After Hours Summary: DOCU -24.1% falls sharply on earnings, billings guidance; CMTL -14.8%, SFIX -14.8% also lower on earnings; ILMN -6.6% falls on CFO departureAfter Hours Gainers:
Companies trading higher in after hours in reaction to earnings/guidance: MTN +4.7%
Companies trading higher in after hours in reaction to news: YELL +3.2% (provides quarter-to-date Q2 operating data), TEVA +1.4% (reaches agreement with Aurobindo resolving AUSTEDO patent dispute), MRCY +1.1% (receives 3-yr ordering agreement worth up to $50 mln from Naval Air Systems Command), MARA +1% (announces bitcoin production and mining operation updates for May; production was lower than expected), VICI +0.5% (MGM's master lease agreement with VICI, which currently includes Gold Strike, will reduce annual rent by $40 mln), AMK +0.2% (reports performance highlights for May), UNVR +0.2% (expands distribution partnership with BASF), DGX +0.1% (names new CFO), FLT +0.1% (to acquire Global Reach Group), MGM +0.1% (to sell Gold Strike Tunica operations to Cherokee Nation for $450 mln), WFC +0.1% (responds to NYT article)
After Hours Losers:
Companies trading lower in after hours in reaction to earnings/guidance: DOCU -24.1%, CMTL -14.8%, SFIX -14.8%
Companies trading lower in after hours in reaction to news: ILMN -6.6% (CFO to step down), IAC -3% (reports May performance metrics), HEAR -1.4% (co's ROCCAT PC gaming peripherals brand extends partnership with Gen.G Esports), AB -1.2% (reports May AUM), SPKB -0.2% (terminates combination agreement with Eleusis), IVZ -0.1% (reports May AUM), APAM -0.1% (reports May AUM)
DWS chief defends ESG credentials amid ‘greenwashing’ claims
Asoka Wöhrmann, who is stepping down after a police raid on the asset manager’s offices, says sustainability is a key policy
The outgoing chief executive of embattled asset manager DWS has defended the Deutsche Bank-owned company’s sustainable investment strategy amid investigations into “greenwashing” by US and German authorities.
“DWS had clearly positioned itself to make ESG a core part of its strategy. We never made a secret of the fact that it would take effort. Nor did we ever say that we had already reached our goal,” Asoka Wöhrmann told the annual shareholders’ meeting on Thursday, in his first public address since resigning last week following a police raid on DWS’s Frankfurt offices.
He went on to assert that the nearly 25 per cent slump in DWS’s share price in the months since whistleblower Desiree Fixler alleged that the company’s criteria for labelling ESG investments was flawed, was “not justified”.
“The topic of sustainability is far too significant and far too important for us to be OK with it being instrumentalised by individuals for personal gain,” Wöhrmann added.
Wöhrmann, who will step down at the end of the AGM and hand over to Deutsche Bank’s Stefan Hoops, has also been criticised for the use of a personal email address to conduct business in a former role, and was scrutinised for a €160,000 payment made to him by a client, which he explained as a failed attempt to purchase a Porsche car.
Although DWS chair Karl von Rohr told the meeting that Wöhrmann was leaving by mutual agreement, people close to the company told the Financial Times that plans to replace the executive had been in train for some time, and were accelerated after the public raid last week, during which prosecutors gathered physical and digital evidence.
Von Rohr confirmed that Wöhrmann was still negotiating his severance pay and that compensation could be deferred pending the outcome of investigations.
However he praised Wöhrmann’s record at DWS, saying he had “successfully established the firm as a leading European asset manager with global reach”.
Following Fixler’s complaint, DWS changed its ESG criteria. In its 2021 annual report, published in March 2022, DWS reported only €115bn in “ESG assets” for 2021 — 75 per cent less than a year earlier when it stated that €459bn in assets were “ESG integrated”.
In his speech, Wöhrmann admitted that the “definition of sustainable energy today is more complex and even more multi-layered than it was just a few months ago”.
“Especially in the coming quarters, these issues are likely to be reflected in the performance of ESG products.”
Serious Money: Walking Plutocratic London — the rise of the super-rich
Part guide, part indictment of a yawning wealth gap, Caroline Knowles’s eye-opening book reveals how the capital has changed over the decades
Early premarket gappers
- Gapping up:
- OXM +5.2%, GEF +4.7%, SOND +3.6%, YEXT +3.3%, BASE +3.3%, TAK +3.2%, NEXT +2.9%, FLR +2.6%, UPST +1.5%, ICFI +0.9%, CVAC +0.8%, RUBY +0.8%, TRI +0.6%, AVO +0.6%, TRV +0.5%
- Gapping down:
- BILI -10.5%, SKIL -9.3%, FIVE -8.8%, BKD -6.6%, DBVT -5%, ABM -3.1%, NIO -3.1%, OC -2.6%, MMLP -1.5%, MT -1.2%, HA -0.8%, DVN -0.5%
Goldman Sachs Leads $100 Million Investment in Sustainable Textile Company Recover
The minority investment values the Spanish cotton fiber recycling company at about $1.1 billion
Goldman Sachs Group Inc.’s asset-management arm led a $100 million growth investment in Recover Textile Systems SL, an early player in the sustainable fashion movement.
The transaction values the Spanish company at about $1.1 billion, according to a person familiar with the deal. Recover majority owner Story3 Capital Partners also participated in the investment.
“The fashion and apparel sector is one of the most nonsustainable,” said Peter Comisar, Story3’s managing partner and a former Goldman Sachs partner, citing the amount of water used in clothing production. “That is an element that is, perhaps, one of the most wasteful pieces of the equation.”
But sustainability efforts are taking hold across the fashion industry, driven by regulatory actions and consumer demand, Mr. Comisar said. Recover offers both a proprietary technology to provide fiber blends with color at a lower environmental cost and a brand of recycled fiber for collaborators such as retailers Primark, Zara-parent Inditex SA and Revolve Group Inc., he said.
“That Recover name will stand for something important in the consumer’s mind” as a stamp of authenticity and transparency to the quality and methods used in making the garment, Mr. Comisar said.
Pacific Palisades, Calif.-based Story3 acquired a majority stake in Recover in 2020. The founding family retained a minority interest.
Recover is a materials-science company that traces its roots to 1914 and a textile factory in Banyeres de Mariola, a small town in southeastern Spain. The business has focused on sustainable materials and recycling since 1947.
Back then, however, sustainability wasn’t fashionable.
“My father never said this was a recycled cotton product,” said Alfredo Ferre, the company’s chief executive and his family’s fourth generation at the helm. “He simply said it was cotton.”
The market for so-called ethical fashions is expected to reach about $10 billion in 2025, growing at a compound annual rate of about 9.7%, according to data analysis firm Research and Markets. Still, most discarded clothes end up burned in incinerators or buried in landfills.
Recover turns textile waste into recycled cotton fibers and cotton blends, reducing the use of solvents and water and offering an alternative to discarding the material.
The company opened its first manufacturing plant outside Spain last year and plans to use the latest cash infusion for further international expansion, focusing on locations in Asia and Latin America. Recover has manufacturing centers in Pakistan and Bangladesh and plans to add a second location in Bangladesh and another in Vietnam this year.
The proximity of its plants to areas where textile production and waste generation take place helps Recover reduce both operating costs and its carbon footprint, such as greenhouse-gas emissions, company officials said.
Recover is also increasing output, aiming to produce more than 350,000 metric tons of recycled cotton fiber annually by 2026, said Samir Shah, Story3 managing director and a company director. He said the company expects to generate about $1 billion in annual revenue by 2026.
Before Story3’s investment, Recover produced about 4,000 metric tons of recycled cotton fiber annually, Mr. Ferre said.
“What we’re here to do is…to create a global solution for retailers in a mass way” through substantially increasing Recover’s production, said Ben Malka, an operating partner with Story3 and Recover’s executive chairman. “It’s got to be big numbers to make any difference to what’s happening in the world.”
Letitia Webster, managing director and chief sustainability officer of Goldman Sachs Asset Management, said Goldman aims to drive sustainability through backing businesses like Recover. She is joining Recover’s board of directors as part of the deal.
Recover’s production boost fits well into Revolve’s plans, said Michael Mente, a co-founder and co-CEO of the online fashion retailer.
“We’re continually looking to invest and expand,” Mr. Mente said. “This investment that Recover has is only going to strengthen them and also strengthen our partnership.”
While the focus is now on recycled cotton, he said, “ultimately, we’d like to have sustainable fabric across every category.”
In addition to the production expansion, plans call for building Recover’s identity as an “ingredient brand” in clothing and other products that consumers will recognize and trust, Mr. Malka said.
Juan Chaparro, group director for supply chain, sourcing and quality for Primark stores, said the chain and other retailers can’t address the fashion industry’s environmental impacts alone.
“The future in the industry goes to the ingredient brands to help us to solve our problems,” said Mr. Chaparro, who helped introduce Recover to Story3. “So we have to partner. We have to find the right partners to really achieve our sustainability commitments.”
In the end, he said, “We don’t want our customers to buy more from us—we want our customers to buy better.”
>>> Up
* Avast Raised to Buy at HSBC; PT 620 pence
* Britvic Raised to Overweight at Morgan Stanley; PT 940 pence
* Cellnex Raised to Buy at Citi
* Informa Raised to Buy at Kepler Cheuvreux; PT 655 pence
* Lotus Bakeries Raised to Accumulate at KBC Securities (+)
* Partners Group Raised to Buy at SocGen; PT 1,300 Swiss francs
* Seadrill Raised to Buy at SEB Equities; PT 390 kroner
* Sodexo Raised to Buy at HSBC; PT 85 euros
* Spie PT Raised to 32 euros from 29 euros at Berenberg
>>> Down
* ACS Cut to Hold at Kepler Cheuvreux; PT 27.95 euros
* Atlantia Cut to Sector Perform at RBC; PT 23 euros
* Compass Cut to Hold at HSBC; PT 1,990 pence
* Credit Suisse Cut to Add at AlphaValue/Baader
* Daimler Truck Cut to Hold at DZ Bank; PT 30 euros (+)
* DNB Bank Cut to Underperform at Exane; PT 192 kroner
* Elior Group Cut to Hold at HSBC; PT 3 euros
* Ferrovial Cut to Sector Perform at RBC; PT 24 euros
* Inmobiliaria Colonial Cut to Neutral at JB Capital Markets (+)
* Nexi Cut to Neutral at JPMorgan; PT 10.80 euros
* Wacker Chemie Cut to Underweight at JPMorgan; PT 160 euros
>>> Initiate
* Ambea Resumed Buy at Nordea; PT 75 kronor
* Attendo Reinstated Buy at Nordea; PT 40 kronor (+)
* EQT Rated New Hold at SocGen; PT 305 kronor
* Ermenegildo Zegna Rated New Neutral at Mediobanca SpA; PT $11.60 (+)
* EV Digital Invest Rated New Buy at Hauck & Aufhaeuser (+)
* Haffner Energy Rated New Neutral at Oddo BHF; PT 9 euros
* Heliad Equity Resumed Buy at M.M. Warburg; PT 17.80 euros (+)
* Lords Group Trading Rated New Buy at Berenberg; PT 120 pence
>>> Call
* Cellnex Upgraded at Citi With Risk-Reward ‘Very Attractive’
* Heidelberger Druck’s Guidance Looks ‘Encouraging,’ Baader Says (+)
* Mitie Delivered ‘Strong’ Showing in FY22, Peel Hunt Says (+)
* Nexi Downgraded at JPMorgan in Payments Reset, Adyen Top Pick (+)
* See Opportunities in Soft Drinks, Britvic Raised: Morgan Stanley
* Rising Cost of Capital to Pressure Stocks, MS Strategists Say (+)
* Wacker Chemie Downgraded at JPMorgan on FY23 Consensus Pessimism (+)
DAX:
- Vonovia (VNA TH) -0.5%
- E.On (EOAN TH) -0.6%
- Mercedes (MBG TH) -0.9%
- Watch Auto Stocks as EU Moves Closer to Gasoline-Fueled Car Ban
- BASF (BAS TH) -1%
- Daimler Truck (DTG TH) -1%
- Infineon (IFX TH) -1.1%
- Watch European Chip Stocks After Intel Views on Weakening Demand
- Siemens (SIE TH) -1.1%
MDAX:
- Aroundtown (AT1 TH) +0.8%
- K+S (SDF TH) -1%
- Cancom (COK TH) -1.2%
- Duerr (DUE TH) -1.7%
- Wacker Chemie (WCH TH) -2.9%
- Wacker Chemie Cut to Underweight at JPMorgan; PT 160 euros
SDAX:
- Heidelberger Druck (HDD TH) +2.6%
- SAF-Holland SE (SFQ TH) +0.7%
- Schaeffler (SHA TH) -0.6%
- SMA Solar (S92 TH) -0.9%
- DWS (DWS TH) -1%
- MorphoSys (MOR TH) -1.4%
- Hochtief (HOT TH) -4.4%
- Hochtief to Issue ~7.1m New Shares, Backstopped by ACS