German Stocks Drop Most in 19 Years; Daimler, MAN, VW Decline

By Stefanie Haxel

Oct. 24 (Bloomberg) -- German stocks plunged the most in 19 years as investor concern deepened a global economic cooldown will weigh on corporate profits.

MAN AG, Europe's third-largest truckmaker, tumbled to the lowest in more than three years after Volvo AB cut its outlook and Scania AB reported profit figures that trailed analysts' estimates. Daimler AG fell to a 12-year low as several analysts reduced their share-price estimates for the world's largest truckmaker and Oddo & Cie downgraded the shares.

The DAX Index declined 394.77, or 8.7 percent, to 4,124.93 as of 2:36 p.m. in Frankfurt, the lowest since October 1998. DAX Index futures expiring in December lost 8.2 percent. The HDAX Index of the country's 110 biggest companies fell 8.2 percent.

``There's uncertainty about how deep the recession will become and how long it may last,'' said Philipp Musil, who helps oversee 11 billion euros ($14 billion) at Constantia Privatbank in Vienna. ``Investors are extremely unsettled and are selling blindly. There's some panic in the market.''

The DAX Index is heading for a 14 percent drop this week. The benchmark for German equities has fallen 49 percent this year on concern that bank bailouts in the U.S. and Europe won't prevent a recession. Analysts lowered profit forecasts this year as credit-related losses and writedowns topped $660 billion in the worst financial crisis since the Great Depression.

MAN dropped 3.11 euros, or 8.8 percent, to 32.43 euros, the lowest since May 2005.

Volvo, Scania

Volvo forecast the European market for heavy trucks may be flat this year, while North America will contract by 10 percent. Previously, Volvo anticipated Europe to expand 23 percent and North America to be unchanged. Volvo, based in Gothenburg, Sweden, fell as much as 23 percent in Stockholm trading today.

Scania AB, Sweden's second-largest truckmaker, dropped as much as 14 percent, after posting third-quarter profit that trailed analyst estimates as European customers become more cautious ordering new equipment.

European sales of trucks weighing 16 metric tons or more in September fell 4.8 percent as the credit crisis and concern that a recession is coming deterred companies from expanding fleets.

Volkswagen AG plunged 25 euros, or 11 percent, to 204, the lowest in six weeks.

Europe's largest carmaker said vehicle sales rose 3.9 percent in the first nine months because of growth in emerging economies and the introduction of new models. The company said it's sticking to a goal of selling more cars this year.

Daimler Cut

Daimler declined 2.38 euros, or 10 percent, to 21.45, the lowest since November 1998. Oddo lowered its recommendation on the luxury-car and truckmaker to ``reduce'' from ``add'' after Daimler yesterday scrapped its full-year profit forecast by 1 billion euros ($1.3 billion) on plunging auto sales.

Separately, analysts at Citigroup Inc., UBS AG and UniCredit Markets & Investment Banking reduced their share-price estimates on the stock.

Siemens AG dropped 4.12 euros, or 9.5 percent, to 39.40. WestLB AG downgraded Europe's largest engineering company to ``hold'' from ``add,'' saying power and industrial markets may be undergoing a rapid swing away from boom times.

The following stocks also rose or fell in German markets. Symbols are in parentheses.

Allianz SE (ALV GY) lost 6.62 euros, or 10 percent, to 59.17 euros, the lowest since May 2003. Societe Generale SA cut its recommendation for Europe's largest insurer to ``hold'' from ``buy'' and lowered its share-price estimate 46 percent to 75 euros.

BASF SE (BAS GY) fell a third day, losing 1.8 euros, or 7.6 percent, to 21.65. JPMorgan Chase & Co. cut its recommendation on shares of the world's largest chemical maker to ``neutral'' from ``overweight.''

Deutsche Post AG (DPW GY) slipped 54 cents, or 5.4 percent, to 9.42 euros, the lowest since April 2003. ING Groep NV cut its recommendation on shares of Europe's biggest postal service to ``sell'' from ``buy,'' citing declining airfreight growth and the possibility of a ``severe economic downturn.''

Continental AG (CON GY), Europe's second-largest car-parts maker, retreated 4.64 euros, or 12 percent, to 34.36, the lowest in more than four years. Schaeffler Group's owners may sell as much as 25 percent of the auto supplier to investors to alleviate the financial burden of its takeover of Continental amid the credit crisis, Sueddeutsche Zeitung reported, citing unidentified bankers.

HeidelbergCement AG (HEI GY) slumped 3.80 euros, or 6.2 percent, to 57.68, the lowest in more than three years. The country's biggest cement maker had its long-term debt rating lowered to junk at Moody's Investors Service.

Infineon Technologies AG (IFX GY), Europe's second-largest chipmaker, tumbled 29 cents, or 11 percent, to 2.28 euros, an eight-year low. Competitor Samsung Electronics Co., Asia's largest maker of chips, flat screens and mobile phones, posted its biggest profit drop in more than three years as oversupply drove down prices of semiconductors and displays.

Norddeutsche Affinerie AG (NDA GY), Europe's largest copper refiner, dropped 4 euros, or 15 percent, to 23.08, the lowest in 10 months. Copper, used in wires and pipes, sank 22 percent this week, poised for its biggest weekly decline since the 1980s as consumer demand for cars and houses crumbles.

Nordex AG (NDX1 GY), a windmill maker, lost 1.29 euros, or 12 percent, to 9.17 euros, the lowest in more than two years.

``Market expectations are too high,'' said Patrick Hummel, an analyst at UBS AG in Frankfurt who rates the stock a ``sell.'' ``The company forecast to grow 50 percent next year, which can be ruled out given the financing problems of its customers.''

Though renewable energy stocks are more crisis-resistant due to government subsidies than others, it would be ``naïve to believe the sector would be the only one to continue to grow in a double-digit range,'' Hummel said.

Roth & Rau AG, the world's largest maker of equipment used to coat solar panels, lost 2.1 euros, or 14 percent, to 12.80. Repower Systems AG, a wind-turbine maker, lost 10.78 euros, or 11 percent, to 84.97.

Software AG (SOW GY) gained 55 cents, or 1.8 percent, to 31.55 euros. Germany's largest software maker, will cut its net debt to zero by the end of next year and the financial crisis has not affected its business so far, Chief Financial Officer Arnd Zinnhardt said.

Third-quarter net income climbed 62 percent to 31 million euros, beating a 24.7 million-euro median estimate of analysts, Software AG said earlier today.

To contact the reporters on this story: Stefanie Haxel in Frankfurt at shaxel@bloomberg.net.