data center.

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<v Speaker 4>Revenue to be above one billion dollars for twenty twenty six,

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<v Speaker 4>which is more than what it had expected. It also

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<v Speaker 4>said that the data center revenues will be above, well

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<v Speaker 4>above two billion in twenty twenty seven. So there's very

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<v Speaker 4>strong momentum in that part of the business. But what

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<v Speaker 4>investors seem to be focusing on more this morning is

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<v Speaker 4>that the forecast for the third quarter is actually slightly

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<v Speaker 4>lower than expected. And so given how strong this data

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<v Speaker 4>center business is, the weakness can probably be attributed to

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<v Speaker 4>weakness in other end markets, and namely the automotive and

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<v Speaker 4>market and then the consumer electronics and market as well,

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<v Speaker 4>where it seems that maybe recovery is taking a little

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<v Speaker 4>bit longer than expected. So this is not a story

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<v Speaker 4>about a slow down in AI demand, but more one

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<v Speaker 4>about one of those very elevated expectations and what happens

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<v Speaker 4>to kind of those chip makers when they disappoint on

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<v Speaker 4>some of those metrics. But it's very much the weakness

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<v Speaker 4>in other end markets rather than AI driving down those shares.

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<v Speaker 1>For this you micro this morning well, speaking of elevation,

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<v Speaker 1>DOSO Aviation share is taking off.

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<v Speaker 4>Yeah, absolutely, it's a good day for French defense overall.

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<v Speaker 4>So Deser Aviation, which makes both private jets and then

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<v Speaker 4>also fighter jets, came out with very strong numbers last

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<v Speaker 4>night with revenue way above what analysts had expected and

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<v Speaker 4>then very strong deliveries of its fighter jets as well.

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<v Speaker 1>That was also a head of estimates.

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<v Speaker 4>And in addition to that we had this morning we

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<v Speaker 4>had Talis, another big French defense company, reporting a huge,

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<v Speaker 4>huge search in orders and then very strong at cash

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<v Speaker 4>flow as well, with performance being driven in particular by

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<v Speaker 4>the defense in aerospace divisions, and some analysts noted that

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<v Speaker 4>there was very very strong demand from a Middle Eastern customers.

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<v Speaker 4>So this is really an example of this huge rise

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<v Speaker 4>in military spending really boosting those defense companies. Of course,

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<v Speaker 4>we know that Nature allies have committed to at least

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<v Speaker 4>fifty billion dollars in defense industry deals. Several governments across

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<v Speaker 4>Europe have already raised budgets for armed forces and we

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<v Speaker 4>can see some of that momentum starting to translate into

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<v Speaker 4>orders and into a very upb outlook as well.

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<v Speaker 1>Okay, so that on.

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<v Speaker 3>So what about Nesle shares sinking there?

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<v Speaker 4>Yeah, so in Esle's volume growth was seen us quite disappointing.

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<v Speaker 4>So that might not vote very well for other consumer

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<v Speaker 4>goods companies like Unileva or Workit actually reporting next week.

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<v Speaker 4>Given that the inflation from the Iran war means you know,

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<v Speaker 4>weaker consumer confidence, it means higher input costs as well,

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<v Speaker 4>so there's some of that impact they're on volumes for

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<v Speaker 4>those companies, and this for Neesle is seen as a

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<v Speaker 4>bit of a setback for the new CEO, although he

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<v Speaker 4>is making progress on his strategy of kind of shedding

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<v Speaker 4>those underperforming units.

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<v Speaker 1>Today in Nesle also.

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<v Speaker 4>Announced the cell of half of its bottled water business

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<v Speaker 4>for three billion euros to a private equity company. So

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<v Speaker 4>this is part of this strategy of kind of refocusing

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<v Speaker 4>on more core businesses, meaning coffee, pet care, nutrition, and snacks,

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<v Speaker 4>and so some of these are actually doing really well.

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<v Speaker 4>The snacks division did well, the coffee unit have very

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<v Speaker 4>strong sales as well in over the first half. So

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<v Speaker 4>the CEO will be really hoping that this more dreamlined

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<v Speaker 4>a business model is going to be able to translate

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<v Speaker 4>into a better performance. But in the meantime, we are

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<v Speaker 4>definitely seeing that weakness this morning because of that week

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<v Speaker 4>of volume growth.

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