Bloomberg daybreak europe. I am anna edwards. Manus ims cranny. We had a slew of earnings before the start of the show. We have more as well. Nus is womens lehmans mbers. They happen rising 11 to 12 . Second quarter, sales profits rise. Sales for the Second Quarter , 20 point 2 billion, the market was looking for 19. 7. There is a comfortable bit coming through and confirming the fullyear outlook. Profits rose 18 to 2. 4 9 billion. Have the wind of business wrapped in and the Health Care Business potentially being ipoed and the margins will be the critical point. Well have a conversation with ralph thomas joining us under 14 minutes time. We will talk margins. We have socgen. Anna the socgen Bank Reporting numbers. That is below the estimate of 863 million. If you added that back end it would be above the estimate but we will see if that is the Way Investors decide to look at these things. Investor Services Revenue up by eight point 8. 2 . They are making an additional Digital Investment of 250 million. The net income figure coming in above estimates. 1. 8 billion versus an estimate. That is adding back in that legal provision. With,e that were going 700 47 is below 863 as the estimate. A brief word, this is the Global Leader in equity deliverables. Interestingly talked about the Digital Investment. That is what theyre trying to do, build up their offering. It pushed unit revenues down and they happen cutting back on their branch network. About billtalked il it he and the lack of volatility. Some of the lines coming back on socgen. We have one of the worlds biggest brewers. That is a nice, comfortable beat but when it comes to the ebitda, that is amiss. A miss. The earningspershare lower at . 74. The market penciled in . 96. When it comes to the volume, that is declining down. 5 of 1 . They still see acceleration in the organic Revenue Growth throughout the year, synergies and uppingthe cost the cost of sales will rise by low Single Digits and the tax rate is 24 percent to 26 . Anna they have reached a settlement with the libya thestment authority, details of that settlement are confidential, they said and they regret a lack of caution and the apologize to the Libyan Investment Authority. Taking a legal position. 656quarter net income million shy of the 708 million that was estimated. Missing estimates. Of howus a breakdown they are doing in the various businesses. This is the worlds secondlargest reinsurer. How with they do in the face of the australian cyclone . The investment rates had been hurting investment earnings. There is a number of issues, profits sweet squeezed by lower Interest Rates. There is a relatively quiet time of natural disasters. The cost ofwn premium so anything they say about the pricing will be interesting. Have all talk conversation, a tenfold increase in terms of their profitability. 1. 1 billion up from 122 million from this time last year. Market penciled in 736 million. They are maintaining their view in terms of capital expenditure. They have broken trend and this is the important thing in terms of their adjusted numbers. Three consecutive losses. Rise production rising by some percent. That is above what the market had slated in there. The breakeven point the last 27we caught up with them, a barrel. Is that the lowest point question mark we will continue that conversation with the ceo of statoil. We speak to him at 6 45 a. M. He is a good friend of the show. Fores reopened for trade the session in hong kong just a few minutes ago. We should bring viewers up to speed. Hsbc posting private prize profit increase. The finance director was positive with what they managed to do in the First Quarter. The market seems to be encouraged by what they heard on topline growth and they go in with that at the top line at least in the hong kong session. The stock is up by 2. 2 . We have got these numbers during the lunch break. We will see whether people ask more questions about return of cash to shareholders, that is one of the key factors behind the story. The ceo was saying they would review returning cash. Their capital ratio is strong, well above the 12 or 13 manus target they had. Had. target that they manus lets talk about [inaudible] probably the best lager in the world, i wasnt another one . Or was it another one . The danish krone, the market had penciled in 13. 4 billion. They are going for fullyear earnings. Statoil, that is a tenfold increase. And karl. Youre looking at this is initial suite. This is what drives the markets once get to the French Elections risk out of the way. A comfortable day for carlsberg and they are sticking to their outlook. Lets talk about where we are in the broader markets. Put up the risk radar and show you where we are got to. Have eight minutes into the program and we have not mentioned the fed. We were subsumed by the earnings story. 4 of 1 , this has a lot to do with what we are seeing in the middle space and iron ore down by 5. 4 . Pressure, one of the egg stories of the day. Manus the center of gravity is moving in the iron ore market. Seeing the actual steel index in china go back into contraction. Lets have a look at the dollar because that is relevant to what happened. The Federal Reserve looking through the First Quarter, staying the course and not changing their view. You have dollar rising a bit five. 1 of 1 . June hike [inaudible] we have got another set of questionable numbers from the tech sector. Concerned about cells busy andt will be a of the week. Juliette and the u. S. , the fed has stuck to its outlook for gradual Monetary Policy tightening after it left Interest Rates unchanged and showed no love over recent economic waste bess. Officials were unusually explicit indicating that a difficult First Quarter would not knock them off their path to raise rates to more times this year. The way the specter decision contained no concrete commitment for the timing of the next rate increase. Investors increased bets on a move in june. The uks Prime Minister has accused European Union officials of interfering with britains election. She unlaced her fury at unflattering account 7 april 2016 or with European Commission president jean claude junker. Bloc toughened its opening demands on money, trade and 70. E European Commissions stance has hardened. Threats against britain have been issued by european politicians and officials. All of these have been deliberately timed to affect the result of the general election that will take place on the eighth of june. Juliette in the u. S. Among House Republicans plan to vote on their long stalled obamacare appeal measure. Repeal measure. It comes after six weeks of agonizing how the gop would liver on years of promises to repeal obamacare as well as intense pressure the white house. Republican moderates remain opposed are undecided. Global news 24 hours a day, powered by more than 2600 journalists and analysts in more than 120 countries. You can find more stories on the bloomberg at top. It has been a bit of a downbeat day across asian equity markets. Japan still closed, hong kong down. 41 after the lunch break area that weakness and iron ore and copper weighing into the asx 200. Also into the malaysian market. Look at the tykes, they are getting close to the tight to the 10,000 point level. Hitting a record high in intraday trading. We have been watching in the region fortescue metals group, one of the biggest decliners on that huge jump in iron ore, futures and china dropping over 7 , the biggest fall in three months. Hsbc humming out of the lunch break looking quite good. There was concern we could see selling. Investors have shied away from the fact it has not announced a third by back and looked at the fact that numbers were better than the market was looking for. And one of the best gainers, this is an interesting story because if you look at the technicals you can see a story on the bloomberg showing that the kospi has quite a bit of room to run free in overall, the south korean index is still trending below the fiveyear index. Looking quite good in terms of some of those south korean players. Manus and anna. Manus thank you very much. A great market roundup. Lets talk about Marine Le Pen and emmanuel macron. Not holdandidates did back. She portrayed her opponents as part of the global elite and refuted his claims. You have said it so often, i am the candidate of openness. You are the candidate of closure. The closure of factories, the closure of attorney warts, the closure of police stations, the of hospitals. Anything you do not want to close its borders. Anna macron hit back. This great fear, who has been manipulating it since the beginning question market as you them a who plays with the fears of our services on terrorism, etc. , it is you. The great priestess of fear is in for to me. Great britain has nothing to do with us. It was not in the euro and had never has been. You suggest leaving the euro. That is a mortifying project and a dangerous project. Manus for more on the debate, lets go to carolyn, joining us from paris. The headlines are pretty spectacular. When were the biggest clashes, which area would you say were the biggest clashes in . Caroline it was brutal, it was feisty, it was a freeforall where the moderators almost could not intervene. They question almost every europe,ubject, terrorism, education, and, of course, the economy. Comfortable on some subjects. Ae told macron you have thirst for fundamentalism. She feels confused about the plan to leave the euro. She had a hard time to clarify saying that there are be two guarantees, the french would pay but the euro could still be used with international transactions. Said this is nonsense. Le pen arrived on set with a lot es, macron, every time she sounded confused he said look into your notes. To appear to be the competent one. Arrogant. Sounding the penn said do not talk to me like a teacher to student. It was feisty, reading some of the quotes. Thank you. Joining us from paris, quick word on the corporate spear sphere in france. We are getting numbers from air france. Loss widening, versus a loss of 155 million. It is a time when the lines do tend to get losses. Resilient start to the Second Quarter, they say. Lets get back to the policies and get back to the story we were talking about with caroline and france. A very good morning to you. A testy debate, feisty language on both sides, did any of that stick to the euro, we will wait for monday or sunday night. There are layers of complexity regarding this branch election. Right now the market is pretty relieved that the opinion polls are suggesting it will not be le pen and an antieuro candidate. Phile almost certainly. We have a lot of relief in the it will be some time that macron does not have the support in parliament yet behind him. It will not necessarily be an easy ride but for the market it is a relief. Manus we had a couple of guests saved these are the risk reversals in the market as far as the euros concerned. Less specs than it was going into round one. To what extent has the recovery been done on the euro and that parity trade is off the table, you talk about support for macron, they would have to each. D 49 to 286 this is the latest poll we have in terms of the assembly. That is considerable, that is a lot more than i thought. I was quite shocked when i read that. He does not have a system a president or politician would have. It is unusual to have a candidate like this. We will see how that works you but it could be difficult for some ofet support for the reforms he has suggested. For the markets the French Election would cap from the headlines, it would drop from the focus of tension and the euro has been interesting all year and i would suggest that the euro has seen [inaudible] since the end of last year. If you recall last year the markets had gone through that italian referendum and constitutional reform, it was concern because of the failure of that and renzi had to resign. They were concerned about how they would emerge this year in europe and the French Election, the dutch election has brought concerns to the fore. Manus thank you. Jane foley stays with us. Duffy forget, bloomberg tv and radio will ring you special coverage of the french president ial election. That hits your screens on sunday afternoon. Six it is 19 minutes past in london. Siemens reported secondquarter sales of 22. 2 euros. The company said it expects a business margin. Joining us from munich to discuss the numbers is the siemens cfo. The profit rises by 18 . You confirmed to the outlook. Is there as we go through the years, you hope that you will be able to upgrade your outlook on those numbers . Guest thank you for having me this morning. And youre right, siemens is strong has another quarter with continued profitable growth, 5 revenues increase, it is quite something in a challenging environment. The good thing all divisions affect contribute into the growth, eight out of nine being in or above the target margin range. That has been through momentum. Have been we benefiting in the Second Quarter. We expect momentum to carry over into the second half of the year. From a cfo perspective, the best thing is that profits have been converting into cash with 2 billion of industrial business, billionh flow and 1. 4 over and above the first half of the fiscal year compared to the higher your and free cash flow. We are very confident that we are successfully executing on our vision for 2020. Manus every, a hear a sea of eight talk about free cash flow, a cfo talk about free cash flow, what is the confidence in forhat is the consequences dividends, do you hunker down on the cash, what are your expectations question mark expectations questio . What we see is cement has been substantially improving its pattern of generating cash. We were seasonally fairly late in the past and now we have been obviously breaking that pattern and more continuously electing cash, putting us into a strong position. Anna can i ask you about oil and gas in terms of how your business is doing, ge has opened up their oil and gas unit. How is yours doing at the moment . Guest oil and gas is very challenging place to be. We see many competitors and they are all competing for more or less the same order. We happen making quite Good Progress on the top line and we feel encouraged by the efforts and the successes we have been accomplishing so far by business,g the rent forming a strong team and winning more against the competition. Is goingur company through a great deal of change. Read organization, folding businesses and but the one area that we have talked about here is you train business and we reported that is set to be mooting moving with somebody i bombardier. Where are we on that potential merging . Need to say that we are very happy with the Business Development of our mobility business. It has been creating leading margins on the street and the topline momentum has been going up substantially compared to the prior quarters. You know and i know there is a lot of rumors out there in the market and we do not comment on speculation. On the other hand, we all do know the Competitive Landscape and since the megamerger took place between the number one and the number two in china, forming a real giant in rolling stock, it is obvious that there is a consolidation process going on and many people are speculating and waiting for further steps to come. I believe that also the antitrust authority should look at the Global Landscape when assessing on the questions arising. Manus you say things have improved, has the worst past . In that case for that Mobility Division in your view . The our Mobility Division is working along a vertical integration strategy. We are not only in rolling stock, we are and automation and signaling. Both being the parts of the market that will have substantial impact on driving digitalization which is in the focus of our portfolio. Anna can i ask you about the portfolio, talking about another section. How is the process around health progressing, can you give us an update on timing and is that going to be an ipo . Guest what we said in the past as we want to enable the [inaudible] closer to their Customer Base and allowing them to work and grow along the lines and paradigms of their specifics in their industry. That is why we have been creating the company and we are very well advanced in all the efforts it takes to allow this beingy and the Company Separately managed and also allowing for listing. We have been preparing all the decisive steps and we are now following three very interesting alternatives at the moment. As soon as we come to a point to determine which one will be preferred from our end, we will share with you. Anna the digital factory business is performing well. It is a potential spinoff. Could that also be a spinoff, that business within a business . Guest as i said before, we are looking at all the businesses and what will make them more competitive in their particular and specific business environment. With theital digital factory be one of the core pieces of digitalization . We are doing well with a substantial contribution to growth. The short cycle business in the Second Quarter with tremendous growth rates i can china with and like the u. S. With 10 italy with 14 . We are very well positioned and this will also allow us to have other divisions contributing to the Digital Initiative and that is what we are driving as long as we do see opportunities to make best use of the strong brand of siemens and our global value chain and technologies as long as we see those opportunities to