FRANKFURT, Germany (Reuters) -- Shares in Allianz AG fell on Thursday as German insurer said it would cut another 4,700 jobs at its Dresdner Bank unit.
The group's second-quarter net profit beat expectations, but its pre-tax profit of just one million euros ($1.1 million) fell far short of an average profit forecast of 629 million in a Reuters poll of analysts.
Meanwhile Allianz ruled out a sale in the near term of its investment banking unit Dresdner Kleinwort Wasserstein, but hoped it would
eventually find an outside partner.
Allianz Chief Executive Michael Diekmann told a conference call his company would not sell DrKW, which made a pre-tax profit of 201 million euros ($227 million) in the first half year, during the next two years.
Diekmann added that he did not expect the group to post a loss for the full year. "I would be disappointed if we saw a minus at the end of this year. There are currently no signs of that."
Tom Bennett, an analyst at BNP Paribas in London, who rates the stock "outperform," said: "They are continuing to do what they've already been doing, which is cutting the costs, getting the Dresdner Bank on to an even keel."
But he added: "The banking operations...look messy.''
Allianz's second-quarter net profit, buoyed by a tax credit of 853 million euros, was 622 million euros, beating the average of 262 million euros in the Reuters poll.
Allianz's shares lagged its peers, sliding three percent in early trade but recovering a bit to trade two percent lower at 86.90 euros by 1033 GMT. The DJ Stoxx European insurance index was up 0.8 percent.
"The bottom line of Allianz's results was boosted by tax credits. When these are taken out the net result was slightly worse than we had expected,'' said Paul Vrouwes, who runs a global fund of financial stocks at ING Investment Management.
"I do not think Allianz's shares are falling enough,'' he said, adding the results do not support the premium at which its shares are currently trading compared to its rivals. He said he preferred to invest in AXA.
Writedowns
Allianz management board member Helmut Perlet said the Munich-based group expected 300 to 400 million euros in further writedowns on securities in the third quarter of 2003 if markets stay at current levels.
Europe's second-biggest insurer by market value said net premium income -- revenue from selling insurance policies -- was 27.5 billion euros in the first half, in line with forecasts and up from 26.9 billion in the first half of 2002.
Diekmann said that, while the unit's operating trend is positive, "we are not yet out of the woods.''
"Even though the current economic market environments are friendlier, we are continuing with our ongoing review of all business segments,'' he said.
Allianz said its banking division, largely made up of Frankfurt-based Dresdner Bank, suffered a first-half loss of 437 million euros. The unit's goal of breaking even this year would depend on the economy and markets, it added.
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