Before the bell: What’s Happening in Sports?

European Markets Deep in the Red, Losses Continue in Asia—A Wave of Belgian Earnings Reports Today

Taking a Dip

The Nasdaq (+0.1%) and S&P 500 (+0.2%) barely moved higher, but despite the small gain, the S&P 500 closed at a new all-time high of 6,144 points. Pharmaceutical giant Merck (+2.8%) was a standout performer, while UnitedHealth (+2.1%) managed to recover some of its previous day’s losses. Quantum computing was the hot theme of the day, after Microsoft (+1.3%) suggested that these ultra-fast computers might hit the market sooner than expected. Investors jumped on Quantum Computing (+7.9%), Super Micro Computer (+8%), and D-Wave Quantum (+8.3%).

However, European markets struggled, with the Euro Stoxx 50 losing 1.3% and Frankfurt’s DAX plunging 1.8%. Cement producer Heidelberg Materials (-5.4%) and Siemens Energy (-4.7%) were among the biggest losers. In Brussels, Ageas (+2.7%) and Melexis (+2.9%) posted solid gains, but the Bel20 still fell 1.3%, with Solvay (-3.5%) and Syensqo (-5.6%) leading the declines.

Asian markets followed suit, with pessimism spreading among investors. Hong Kong’s Hang Seng is down 1.1%, while Tokyo’s Topix loses 1.2%, with chipmaker Tokyo Electron dropping 2.9%. Several Belgian-listed companies have already reported earnings this morning, with Qrf, Airbus, BESI, Mercedes-Benz, Renault, and Schneider set to release their results later today. On Wall Street, investors are eagerly awaiting earnings from Alibaba, Birkenstock, Live Nation, and Walmart.

No First Aid Needed

Fagron delivered a strong set of results, with revenue up 14% to 872 million euros last year. The company achieved an operating margin of 20%, slightly improving from 19.5% in 2023, leading to a 16.8% increase in operating profit to 174 million euros. Fagron itself calls this growth “exceptionally strong.” The company, which specializes in raw materials for pharmaceutical preparations for hospitals and pharmacies, expects growth to continue this year, though at a slightly lower pace than in 2024. The stock has already gained 19.9% year-to-date, and shareholders will receive a dividend of 0.35 euros per share, up 17% from last year.

Not a Blockbuster Year

That 2024 would be a tough year for Kinepolis was no surprise. The Barbenheimer success of 2023 could not be repeated. The cinema chain welcomed 8% fewer visitors in 2024, leading to a 5% drop in revenue, while operating profit fell 13% and net profit plunged 25% compared to 2023. We at Spaarvarkens remain unconvinced by Kinepolis. A night out at the movies with the family is relatively expensive compared to a Netflix subscription, and we believe the shift from cinema to streaming will continue. The stock market seems to agree—Netflix shares surged 81% over the past year, while Kinepolis lost 9.1% in the same period. A small consolation for shareholders: the dividend remains unchanged at 0.55 euros gross per share.

Building Blocks for the Future

At Spaarvarkens, we have long warned against real estate developers, but we’ve made one exception—VGP. Unlike traditional property developers, VGP focuses on logistics real estate and manages its own property portfolio, a strategy that seems to be paying off.

This morning’s earnings report confirmed the company’s strength, as net profit surged 229% to 287 million euros. New rental agreements and lease renewals contributed 91.6 million euros in rental income, bringing total annual rental income to 413 million euros (+17.6%). In 2024, the company delivered 21 new projects covering 584,000 square meters. Currently, 34 projects are under construction, totaling 780,000 square meters of future leasable space.

A Favorite of Jan R.

The chemical sector has been struggling, but Azelis has managed to hold its ground. What makes Azelis special is its business model—acting as an intermediary between large chemical producers and SMEs that buy chemical products. The company mixes, packages, and distributes these chemicals, creating value in the supply chain.

Despite the challenging market conditions, Azelis’ revenue increased 1.5% last year, from 4.15 billion to 4.21 billion euros. Meanwhile, net profit remained stable at 189.5 million euros, showing the company’s resilience in tough times.

Did You Know That…

Donald Trump announced yesterday that the U.S. gold reserves in Fort Knox will be audited? The last time this happened was in 2017. A question on X (formerly Twitter) inspired Elon Musk to suggest an independent audit to confirm that the vault still holds 4,580 tons of gold. The gold price responded by reaching a new record high.