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Wednesday, 14 August 2024
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European Business News (EBN), 96-10-25European Business News (EBN) Directory - Previous Article - Next ArticleFrom: The European Business News Server at <http://www.ebn.co.uk/>Page last updated October 25 1210 CETCONTENTS
[01] Yeltsin warns top aides he won't tolerate power strugglesRussian President Boris Yeltsin warned his top aides to stop fighting for power and made it clear that he plans to serve out his full term.The beleaguered and ailing president said in a radio address that he wanted to remind the countries' politicians that the Russian people had made their choice of a leader for the next for years. 'There have been enough struggles for influence, fights for jobs, criticism and electioneering. It is time to work,' he said. Yeltsin, who will undergo hear bypass surgery next month, apparently recorder the address at the Barvika sanatorium where he is getting ready for the surgery. Russian and foreign doctors have said that Yeltsin should be able to work normally again after the operation. Yeltsin said that he was worried about the recent public scandals over pwer struggles and that he would act firmly to prevent such fights. 'Such actions discredit the (state) powers, they are undermining citizens' confidence in the state,' he said. Yeltsin said Russia, which faced huge economic and social problems, badly needed a unified state power capable of concerted effort to make people's life better. He called on his political rivals to work together. 'An accord among powers should be accompanied by an accord among all our society,' Yeltsin said. 'We should stop dividing ourselved into red and white, into friends and foes.' 'We should have only one criteria in assessing people -- their professionalism, their ability to work for the people's good and get results,' he added. The September announcement of the pending operation led to a fight among top officials for control over Russia. And that wrangling became public last week, when Interior Minister Anatoly Kulikov accused Yeltsin's national security adviser Alexander Lebed of plotting to seize power by force. Yeltsin sacked Lebed, who had denied the accusations, and the gruff reserve paratroop general has not been charged with any wrongdoing. [02] Deutsche Babcock flatly denies it's declaring bankcruptcyFinancially troubled German engineering and construction group Deutsche Babcock strenuously denied rumours that it is going bankrupt.Shares of the company dropped sharply Friday, amid talk on the Frankfurt stock exchange that the company had already or was about to declare bankruptcy. Babcock shares dropped 7% in IBIS electronic trading. The company said it 'categorically rejected' rumours on the Frankfurt stock exchange that it was facing insolvency and stressed that its restructuring programme was progressing well. Earlier this month, the company said it would take a larger than expected restructuring charge due to the closure of its Magdeburg plant and other key changes stemming from a business plan drawn up in July. It also said that its core operating subsidiaries would meet their profit targets this year. But analysts doubt Babcock will meet its loss target of 400 million Deutschemarks ($263 million) for the year ended September 30. 'The rumours are totally wrong,' a spokesman for Babcock said. 'People can make them up, just as they can invent stories that (Russian President Boris) Yeltsin is dead,' he said. The rumours are 'an invention ... without grounding,' he added. 'Our restructuring is in the works; everybody knows that,' the spokesman said. 'There are no negative developments.' The Oberhausen-based company has been suffering from financial difficulties for over a year. Having last paid a dividend in 1994, the company has said it doesn't expect to pay out another one until 1999. It has said it expects to reports that it had a loss in the fiscal year ended September 30, 1996. Preliminary financial figures on the fiscal year will be released by the company at the end of November, the spokesman said. Hurt by continued weak capital investment by industry, Babcock in February disclosed plans to sell or close units representing around 1.6 billion marks in sales in order to keep itself afloat financially. Babcock creditors later agreed to a 600-million-mark bail-out. At that time, the company denied a spate of rumours it was on the verge of bankruptcy. It also has presented a drastic restructuring strategy to be completed by the end of next year. The plan aims to create a holding company with its units concentrating on core areas of plant-building and engineering. But the company problems haven't faded. On Oct. 14, Babcock said its restructuring is turning out to be more expensive than originally thought. Yet the company also said, despite the cost overshoot, the restructuring was still 'on the right path.' [03] National Grid accepts new price capsU.K. electricity transmission company The National Grid Group said it accepts in principle the price controls proposed by the Office of Electricity Regulation.National Grid said it considers that accepting the new price controls is in the best interests of its shareholders and employees, adding that it will also avoid any further uncertainty that would be caused by a referral of the case to the Monopolies and Mergers Commission. David Jones, group chief executive of National Grid said: 'These proposals will create a challenging environment for the regulated transmission business.' He said although the company will be introducing further measures to improve efficiency, the new price controls and proposed reductions in revenue will still have a material impact on the company's overall profitability. 'However, we are confident that group performance will enable us to maintain a progressive dividend policy,' said Jones. National Grid said implementation of Offer's proposals will result in a 20% cut in price controlled revenue in fiscal 1998 and a tightening of the X factor in the Retail Price Index minus X formula to 4% in each of the subsequent three years, up to and including the fiscal 2001. Offer said it welcomes National Grid's decision to accept the price proposals. Steven Littlechild, the head of the regulatory agency, said, 'I am pleased that National Grid Group has accepted my proposals. As a result customers will benefit by nearly 1 billion pounds over the next 4 years'. [04] Bayerische Vereinsbank operating profit jumps 17.5%Bayerische Vereinsbank posted a 17.5% jump in nine-month operating profit to 1.03 billion Deutschemarks ($678 million) and said it expects full year earnings to grow more than 10%.The commercial bank also hinted at a dividend increase. The company said ‘our shareholders should profit' from the expected double digit growth in 1996 operating profit, 'despite the difficult basis effect in the second half of 1995.' In addition, the bank said it expects to concentrate more on its core activities, noting for instance it shed its 77% stake in beer maker Hasenbraeu at the start of the month. It also plans to build up its electronic sales and marketing system in the near-term. In the nine-month period, Vereinsbank said it was able to keep its interest margin on the mortgage business stable at 0.73%. Bank lending, meanwhile, rose 4.8% to 102.4 billion marks, with many customers taking advantage of low current interest rates to switch from short- to long-term loans. The interest margin on bank lending remained at 1.7%, Vereinsbank said. Vereinsbank said it raised its provisions for potential bad loans to 580.6 million marks from 495.7 million marks as of Sept. 30, 1995, citing 'difficult conditions' in the real estate market. It noted, however, that it hasn't had any cases of large loans going bad so far this year. The 16% rise in the bank's commission income, meanwhile, was driven by the performance of the bond and equities markets. Earnings from securities transactions made up 48% of net commission income, it said. [05] Rhone-Poulenc shows 13% profit gain for third quarterFrance's Rhone-Poulenc posted a 13% gain in third quarter net income and said the recent recall of albumin products would result in a charge of between 100 million to 200 million French francs ($20 million to $100 million). The drug and chemical company said net income rose to 756 million francs, while operating profit rose 12% to 2.05 billion francs.Rhone took a smaller-than-expected charge of 81 million francs after announcing the recall of products made by its U.S. unit Rhone-Poulenc Rorer. Rhone expects total charges for the year of between 100 million and 200 million francs. Finance Director Jean-Pierre reaffirmed the total effect on net profits of the recall would reduce 1996 net income by 6% to 7%. Asked to comment on a forecast of 2.5 billion francs, Tirouflet said: 'I have lower forecasts in my head.' 'Excluding this charge, net income would have progressed by 25.1 percent,' Rhone-Poulenc said. In addition, he said, the company will take new restructuring provisions for its chemical division in the fourth quarter. The pharmaceutical division's fourth-quarter net profit will be greater than the third-quarter figure, Tirouflet said. In the third quarter, the group's health division, which includes both human pharmaceuticals and animal health products, saw a rise of 26.7% in operating income to 1.58 billion francs. [06] Britain's third-quarter GDP rises 2.3% on the yearBritain's gross domestic product rose a provisional 0.8% in the third quarter from the second quarter and was up 2.3% from a year earlier, as industrial production picked up.The figures were largely in line with economists' expectations. The Office for National Statistics said industrial production is estimated to have grown slightly more strongly in the third quarter than the second due to higher levels of manufacturing output. It was the eighteenth successive quarter of growth. GDP is now 8% higher than the previous peak in the second quarter of 1990 and 12.5% higher than the trough in the second quarter of 1992, said the ONS. Excluding oil production, GDP rose 0.8% in the third quarter from the second quarter and was up 2.3% from a year earlier. Services output rose 0.9% in the quarter and 3.3% on the year. In the second quarter, services grew 0.7% from the first quarter and 2.7% on the year. Within the services sector, finance and business services have continued to show the strongest growth. [07] TWA's chief executive quits after airline posts lossThe chief executive of Trans World Airlines quit just hours after the carrier posted a $14.3 million loss for the third quarter that was linked to the July explosion of a TWA jetliner.Jeffrey H. Erickson, 51, who also is the airline's president, said he will step down in January. 'I have decided that it is time for me to move on,' he said. He made no mention of the crash that killed 230 people nor of the quarterly loss. 'I am proud of the accomplishments of the people of TWA under my leadership, which included a successful financial restructuring,' he said. An airline spokesman said there would be no additional comment. Earlier in the day, TWA posted its loss for the third quarter, a period that included the July 17 crash of Flight 800. On that date, TWA reported a 400 percent gain in its second-quarter earnings, a big turnaround for the airline, which has been in and out of bankruptcy court twice. Erickson was in London the day of the crash. He cut short his trip and flew back the next day. Nonetheless, he was widely criticized for his response. New York City Mayor Rudolph Giuliani called TWA management 'abysmal and horrible.' In announcing the third-quarter results, Erickson said: 'The events of the summer of 1996 have dealt us a setback. We will redouble our efforts through the remainder of this year and into 1997 to put our rebuilding effort back on track.' Erickson said that advance bookings and premium-fare bookings dropped after the crash. In addition, fuel during the quarter cost about 30 percent more than it did at the same time in 1995, and the cost of maintenance materials and repairs more than doubled. Louis Marckesano, an airline industry analyst with Philadelphia money management firm Roffman Miller Associates, said he was surprised by Erickson's resignation. 'I don't view it as good news,' Marckesano said. 'I would think from the investors' point of view perhaps something can be salvaged, and the company can be righted.' [08] IMF delays $10 billion loan instalment to RussiaThe International Monetary Fund has delayed a $10 billion loan payment to Russia, warning the country that its efforts to stop tax evasion are failing.The IMF's delay is likely to undermine investor confidence, which has been shaken already by Russia's political turmoil, and has hurt Moscow's chances of borrowing the money elsewhere. Russia's central bank said it will resume talks on the loan payments in Moscow early in November. The central bank said recent talks with the IMF broke down over differences about a package of measures aimed at increasing revenues and about plans to impose quotas on imports of alcoholic beverages. It added though that the IMF said key program targets were being met in monetary and credit policy and on the budget deficit, allowing inflation to be kept stable. Fund officials in Moscow were not immediately available for comment. But the Fund had indicated concern in recent weeks that the government's draconian spending cuts, made to meet deficit targets, are unsustainable. Russia's budget planners are grappling with an unprecedented fall in revenues. The government has moved against some of the largest tax deadbeats and has created an emergency tax-collection committee, but officials admit they have been unable to reverse the decline. Finance Minister Alexander Livshits told parliament this week that the budget is under 'extreme stress.' Over the first nine months of the year, he said, federal revenues were just 71% of targets, forcing huge spending cuts. Tax revenues over that period were only 65% of targets, leaving the government 71 trillion rubles ($13 billion) short. Livshits said he hopes the latest attempts to crack down on tax evasion will yield results by the end of the year, but warned that the situation remains tense. Had agreement been reached, the Fund would likely have released the monthly tranche in early November. Now, the money isn't likely to arrive until late next month at the earliest. [09] Investor AB is in talks over Orrefors ownershipSwedish investment company Investor AB, the holding company for the Wallenberg family's financial empire, said it has started talks with Proventus and Royal Copenhagen over the long-term ownership of glass maker Orrefors Kosta Boda.The discussions should be completed by next week with more information expected before the opening of trading on Tuesday. Investor, Proventus and Royal Copenhagen are the main shareholders in Orrefors Kosta Boda. The shares in Orrefors, which are listed on the Stockholm Exchange, were suspended Friday pending the talks. [10] Prodi says 1997 budget could depress economy slightlyItaly's 1997 budget could depress the Italian economy slightly, but the measures' positive effects should compensate for any such repercussions, Prime Minister Romano Prodi said in an interview.Prodi told daily newspaper La Repubblica that there could be 'a minimum depressing effect' from the 63-trillion-lira budget ($41 billion). However, the fact that the measures clear away uncertainties will more than compensate, as will the positive trend in the world economy. Prodi said the budget shouldn't weigh on domestic consumption, adding that he is optimistic that steady growth in the U.S., U.K. and Asian economies will help pull Italy out of its current slowdown. The Italian economy has already started to pick up and the country has put the worst of the slowdown behind it, Prodi said. He reaffirmed his target of 2% gross domestic product growth for 1997; earlier this week Prodi said the Italian economy should expand by 0.5% in the current quarter compared to the second quarter. The prime minister also said he saw no reason why the lira should weaken in the near term, citing the decreasing trend in prices of most raw materials on world markets. Meanwhile, Treasury Minister Carlo Ciampi reiterated that Italy could begin negotiations to reenter the European exchange rate mechanism after the lower house of parliament approves the budget. Ciampi told financial daily 'Il Sole 24 Ore' that his priority as a member of the government is to bring Italy into European economic and monetary union. In response to a question as to whether Italy could enter EMU a month or a year later as some have suggested, Ciampi remarked that 'you can't be certain that the delay will be for a year, a year and a half or more.' He noted that Italy expected to reenter ERM within a matter of a few months when it was expelled in 1992. From the European Business News (EBN) Server at http://www.ebn.co.uk/European Business News (EBN) Directory - Previous Article - Next Article |
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