>>> Stanley Black & Decker beats by $0.06, misses on revs; raises FY14 EPS above

Stanley Black & Decker beats by $0.06, misses on revs; raises FY14 EPS above consensus
Reports Q2 (Jun) earnings of $1.43 per share, excluding non-recurring items, $0.06 better than the Capital IQ Consensus Estimate of $1.37; revenues rose 1.0% year/year to $2.89 bln vs the $2.94 bln consensus.
  • Co issues raised guidance for FY14, sees EPS of $5.50-5.60 from $5.35-5.50, excluding non-recurring items, vs. $5.43 Capital IQ Consensus Estimate.
  • The gross margin rate for the quarter was 36.5%. Excluding charges the gross margin rate was also 36.5%, up 100 basis points from the prior year rate of 35.5%, as price, productivity and cost actions more than offset significant unfavorable currency.
  • Guidance Commentary: "We anticipate a stronger full year financial performance within certain of our businesses, most notably the Industrial segment, and further Company-wide cost savings to more than offset slightly lower full year organic sales growth due to the weather impact on the CDIY outdoor product season and slower underlying emerging markets growth. This revised guidance is consistent with our EPS profile in recent years whereby approximately 45% of annual EPS typically falls within the first half of the year. We have strong conviction that our 2014 free cash flow will be at least $675 million inclusive of approximately $250 million of one-time payments primarily relating to 2013 restructuring actions."

>>> Stanley Black & Decker beats by $0.06, misses on revs; raises FY14 EPS above

Stanley Black & Decker beats by $0.06, misses on revs; raises FY14 EPS above consensus
Reports Q2 (Jun) earnings of $1.43 per share, excluding non-recurring items, $0.06 better than the Capital IQ Consensus Estimate of $1.37; revenues rose 1.0% year/year to $2.89 bln vs the $2.94 bln consensus.
  • Co issues raised guidance for FY14, sees EPS of $5.50-5.60 from $5.35-5.50, excluding non-recurring items, vs. $5.43 Capital IQ Consensus Estimate.
  • The gross margin rate for the quarter was 36.5%. Excluding charges the gross margin rate was also 36.5%, up 100 basis points from the prior year rate of 35.5%, as price, productivity and cost actions more than offset significant unfavorable currency.
  • Guidance Commentary: "We anticipate a stronger full year financial performance within certain of our businesses, most notably the Industrial segment, and further Company-wide cost savings to more than offset slightly lower full year organic sales growth due to the weather impact on the CDIY outdoor product season and slower underlying emerging markets growth. This revised guidance is consistent with our EPS profile in recent years whereby approximately 45% of annual EPS typically falls within the first half of the year. We have strong conviction that our 2014 free cash flow will be at least $675 million inclusive of approximately $250 million of one-time payments primarily relating to 2013 restructuring actions."

FT : Fiat checks out Peugeot as marriage partner

Fiat-Chrysler chief executive Sergio Marchionne has made something of a name for himself selling ambitious business plans to sceptical investors.
But even he cannot kid himself when it comes to the hard road ahead for his US-Italian car company.

“To delude ourselves that we can do everything by ourselves is nonsense,” Mr Marchionne said recently. “[And] there are some people who are looking for marriage partners.”
One of those may be PSA Peugeot Citroën, the French carmaker, which has held talks over the past year with Mr Marchionne’s Fiat-Chrysler, said four people with knowledge of the discussions.
The talks did not progress, but were aimed at finding a possible way to bring together two struggling, middle-ranking carmakers with ambitions of becoming a strong, global player, said the people briefed on the talks.
Fiat-Chrysler says it is not currently in talks with Peugeot, while the French carmaker denies it has held merger talks with the US-Italian company.
PSA’s deal with Dongfeng Motor earlier this year gave the French carmaker some respite from its problems but did not provide a long-term solution, proponents of a potential Fiat deal told the FT, while Fiat recognises that it needs to increase its business faster than organic growth would feasibly allow.
Mr Marchionne and Carlos Tavares, his counterpart at Peugeot, both need scale, greater efficiency in Europe, and ways to bring down their investment costs per car as they compete with far larger and richer rivals.
In addition, Mr Marchionne’s tired-looking Fiat and Chrysler product portfolios, some of the oldest in the industry, could benefit from ideas from PSA’s development labs, and Mr Tavares could be keen to leverage FCA’s strong presence in North and South America.
"Fiat still needs scale, especially in Europe, and it really needs some help with its product pipeline," one of the people with knowledge of the talks said. "FCA's turnround plan only works if you have more scale than today."
For China’s Dongfeng, which owns a stake in Peugeot, any tie-up with Fiat-Chrysler would further enhance its position as China’s most prominent carmaker in the global market, and chime with Beijing’s ambitions to create a more advanced and mature car industry.
The two companies have history. The Agnelli family, which controls Fiat, is close to the Peugeot dynasty, and Mr Marchionne has always seen PSA as a natural partner for Fiat.
Talks between the two would pit the demands and expectations of two of Europe’s most famous industrial families, who in the past have had concerns over what would happen to their shareholdings.


But PSA’s deal with Dongfeng has reduced the stake of the Peugeot family, and its power over the carmaker, and some members of the Agnelli family are thought to be more open to a possible deal with any investor if it brightened the business prospects for their business, which has not generated significant returns recently.
Peugeot shareholders also include the French state, which could object to any shift in ownership after struggling so hard to keep the industrial champion under French ownership late last year.
Those briefed on the talks say that any potential deal is most likely to happen after Peugeot has pushed ahead with its restructuring following the Dongfeng deal, and Fiat-Chrysler has completed its own corporate reshaping, including shifting its incorporation outside of Italy and listing in New York.
Mr Marchionne is credited with the rough yardstick coined a few years ago that a global carmaker needs to build and sell 6m cars a year to stay globally competitive. FCA will sell less than 5m this year.
Adding in PSA would bring the total to close to 8m, based on their current sales and growth estimates, within touching distance of the Renault-Nissan alliance, and a couple of million cars behind Volkswagen, Toyota and General Motors.
But aside from the basic numbers, any form of combination of the two groups would raise large integration challenges.
Peugeot and Fiat-Chrysler have a number of overlapping markets and product segments, which could concern antitrust bodies.
Together, Fiat and Peugeot have a 17 per cent market share in Europe, second to Volkswagen with 25 per cent. While any possible deal could lead to synergies, especially in purchasing and distribution, it could force politically sensitive plant closures in Europe, where both companies are wrestling with inefficient and underused factories.
Moreover, while it could also give Fiat a stronger foothold in some Asian markets where PSA is growing, and give Peugeot access to the US market, thanks to Chrysler. Previous deals in the car industry, such as Daimler’s ill-fated merger with Chrysler, prove practice is far harder than theory.

FT : Why tax systems are trickier than Martian algebra

Only radical restructuring has a chance of creating fair taxation, writes Tim Harford

Tax is a divisive subject but everyone seems to agree on one point: taxes are too complicated and should be simpler. Unfortunately, tax systems did not receive the memo.
In the UK only a few years ago, almost everyone in work used to be taxed at a marginal rate of either 31 per cent or 41 per cent, depending on how much they earned. (If Brits do not recognise those numbers, it is because the UK has two cumulative systems of income tax, one of which goes by the code name of “national insurance”.)
The system is trickier today than Martian algebra. Paul Johnson of the Institute for Fiscal studies points out that, over different levels of income, a non-working spouse with two children will be taxed at marginal rates of 12 per cent, 32 per cent, infinity, 42 per cent, 60 per cent, 42 per cent, 60 per cent, 42 per cent and 47 per cent. You might ask what kind of muppet designed a tax schedule like that, and one answer would be George Osborne, chancellor of the exchequer, and Alistair Darling, his predecessor – the last two men to be in charge of the UK tax system.

Another answer would be that this is just the sort of thing that happens without diligent maintenance. Window frames rot. Iron structures rust. Tax systems become complex.
Having nine different marginal tax rates is an ugly sign that things are not well. There are others. Cereal bars attract value added tax at 20 per cent but flapjacks enjoy a zero rate; vegetable chips are tax-free if the vegetable in question is not a potato; dried fruit is subject to VAT unless destined for a cake. On a gingerbread man, chocolate icing attracts a substantial VAT liability unless the icing constitutes the eyes. There are more things in tax accounting, Horatio, than are dreamt of in your philosophy.
If a tax break for unfrosted gingerbread seems uniquely British in its eccentricity, it is not. Officials in New York state have been obliged to rule on the tax status of burritos. (Legally they are sandwiches and attract sales tax of 8 per cent.) Or consider Pillow Pets, a stuffed toy/ pillow whose slogan – “It’s a pillow, it’s a pet, it’s a Pillow Pet” – poses a dilemma for US Customs. For the purposes of levying a tariff, is it a pillow? Or is it a tariff-free toy pet?
Then there are tax subsidies for agricultural land in places such as Florida. Agricultural land is no easier to define than a flapjack or a sandwich. Rent a cow, let it graze on your garden or vacant lot; if that is not agriculture, what is?
All this matters not just because the rules are hard to understand and expensive to obey but also because taxes shape our behaviour. The “camelback” houses of late 19th century New Orleans, with a hump of two storeys at the rear and a long single-storey snout stretching to the street, were tax-efficient because property taxes were levied based on the number of storeys at the front of the house. Abba’s outlandish outfits are reported to have been inspired by tax rules: they were tax-deductible only if they were too outré to be worn anywhere other than on stage.
These are trivial examples of tax-efficient charm but the same principle can be harnessed for a far greater good: a carbon tax to shift our energy system towards low-carbon fuels. Well-designed taxes can raise revenue while rewarding green behaviour.
Meanwhile complex, illogical taxes raise less revenue while rewarding clever accountants. There has been outrage over celebrity tax-dodging in the UK but the tax avoidance schemes usually involve a government attempt to provide a tax incentive for the British film industry or some other hobbyhorse.
What is behind such insanities? Partly, absurd loopholes exist because special interest groups demand them; hence the subsidies for land with cows on it. Partly, voters are given the tax systems they deserve because we sympathise with highly vocal losers whenever a loophole is closed and we fall for simple tricks that hide taxes behind a veil of complication.
The UK’s two-tier income tax system is a good example. Basic income tax rates have tended to fall over time, while national insurance rates have tended to rise. True income tax rates for the typical worker are similar to those of 35 years ago but they seem much lower. The sleight of hand is politically convenient but increases complexity, creates unfairness and opens opportunities for tax avoidance.
It is tempting, then, to call for a radical simplification, for taxes simple enough to write on the back of a postcard. But this ignores the third reason that taxes are complex, which is that fair taxation is a genuinely complex business. This year’s piecemeal reform efforts become next year’s loopholes.
Only radical, systemic reform has much chance of success – and it may be less elegant than some reformers hope. A per-person “poll tax” was introduced in the UK 25 years ago, and promptly ended the premiership of Margaret Thatcher. It was undoubtedly simple – but in taxation, as in life, simplicity is not the only virtue.

(BofA-ML) The Flow Show - Equities $5b Outflows (Out : US & Eur In : EM & JP)

>>> Asset class flows
* Equities: $5.0bn outflows (all outflows via ETF”s – especially SPY)
* Bonds: $1.9bn inflows (5 straight weeks) (Table 1)
* Commodities: flat

>>> Equity flows
* EM: 7 straight weeks of inflows ($0.2bn) (Table 3)
* Japan: 5 straight weeks of inflows ($0.6bn)
* Europe: 3 straight weeks of outflows ($0.1bn)
* US: $7.6bn outflows (largest in 9 weeks and driven by SPY selling)
By sector, real-estate funds see largest inflows in 9 weeks ($1.1bn)

>>> FICC flows
* Largest weekly outflows ($4.8bn) from HY bond funds since Jun’13 (Table 2)
* 31 straight weeks of inflows to IG bond funds ($4.2bn)
* 17 straight weeks of inflows to EM debt funds ($0.3bn)
* Largest weekly inflows to Govt/Tsy funds in 9 weeks ($1.8bn)
* Outflows from floating-rate debt funds in 14 out of past 15 weeks ($0.4bn)

(BFW) BSkyB Placing 156.1m Shrs to Part Fund SkyD, Sky Italia Deals

BN 07/25 06:01 *BSKYB PLACING 156.1M SHRS TO PART FUND PROPOSED ACQUISITIONS
BN 07/25 06:01 *BSKYB PLACING OF 156.1M SHRS
BN 07/25 06:00 *BSKYB BSY PLACING OF NEW ORDINARY SHRS
BSkyB Placing 156.1m Shrs to Part Fund SkyD, Sky Italia Deals
2014-07-25 06:11:27.572 GMT


By Gaurav Panchal
July 25 (Bloomberg) -- BSkyB to place 156.1m new ordinary
shares, representing ~9.99% of BSkyB’s existing capital, with
both existing investors and new institutional investors to part
fund the acquistions of Sky Italia, Sky Deutschland.
* 21st Century Fox, the 39.14% shareholder in BSkyB, has
undertaken to subscribe for 61.1m placing shares so as to
maintain existing percentage shareholding in co.
* 21st Century Fox agrees that it will not exceed more
than 37.19% of voting rights at any time exercisable at
a general meeting of BSkyB
* Placing shares, other than the 21st Century Fox Placing
Shares, fully underwritten by Barclays and Morgan Stanley
* Statement:{NSN N997DI3HBS3O <GO>}
* Earlier: BSkyB to Buy 100% of Fox’s Sky Italia Stake, Swap
NatGeo Stake {NSN N997NJ6TTDSN <go>}
* BSkyB Offers EU6.75-Shr for Sky Deutschland {NSN
N997176TTDS1 <go>}

Link to Company News:{BSY LN <Equity> CN <GO>}
Link to Company News:{FOXA US <Equity> CN <GO>}
Link to Company News:{SKYD GR <Equity> CN <GO>}

For Related News and Information:
First Word scrolling panel: {FIRST<GO>}
First Word newswire: {NH BFW<GO>}

To contact the editor responsible for this story:
Gaurav Panchal at +44-20-7392-0511 or
gpanchal2@bloomberg.net

>>> Balfour Beatty and Carillion confirm merger talks; Goldman Sachs advising Ba

Balfour Beatty and Carillion confirm merger talks; Goldman Sachs advising Balfour Beatty, Lazard advising Carillion -
The listed UK-based construction companies Balfour Beatty and Carillion have confirmed that they are in talks regarding a potential merger. The statement posted on Balfour Beatty's website on 24 July follows:

Balfour Beatty plc (“Balfour Beatty”) and Carillion plc (“Carillion”) Possible Merger

In view of recent media speculation the Boards of Carillion and Balfour Beatty can confirm that, following an approach from Carillion to Balfour Beatty, they are engaged in preliminary discussions in relation to a possible merger of Carillion and Balfour Beatty.

The Boards of Carillion and Balfour Beatty believe that the merger of the two groups has the potential to create a market leading services, investments, and construction business of considerable depth and scale. Work is now underway to develop a strategy and outline business plan for a combined entity, underpinned by the evaluation of achievable synergies, future financing arrangements and a number of other essential supporting workstreams. In evaluating the merits of the merger, the two boards will, inter alia, wish to be satisfied that such a merger would lead to very significant value creation for the benefit of both sets of shareholders.

The two parties have agreed that Balfour Beatty’s publicly announced sale process for Parsons Brinckerhoff, which is already underway, will proceed unaffected by this announcement, subject to achieving acceptable value and terms.
The Boards of Carillion and Balfour Beatty note that they would only proceed with a merger if, inter alia, (i) both Carillion and Balfour Beatty were to conclude due diligence to their satisfaction; and (ii) the Boards of Carillion and Balfour Beatty were to recommend it to their shareholders. In accordance with Rule 2.5(c)(i) of the Code, Carillion and Balfour Beatty confirm that the pre-conditions referenced in (i) and (ii) above must be satisfied prior to the agreement of any transaction.

No final decision has been reached regarding the structure of any merger. Accordingly until further notice, for the purposes of the Code, both Balfour Beatty and Carillion will be treated as offeree companies.

As required by Rule 2.6(a) of the Code each of Carillion and Balfour Beatty are required, by not later than 5.00 p.m. on 21 August 2014, to either announce a firm intention to undertake a transaction in accordance with Rule 2.7 of the Code or announce that they do not intend to undertake a transaction, in which case the announcement will be treated as a statement to which Rule 2.8 of the Code applies. Either deadline may be extended with the consent of the Panel in accordance with Rule 2.6(c) of the Code.

A further announcement will be made in due course, as appropriate. In the meantime, there can be no certainty that any offer will be made by either Carillion or Balfour Beatty or as to the terms on which any such offer might be made.

Background:

A Sky News report on 24 July prior to Balfour Beatty and Carillion’s statement said the investment bank Goldman Sachs is advising Balfour Beatty, while Lazard is advising Carillion. Spokespersons for Balfour Beatty and Carillion refused to comment, the item said.

Balfour Beatty’s market capitalisation stood at GBP 1.60bn (EUR 2.01bn) at the close of trading in London on 24 July, while Carillion’s market capitalisation stood at GBP 1.45bn.

>>> What to look at today - 25/07/2014

US Market Closed near the flat line, mkt open higher on strong data & perf from China, none sector made a real difference today, volume were ligth again @ 615mil shares...FB +5.2% on better earnings was a name who helped Tech to performed...VIX @ 11.84 +2.78%...US After Hours : DTLK +19%, BIDU +6.1%, DECK +5.6%, CERN +2.9%, LSCC-15.6%, WCG -15.3%, P -10.5%, AMZN -10.2% following earnings/guidance...- Another set of disappointing numbers from Japan is further indicative of the rising possibility of Abenomics hitting the skids. Following a 2nd consecutive drop in exports overnight, the trend of steady growth in CPI also appears to be waning, adding to pressure on the BOJ to take more action to meet its targets...Among some of the more notable Asian companies reporting quarterly earnings, BIDU was up nearly 7% in the after-market following a solid beat on the top and bottom line. Q3 sales guidance was also very impressive...Nikkei +1.01% Hang Seng -0.05% Shanghai +0.61%

Eur$ 1.3468 S&P -0.06% EuroStoxx -0.21% FTSE -0.15% DAX -0.18% SMI -0.08%

Macro :
- Italy Unlikely to Meet 0.8% GDP Target, Renzi Tells Corriere
- Emerging-Market ETF Flows in U.S. Turn Positive for 2014

Keep an eye on :
- ABG LN : African Barrick Posts 1H Profit; FY Output Guidance Raised
- AF FP : Air France 2Q Ebit Beats, Rev. Misses Est.; Repeats Ebitda Goal
- AZA IM : Alitalia May Propose Capital Boost of Up to EU250m: Reuters Link
- BP/ LN : Delta Ends BP Fuel Contract at Trainer Refinery: Reuters Link
- BSY LN : Murdoch Said Poised to Sell European Sky Stakes for $9.3b
- CABK SM : CaixaBank 1H Net EU305 Mln; Analyst Est. EU262.8 Mln , Puts EU900M of Real Estate Up for Sale: Expansion
- BN FP : Danone 1H Trading Oper. Income Misses Ests., Confirms Forecast
- DB1 GY : Deutsche Boerse 2Q Net EU159.3m vs Est. EU158m
- DBK GY : Deutsche Bank May Expand Efficiency Efforts, Wants Added Savings of EU2.5b:: Handelsblatt
- ERICB SS : Ericsson Looking at Add-On Acquisitions, Dagens Industri Reports
- GLJ GY : Grenkeleasing 1H Net Income Rises 40%; Raises 2014 Forecast
- LG FP : Lafarge 2Q Ebitda EU812m vs Estimate EU816m; Confirms Outlook
- LLOY LN : Lloyds Said to Be Set to Announce Up to GBP300m Libor Fines: FT
- LUX IM : Luxottica 2Q Oper. Inc. Beats, Sees Strong 3Q Sales
- MC FP : LVMH 1H Rev., Profit Recurring Ops Miss Ests, 1H Fashion/Leather Organic Sales Growth Misses Ests.
- NEX FP : Nexans 1H Op Margin EU77m From EU75m Y/y; Confirms 2014 Target
- NXI FP : Nexity 1H Rev. EU1.11b vs Est. EU1.13b
- PRS SM : Prisa 2Q Net Loss EU2.12B Vs EU159.39M Loss a Yr Earlier
- SAN FP : Sanofi Drugs Sale Said to Interest Blackstone, KKR
- SBRY LN : Bid talks around
- SKYD GY : BSkyB bid 6.75/share
- SOP FP : Sopra 2Q Total Revenue Growth Up 7.1%, Organic Growth Up 4.7%
- RIA FP : Steria 1H Sales Rise 8%; Net Falls 30%
- STL NO : Statoil 2Q Adj. Net NOK9.9b vs Est. NOK10.9b; Div. NOK1.8/Share, 2Q Pretax Profit NOK33.2b vs Est. NOK35.9b, CEO Says ‘More Skeptical’ on Europe Shale Gas Volume
- TFI FP : TF1 1H Ad Rev. Falls; Says Conditions Remain Tough
- HO FP : Thales 1H Sales Miss Ests.; Confirms 2014 Outlook
- TL5 SM : Prisa Sells 8.5% Mediaset Espana Stake for EU307.5m
- TCH FP : Technicolor 1H Sales Drop, Net Income Rises; Confirms Targets
- UNR1V FH : Uponor 2Q Sales, Profit Miss Ests.; Keeps 2014 Outlook Intact
- FR FP : Valeo 1H Net Misses, Rev. In Line
- VOD LN : Vodafone 1Q Organic Sales Growth Beats Estimates