Two of Europe's biggest companies see their share price slide after weak third-quarter earnings. As Grace Pascoe reports BASF, the world's largest chemicals company by sales, cuts its full-year earnings guidance and Swiss drug maker Novartis is hit by a U.S. settlement.
Earnings weigh on Europe's stock markets. A U.S. lawsuit hit Swiss drug giant Novartis. Who have agreed in principle to shell out $390 million dollars That's to settle allegations that it used kickbacks to push sales of some drugs. In turn pushing third-quarter net income down 42 percent to $1.8 billion dollars- with shares down 2.3 percent. Seven Investment Management's Justin Urquhart Stewart. (SOUNDBITE) (English) SEVEN INVESTMENT MANAGEMENT, HEAD OF CORPORATE DEVELOPMENT, JUSTIN URQUHART STEWART, SAYING: "I can quite understand why many companies now are actually moving away from original production, it takes too long, far too expensive to develop and at the end of it, if you fail one of those hurdles you have wasted all your money and then you can find yourself with a very litigious operation, particularly in the States and do you actually want to enter that world." BASF - the world's largest chemical company by sales - also felt investor pain - shares slumped 4.7 percent. But the German firm's problems weren't of their own doing - weak demand and plunging emerging market local currencies a familiar theme. (SOUNDBITE) (English) SEVEN INVESTMENT MANAGEMENT, HEAD OF CORPORATE DEVELOPMENT, JUSTIN URQUHART STEWART, SAYING: "Here you have a global business being affected globally. You look at some of its operations in the developing nations, such as Brazil, its agricultural sector there has been really heavily hit indeed. But also in other areas as well, in their core chemical area, that has also been affected, but to a less extent." Both Novartis and BASF undershot analyst forecasts. And whilst BASF lowered its full-year earnings guidance, Novartis maintains theirs.