TheChek News Flow

South Korean supermarket chain Lotte Mart has stopped stocking Reckitt Benckiser products amid a growing public backlash against the British consumer goods maker blamed for selling fatal disinfectants that caused nearly 100 deaths five years ago.

The move comes as South Korean prosecutors investigate Reckitt Benckiser and three other domestic makers of humidifier sterilisers linked to the illness or deaths of more than 500 people who inhaled allegedly poisonous chemicals.

Reckitt Benckiser withdrew the disinfectant made by its Korean Oxy unit in 2011 after a government probe suggested a link between lung damage and humidifier disinfectants. The environment ministry said none of the tainted products were sold outside South Korea.

Prosecutors last month summoned the former head of Reckitt Benckiser’s Korean unit and two other senior executives to find out whether they approved the sale of the disinfectants, knowing their harmful effects.

On Wednesday, Lotte cleared most of Reckitt Benckiser’s products from its store shelves. “Not many consumers are buying the company’s products these days and we have to respond to their calls,” the company said.

Reckitt Benckiser sells more than 120 household items and five medical products in South Korea.

Atar Safdar, the head of its Korean unit, apologised on Monday in a televised news conference and offered a multimillion-dollar compensation plan for victims.

But the company has come under fire for its initial denials of any responsibility. The victims’ families rejected Mr Safdar’s apology as too late and consumer groups have called for a boycott of Reckitt Benckiser products.

Civic groups representing the victims have filed a complaint with prosecutors against the UK company’s eight board members including Rakesh Kapoor, the British company’s chief executive, for failing to conduct proper safety tests before launching the product in 2001.

Lotte Mart itself apologised last month to affected users of its own brand Wiselect, which it sold November 2006 and September 2011, and offered compensation for victims.

The health risks from the disinfectants came to light after four pregnant women died of lung problems for unknown reasons in 2011. South Korean authorities later that year blamed the chemicals PHMG and PGH used in humidifier disinfectants and suspended sales of the products. Most victims were children and pregnant women.

According to government data, 530 affected people applied for compensation as of April 2015. The government said it would compensate 221 confirmed victims, including the families of 95 people who died, and denied compensation for 309 people.

The government said it had paid Won3.75bn ($3.2m) to the victims and their families as of April this year and plans to get refunds from the disinfectant makers through an ongoing lawsuit.

Reckitt Benckiser was fined $1.3m by an Australian court last month for misleading consumers about the effectiveness of its popular painkiller Nurofen. The court ruled that products marketed as targeting specific ailments such as migraines and back pain were actually identical.

The global fund flow picture kept its recent shape to close out April, with investors continuing to rebuild positions in fund groups they fled last year and early this year (DM credit, EM debt) while pulling back from fund groups tied

to NIRP markets (Japan, Europe equity) and normalizing flows out of overallocated assets (DM sovereigns).

The latest redemptions from Japanese equity funds now pulled their year-todate flows into negative territory, while European peers – which posted record setting inflows last year – saw the strongest outflows since Oct’14, pulling the

3-month flow momentum for ETFs to the most negative since Aug’08 (see centre right chart). In a week where the ECB and the BoJ kept their policies unchanged, fund investors continued to lose faith in the impact of monetary stimulus, whilst uncertainties regarding the UK referendum persist (Europe), and competitive FX advantages and inflation expectations wane (Japan).

In terms of new money investments, last week’s flows showed a more cautious risk appetite as investors waited to see what signals emerged from the three DM central banks’ statements. HY bond funds attracting only a quarter of the inflows they averaged over the previous nine weeks, and new commitments to EM equity funds barely broke through the zero mark, slowing the pace of pain relief brought by the rise in oil prices

Across asset classes – bonds (+) vs. equities (-) &. MM (-): 

Total equity funds (-0.1%, MFs: -0.2%, ETFs: +0.1%) declined for a third straight week as Japanese (-0.8) and European funds (-0.4%) continued to be a drag. Total bond funds (+0.1%) once again saw inflows with credit (+0.2%) still enjoying the oil rally and dollar weakness, and only partially offset by sovereign fund redemptions (-0.3%). Global money market funds (+0.0%) witnessed marginal inflows as investors showed some caution before the central bank notes.

DM equity funds (-) with Japan (--), W. Europe (-), with US (~): 

DM equity funds (-0.1%, MFs: -0.2%, ETFs: +0.1%) saw redemptions for a third consecutive week driven by significant losses across Japan (-0.8%, MFs: -0.7%, ETFs: -0.8%) and Western Europe (-0.4%, MFs: -0.3%, ETFs: +0.9%). US equity funds gained marginal inflows (+0.0%, MFs: -0.2%, ETFs: +0.4%), but the outflow streak for US mutual funds extended into the 42nd week.

EM equity fund flows (+0.0%, MFs: +0.0%, ETFs: +0.1%) were positive for another week as MF flows turned positive for the first time in 12 months. Regionally, EMEA inflows (+0.2%, MFs: +0.2%, ETFs: +0.3%) outweighed losses across Asia ex-J (-0.1%, MFs: -0.1%, ETFs: -0.3%) and LatAm (-0.1%, MFs: -0.2%, ETFs: -0.3%). China equity funds (-0.4%) witnessed outflows for the second week in a row.

Bond funds (+) with credit (+) and EM debt (+) but sovereigns (-): 

Total bond funds (+0.1%) experienced significant inflows, again driven by credit (+0.2%) and EM debt (+0.1%). Europe HY funds continued to witness inflows for the 10th consecutive week whereas their US counterparts (-0.1%) turned negative. Sovereign redemptions continued for the 10th consecutive week with outflows across US & Europe. Meanwhile EM debt funds continued their positive run for yet another week.

ML

** Half day in Sweden today, market closes at 12pm (13pm CET)................

* ST GOBAIN - Wendel sold 5.4% stake & issue €500mn bond covertible; BNP/GS..

* SWEDISH ORPHAN - Sobi Chairman sells 8m shrs @ SEK 108.5; Danske...........

GN STORE - Mixed. Revs +1.6% vs con but EBITA -11.8% and EPS -8% v cons......

AIRFRANCE - Q1 EBIT was -EUR99mn (vs. consensus of -EUR226mn)...........+3-4%

HEIDELBERGCEMENT - OIBD better than cons & raises FY16 earnings guidance..+2%

WIZZ - Solid Q1 update with a slight YoY increase in load factor the key..+2%

EVONIK - Q116 better in operating manners, confirmed FY16 outlook.......+1-2%

SIEMENS - Beat throughout the P&L, driven by Power & Gas. Orders 3% beat+1-2%

BAE - Solid trading update with positive order momentum. Reits FY guid..+1-2%

UMICORE - We UPGRADE to Neutral post 1Q results. Take PO to EUR 46........+1%

EDPR - 1Q16 EBIT touch higher v cons, inline at net income. CMD tomorrow..+1%

SPONDA - Q1 meets ests with EPS 0.08, NAV EU4.95 v EU4.5 year earlier....+1%

THALES - Q1 sales beat, solid execution continues. Revs 1% ahead of cons..+1%

ADIDAS - Strong acceleration in North Am. market up 22% v +8% in Q4.......+1%

IMPERIAL BRANDS - Solid. EBIT 3% beat, group EBIT by 2%, EPS 2% beat too..+1%

LEGRAND - Solid org growth (+1.9% v 0.7%) & margins, guidance confirmed...+1%

SOC GEN - Messy on P&L with 4% net profit miss to cons. Strong bal sheet..+1%

ERSTE - 25% headline beat is flattered a little by a lower tax rate.......+1%

RDS - 1Q16 beat thanks to Downstream; Upstream weaker than expected.......+1%

JD WETHERSPOON - 3Q LFL sales +3.8%, consistent with +3.7% reported prev..+1%

SYNGENTA - Appoints J. Erik Fyrwald as new CEO as of June 1 2016..........u/c

INTU - +1% on occupancy YOY but down 50bps from Dec. Reits LfL guidance...u/c

PADDY BETFAIR - Q1 revenue growth (16%) ahead of FY consensus.............u/c

AXA - Inline in life & asset, non-life better. Q1 capital ratio ahead.....u/c

RYANAIR - Traffic stats look ok. Loads up +2pc and volumes +10pc..........u/c

DEUTSCHE TEL - Headlines beat, Germany 1% light, FY guidance reit......u/c-1%

VALLOUREC - Mixed results. Hurt by low demand, mainly in oil and gas......-1%

VEOLIA - 1Q16 inline at EBITDA/EBIT, a bit below at revenues/net income...-1%

INTNL PERSONAL FIN - Customer numbers +3%, mentions strong competition..-1-2%

NOKIAN - 1Q16 EBIT inline, but outlook for 2Q16 inventories looks weak..-1-2%

DIRECT LINE - GWP growth of 4.2% YoY, a touch light v our est (c.0.5%)..-1-2%

PROXIMUS - Domestic underlying rev 1.7% below cons while EBITDA inline....-2%

GLENCORE - Explores sale of its Kazakh gold mine. Copper 10% ahead v BAML.-2%

RANDGOLD - Q1 EBITDA of $123mn is a touch light (23%) v consensus.......-2-3%

UK MINERS - Miners in OZ overnight : BHP OZ -9.7%, RIO OZ -8%, FMG -5%..-3-4%

NEXT - Sales -0.9% v cons flat. New sales range equates to c.2.5% d/g...-3-4%

BHP - Samarco faces $43bn suit for dam disaster, shrs -8.5% in AUS o/n....-5%

DIALOG - 1Q rev inline. Cuts FY16 rev guidance. Announces 50mn buyback..-6-8%

JPM:
ADIDAS No suprises following pre-a. Talks to sell parts of golf unit unch

AVIVA JPM key call. Reiterate Overweight +2%

AXA Solvency strong at 200%. Topline growth a touch disappointing unch

BEIERSDORF Beat driven by better than expected consumer +2%

BHP Brazilian prosecutors file $43bn claim against BHP and Vale -5%

CS Selling distressed debt assets for $1.27bn +2%

D TEL Beat driven by TMUS and System Solution, Germany weak -1%

DIALOG Warning overnight - 8% decline in FY sales vs cons +1% -10%

ERSTE Beat driven by lower provisions, core income is slightly light +2%

EVONIK Touch ahead, outlook reiterated. Consensus unlikely to move +1%

GN STORE Mixed. Better Resound org sales growth, but weaker Netcom -2%

HEIDELBERG Strong. EBITDA 5% beat driven by US & Europe offsetting EM +3%

IMP BRANDS Inline, guidance reiterated unch

LEGRAND Adj EBIT inline, FY guidance left unch unch

NEXT New guidance mid-point = 2.6% reduction -3%

ONTEX 6% EBITDA beat BUT guidance unch & outlook on mature mkts soft +3%

PROXIMUS 4% rev miss, EBITDA in line. Reit FY guidance -2%
SAINSBURY FY numbers, 4% beat at the PBT level but no comment on guidance +2%

SIEMENS Solid. Has been weak into figs +2%

SOC GEN Earnings inline, but capital beat & cost guidance revised lower +1%

THALES Q1 org sales growth tracking ahead vs guidance. Reits FY guid +1%


CS:
Adidas +1-2% Opts to enter talks to sell part of golf unit

Air France +2-3% Numbers better, OP loss 99m vs cons -226m, cautious outlook

Andritz -1-2% EBIT 74.2mln vs cons 72.5mln, outlook slightly light

Axa +1% Q1 new business indicators inline, solvency solid

Beiersdorf -2% Q1 Sales EU 1.67b est EU 1.72b, confirms forecast

BHP Billiton -3% Brazil Seeks $44B in Suit Over Spill at BHP-Vale Mine

Cramo M/P Q1 ebit €11.7 vs cons 9.9m, keep FY guidance

Compugroup -1% Q1 revs 2% miss, EBITDA inline, Confirms FY forecast

Daimler -1-2% US light truck data soft, new orders -40%

Deut Tele -1-2% Net income 1.05b vs 1.04b, confirms 2014 - 2018 outlook

Dialog Semi -8-10% Revises down its revenue and gross margin outlook for FY

Direct Line -1% GWP's inline but cost base is a little higher

Elringklinger UNCH Sales 2% light, 2016 guidance reiterated.

Erste Bank +2% Revs smll miss but lower NPL provisions

Evonik -0.5% Q1 EBITDA €565m cons 550m, reiterate FY16 guidance

Fonciere des +1-2% Q1 rental rev +5.5%, ahead of schedule to meet FY targets

Flow Traders -1-2% Revs €64.6m vs CS ests 67m and net €23.2m vs CS ests 24.7m
Fraport -1% Revs €572m vs cons 577m, reiterate outlook

Freenet M/P Q1 sales and EBITDA inline

GN Store -2% Q1 Revs Dk2.09b cons 2.06b, Margins/Netcom/Resound weaker

HeidelCement +3-5% Q1 revs 1% miss, OIBD 5% beat, op income 21% beat

Imp Brand +1% H1 net rev GBP 3.4b est GBP 3.32b

Intu +1-2% Company remain on target, deliver growth

Inwit M/P Revs inline with consensus, Net income 2% ahead

ISS M/P Sales DK19.2bn vs cons 19.1, keeps FY guidance

JD Weather UNCH LFL +3.8% in line

Kloeckner +1-2% Q1 a marginal beat, Q2 ebitda forecast €50-60m cons at €47m

Kuka -1% Revs light 629.1m vs cons 669.75m, confirms 2016 forecasts

Legrand M/P Q1 sales inline, Net Income 2% miss, reiterates FY outlook

Maersk +1-2% Net Profit $211m cons 54m, reiterated guidance

Miners -2% Copper -0.20%, Brent +0.30%, Iron Ore -2.30%, China -0.30%

Next -1-2% FY sales guidance has been reduced

Nokian Tyres -2% Q1 op profit 3% beat, net sales 1% miss

Norma +1% Revs 226.6mln vs cons 229.4mln, confirms forecasts
Ontex +3-5% LFL rev growth 1% vs cons 0.7%, revs 452.4m vs cons 445m

Orpea +1% Q1 Sales small ahead, reiterates 2016 sales target

Paddy Power -1% EBITDA of 59m vs CS ests 64m

Proximus -2% 1Q adj rev 3% miss, adj Ebitda inline, keeps FY guidance

Randgold -3% EBITDA 10% light, Production issues should be short-term

Royal Dutch +1% Operating level ok and beat at bottom line

Ryanair +1% April traffic stats. Traffic +10%, Load factor up 2%

Sainsbury +1% Pre tax GBP 587m mln est GBP 571.2m, Final div 8.1p conc 7p

Soc Gen +2-3% Decent numbers, capital up

Swed Match +2% Operating profit 1.71b vs cons 1.35b, sales ahead

Swed Orphan -3-5% Chairman sells 8m shares at SEK108.5 via ABB

Thales M/P Organic growth 7% vs our 6%. no change to guidance

Vallourec +1% Q1 EBITDA inline, outlook tough in abscence of a recovery

Verbund -2% 12% beat on numbers but reviewing dividend policy

Veolia -2% Q1 Revenues 1-2% light, confirmed forecasts

Volvo -1-2% US light truck data soft, new orders -40%

Wienerberger +2% Revs 611mln vs cons 618mln, confirms outlook


Investec EU:
* AB INBEV-MISS but outlook maintained, Q1 ebitda 4.6% below consensus.......-3%

* ADIDAS-in talks to sell golf unit,good news but shares strong recently.....U/C

* AIR FRANCE-Q1 rev miss, net better, keeps 2016 targets. Been weak..........+2%

* AXA-Q1 revs +1% to €31.8bn, AUM inflows €10.1bn, broadly in line.........+0.5%

* BEIERSDORF-Q1 sales €1.67bn Vs est €1.71bn, confirms FY f'csts.............-1%

* CSGN-sells debt assets to TPG unit for $1.27bn...........................-0.5%

* DIALOG SEMI-lowers FY rev,margin ests. 2Q rev. $240m-$260m(est. $257.3m)...-8%

* DNO-Q1 look fine,production levels ok. Weak on broker d/g y’day............U/C

* D TEL-Q1 adj ebitda beats at $5.16bn, low quality beat, maintains outlook..U/C

* EVONIK-Q1 sales in line, ebitda 3% ahead, confirms outlook.................+1%

* ERSTE BANK-Q1 NII bang in line, net inc 25% ahead on lower provisions......+2%

* FLOW TRADERS-Q1 value traded +14%, trading inc flat, cancels non-core sale.-2%

* FRAPORT-Q1 ebit 12% below ests, saw weak April, outlook reiterated.........-2%

* GBL-Q1 hit by large LafargeHolcim w/down (€1.44bn), div guidance in line...-1%

* H’BERG CEMENT-Q1 rev in line, op inc 20% beat, raises FY f/casts...........+3%

* KUKA-Q1 rev 6% light, confirms FY rev and margin forecasts.................-2%

* LEGRAND-Q1 sales in line, net 2% miss, confirms FY targets.................U/C

* MAERSK-Q1 sales miss,profits well ahead(lwr costs),lowers oil b/even lvl...+2%

* SIEMENS-Q2 rev small miss,profits beat,confirms o/look,raised cost savings.+1%

* SOC GEN-Q1 net 20% ahead,fine w/back and btr own debt valn.Sees more cuts..+2%

* TDC-Q1 rev 2% light, ebitda in line, keeps guidance........................U/C

* THALES-Q1 sales in line, org rev +7.3%, FY ebit guidance in line...........+2%

* TIT-Republica reports that TIT has put sale of Inwit stake on hold..........1%

* VALLOUREC-Q1 rev low end,€134m in charges,confirms guidance, been weak.....+2%

* VEOLIA-Q1 miss,revs 2%,net 9%. Blames energy prices, confirms outlook......-1%

* WIENERBERGER-Q1 rev and ebitda in line, confirms FY outlook................+2%

Other news

* ALTICE-gets approval from FCC to buy Cablevision.

* ST GOBAIN-Wendel selling 5.3% stake, priced at €38.50

* SYNGENTA-new CEO appointed, seen as neutral ahead of Chemchina deal

Investec UK:

* ARROW GLOBAL-Completes acq's of InVesting & financing using FRNs.........unch

* AVON RUBBER-H1.#'s in line, no chg to FY exp's...........................unch

* BAE SYS-Update. Trading in line with exp's. Outlook unch.................unch

* BILLITON/RIO-Brazilian prosecutors file $43b civil law suit...BLT -5% RIO -2%

* DIRECT LINE-Q1.Gross premiums £777.8m.Reit FY outlook....................unch

* GEMFIELDS-Update.In line,coloured gemstone market remains robust........+1-2%

* GLENCORE-Q1.In line.Sale Kazakh gold mine,worth $2bn(FT)Shs -8% yday.....unch

* IMP.BRANDS-H1.Adj Op Profit sml beat. FY remains on track................+1/2%

* INTU PROP.-Update.Footfall +1.4%,occupancy(95.3%).On track to meet exp's..+1%

* INT'L PERS-Q1.Good update,driven by growth in Mexico & digital products...+2%

* JD W'SPOON-Q3.In line, still expects 'resonable outcome' for the FY......unch

* NEXT-Q1.Full price sales a miss, widens FY guidance.Shs -3.3% yday........-2%

* PPOWER BETFAIR Q1 Rev +16%,good perf' across all divi's,online +17%.......+1%

* RANDGOLD RES-Q1 prof +19%, output -11%(Kibali issues), net cash $254m.....-1%

* ROYAL DUTCH Q1 clean net $1.6bn v $1.2bn est,beat all downstream..........+1%

* SAINSBURY-FY pretax beat,mkt to remain tough, margins narrow..............-1%

* SPIRENT-Q1 'broadly' in-line, N.Amer', EMEA slower than est's.............-1%

* STANDARD LIFE-Acquires Axa's Elevate unit for undisclosed price..........unch

* ULTRA ELEC-Appoints new FD, Ami Sharma...................................unch

* VIRGIN MONEY-Q1 record mortgage lending/credit card balances..............+1%

* WIZZAIR-Stats.Passenger +16%, capacity +15.4%............................+1/2%


ShoreCap:
IMPERIAL BRANDS-H1 pbt 452m.Revs 12.8bln.Strong H1 and on track for fy......+2%

GLENCORE-Cuts fy E&P oil output guidance.Fy prod guidance unchanged.........-1%

JD WETHERSPOON-Q3 lfl slales +3.8%.Op margin 6.4%.Total sales +5.5%.........+1%

RYANAIR-Load factor 93% V 91%.April passengers 9.9m v 9m....................+1%

SAINSBURY-Fy eps 24.2p.Final divi 8.1p.Pricing pressures impact sales/margin+1%

NEXT-Q1 directory sales +4.2%(Est+2.5%).Retail sales -4.7%(Est -1.6%).......-2%

SPIRENT-Q1 rev grows.Orders broadly in line with expectations..............UNCH

SHELL-Q1 adj net $1.55b.Beats estimates.Div 47c/share.......................+1%

BAE SYSTEMS-Says trading consistent with forecasts.........................UNCH

IPF-Sees further strong growth in IPF digital..............................UNCH

PADDY POWER-Says 1Q Good Performance in All Divisions ......................+1%

DIRECT LINE -Q1 gross premiums rise combined ratio 93-95% reit guidance ....+1%

INTU-rental income 2-3% footfall +1.4% occupancy 95.3% v 94.3% ............UNCH

Mainfirst:
*SIEMENS-Inds Pft 2.12b(1.92),Sales 19b(19.3),NI 1.48b(1.08)...........+2%

*SOC GEN-Net 924m(765),CET1 11.1%,Targets addit cost cuts..............+3%

*EVONIK-Sales 3.11b(3.13),Ebit 389m(359.8),Ebitda 565m(546.8)..........+1%

*DTE-Adj Ebitda 5.16b(5.1),Sales 17.6b(17.5),confirms guidance.........+0.5%

*INBEV-Ebitda 3.46b(3.74),OV -1.7%(-0.3),OG 2.5%(5.7),Rev 9.4b.........-4%

*FRAPORT-Sales 572.5m(577.8),Ebitda 145.6m(155.4),Ebit 64.3m(73).......-1.5%

*AIR FRANCE-Rev 5.61b(5.56),Net -155m,o/l remains uncertain............U/C

*KUKA-Rev 629.1m(669.8),Ebit 31.4m(34.6),Orders 746.5m(733)............-2%

*H/CEMENT-Rev 2.83b(2.86),Op Inc 138m(114),OIBD 321m(306.2)............+3%

*DIALOG-Q1 Rev 241.4m(240.9),OP 29.9m(32.3),FY outlook weak............-6%

*LEGRAND-Sales 1.19b(1.18),Net 127.4m(130.4),Confirms 2016 tgt.........-1%

*ERSTE-NII 1.092b(1.094),Op 620.5m(656),F&C Inc 443m(460)..............-2%

*ADIDAS-Confirms it is looking to divest T-M,Adams & Ashworth..........+0.5%

*SYNGENTA-Appoints J.Erik Fyrwald as CEO as of the 1st June............+0.5%

*SONOVA-Acquires AudioNova for €830m in cash(Sales 360m)...............U/C

*ANDRITZ-Ebit 74.2m(72.5),Net Inc 52.5m(52.5).Rev 1.29b(1.36),o/lk ok..U/C

*GN STORE-Rev 2.09b(2.06),Net 208m(227),Keeps FY outlook...............-2%

*NOKIAN-OP 50m(48.4),Net Sales 276m(279),Q2 weaker vs Q2 2015..........-0.5%

*ICA GRUPPEN-Sales 24.76b(24.59),OP Ex 959m(866),Comp still tough......+1%

*THALES-Sales 2.73b(2.704),Order intake 2.31b,FY Ebit 1.3b-1.33b(1.33).+0.5%

*MAERSK-Sales 8.54b(8.81),Ebit 490m(230),NP 211m(38),Short Int 4.7%....+5%

*BEIERSDORF-Sales 1.67b(1.72),Tesa 277m,Consumer 1.4b,FY confirmed.....-1%

*ELRINGKLINGER-Sales 385m(391),Adj Ebit 32m(33.2),NI 17.2m(17.5).......-1%

*ISS-Sales 19.2b(19.1),Adj Ebitda 1.03b(1.03),Keeps FY outlook.........+1%

*FREENET-Rev 749.2m(751),NI 51m(57),FCF 64.9m(65.5),Ebitda 89.1m(90)...-0.5%

*KLOECKNER-Sales 1.4b(1.52),Ebitda 16m(16.2),NI -14m(-14.2),Q2 ok......-0.5%

*NORMA-Sales 226.6m(229),Ebita 40.1m(39.6),Margin 17.7%(17.3)..........U/C

*RATIONAL-Rev 135.7m(136),Ebit 32.2m(30.4),EPS 2.15(2.25)..............-1%

*TDC-Rev 5.83b(5.99),Ebitda 2.23b(2.25),Keeps outlook unch.............U/C