03.02.2011

Up and down see-sawing continued and this time the elevator was pushed upward half a floor behind a bounce-back by Swedish engineering companies after the profit taking sell-off yesterday following quarterly reports. Other Nordic exchanges did post slightly negative numbers.

ECB kept rates unchanged but evidence of inflation in raw materials and commodities picking up is mounting. It should not come as a surprise in historical context concerning the stimulus and historically low interest rates. Add this to the weather related calamities stemming from La Niña phenomenan and it is no wonder. The calls by many politicians as of late that derivative securities are to blame is rather typical as an easy excuse. Very big numbers later on may cause a knee-jerk interest rate hikes so expects bumpy road. Japan Times says that Japan and China are considering vice-ministerial meeting in Tokyo over maritime issues. Spain sold nearly 2 billion worth of bonds and has to pay a lower yield for it than last time.

The quarterly report of TeliaSonera included news of strong profit and guidance coupled with a lofty dividend. The company will also initiate a share buyback, something of a theme with mobile operators today. TeliaSonera does not have a particularly good reputation with employees in the Nordic countries (nor with customers seeking assistance) and the announcement that another 800 jobs will go, fresh on the heels of CEO comments that such measures would likely not be needed any longer, can't help. Curiously the CEO saw it fit to state that middle management is behind this most recent demand. The markets had no beef with the numbers and TeliaSonera closed up three percent

TDC, which is another (or third; Telia & Sonera) former state telecommunications monopoly that is now slugging it out in a market that is turning oligopolistic, (albeit TDC is still at a more dominant position in comparison) said it managed a solid result despite fierce competition. Revenue and profit were nearly unchanged (profit up a tad more) but free cash flow was up nicely. The company continues to invest heavily in fibre, cable and mobile infrastructure to maintain long-term barriers to entry and create stable revenue. For 2011 sales are again expected to remain relatively flat but the company forecasts some profit growth via cost-cutting measures to continue.

Lassila & Tikanoja net sales for the final uarter of 2010 were 151.5 million Euro, which was marginally above 2009 numbers. Operating profit of the defensive environmental services and property support services provider was pretty much unchanged as well. The snowy winter increased costs of the basic business and ventures into renewable energy sources and biofuel refining have so far been busts.

Metso is still in full flight. The year 2010 brought nearly 6 billion Euro worth of new orders. Most of the earnings are paid out as dividends. Outgoing CEO Jorma Eloranta was very satisfied with the progress that was achieved during the year.

Rautaruukki showed some improvement but the result was still unaccebtable and the company did readily admit that. Like last time, the company is still promising growth from emerging markets with a strong push as a late entry. The dividend payment is increased to 60 cents per share, mainly on future outlook as Rautaruukki expects net sales to grow by nearly a quarter in 2011 and clearly improved profitability as well.

Konecranes says that the demand for its products is improving and the company feels that in addition to continued strenght of the emerging economies, customers in OECD countries are also gaining confidence for new equipment investments. Konecranes landed nearly half a billion Euro
of new orders in Q4. The stock was up nearly 10 percent today. Another former Kone spinoff Cargotec did not do equally well after its report although it too reported robust order growth and strong cash flow.

Statoil was down after Shell's report. Amer Sports missed estimates by a country mile and plummeted to below 10 Euro per share. Retailer Kesko missed expectations as well and profit was down from 116 million last year to 83 million for fourth quarter. Kesko was down 7.5% in the market. Network video solutions firm Axis posted a 125 million SEK result on the fourth quarter. Genmab's royalties of Arzerra reached 15.5 million DKK on Q4 and totalled 54.1 million for 2010.

Norske Skog's weak result was not unexpected but that outlook wasn't exactly awe inspriring either. Gross operating earnings for fourth quarter were 479 million Norwegian Kroner and 1413 million for the full year. This compares unfavourably to the 2185 million of 2009. After IFRS items, financial items and other special expenses both the quarterly and annual number very deeply in the red. Capacity utilization is on an upward trajectory and the company feels that newsprint prices will be at a considerably higher level in 2011. Rising prices in inputs will however pose such a large challenge that the company awaits "some improvement. Basically the current strategy is to try to get into such a condition where the company can be involved in future consolidation of the industry. The capital markets day focused on this point as well.