European Business News (EBN), 97-07-07

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From: The European Business News Server at <http://www.ebn.co.uk/>

Page last updated Mon, July 07 7:03 PM CET

CONTENTS

[01] ProSieben shares close at 95 marks on first day of trading

[02] UK factory output drops, refuelling worry over pound's strength

[03] Germany and France downplay divergence on deficit target

[04] Woolwich joins other de-mutualised banks

[05] Bertelsmann expects $1.1-1.7 billion start-up losses for its pay-TV service

[06] UK's Tomkins plans share buyback

[07] Private sector seeks self-regulation of Internet

[08] Corporate and Economic Briefs

[09] World News Briefs

[01] ProSieben shares close at 95 marks on first day of trading

'ProSieben's share price has good long-term potential for a simple reason: our corporate policy focuses on the long term, especially our programming and investment policy,' Kofler said at a press conference.

He added that ProSieben's first half financial results won't be published until after the end of the summer, but that the trend in the second quarter was 'quite pleasing.' In the first quarter, ProSieben's pretax profit rose 32% from a year earlier on a 17% rise in sales.

In their first day trading on the Frankfurt Stock Exchange, new preferred shares in German broadcasting group ProSieben Media got their first official notation at 87 marks, then quickly surged nearly 13% to an intraday high of 98 marks.

By the end of ProSieben's first floor trading session on the Frankfurt Stock Exchange, the shares settled back slightly to close at 95 marks.

That was up 32% from their inital price of 72 marks, set Saturday at the high end of the possible price range.

ProSieben, whose offering was 50 times oversubscribed, is the first German television broadcaster to list its shares on the stock market.

The network said only one in ten bidders will receive any shares at all. Even winners will only get a fraction of the shares they ordered. The issue will raise 1.26 billion marks ($720 million) for the company.

[02] UK factory output drops, refuelling worry over pound's strength

British manufacturing output fell 1.1% in May over April, raising concerns among analysts that the strong pound was hitting exporters hard. It was the biggest monthly fall in manufacturing output for nearly four years.

The wider measure of industrial production, which includes output from the water and power utilities as well as manufacturers, fared little better. It fell 0.9% in May and by 0.2% in the year to May. Economists, who had expected a small rise in manufacturing output, said the fall was a worry for the Bank of England.

But it was not likely to stop the central bank raising interest rates at a meeting this week due to a consumer economy which is booming in sharp contrast to the manufacturing sector.

Meanwhile, the Confederation of British Industry reported that Britain's financial services sector continued to perform well in the second quarter of 1997, with companies reporting rises in profitability, employment and business volumes. The Bank of England's meeting this week will discuss monetary policy and is widely expected to increase interest rates from 6.5%. Last week's budget failed to dampen consumer spending sufficiently, many analysts believe.

'The primary concern of the bank's monetary policy committee will be the strength of demand rather than the weakness of manufacturing output,' said John O'Sullivan, UK economist at NatWest Markets.

Analysts said the output data should give the bank food for thought but they still expected rates to rise, underpinning the strength of the pound. Sterling dropped more than a pfennig on the figures to below 2.94 marks. Shares were down but little affected.

[03] Germany and France downplay divergence on deficit target

''France hasn't put the deficit criterion in question,'' German Finance Minister Theo Waigel told journalists at a meeting of European Union finance ministers in Brussels. And Strauss-Kahn reiterated France's determination to meet the Maastricht Treaty's requirements to be able to qualify for EMU at its planned Jan. 1, 1999 launch.

The French finance minister said there is a ''good understanding'' between France and Germany on the topic.

But Waigel and Strauss-Kahn still weren't pulling on the same oar when it came to interpreting the Maastricht Treaty dictum that budget deficits be at 3% of gross domestic product this year, or well on their way.

For Waigel, this means 3%, as he reiterated under close questioning by journalists. But Strauss-Kahn - who faces a deficit, which he last week warned might be as high as 3.6%, without additional measures that are planned - hasn't cited 3% as a goal or ambition.

Waigel didn't address the idea of a ''controlled delay'' mooted by Bavarian governor Edmund Stoiber in an interview with the Financial Times Monday, but Waigel did say: ''I see very well the possibility'' the EMU targets will be met.

Others emphatically ruled out a delay. Luxembourg's Prime Minister and Finance Minister Jean-Claude Juncker, who currently hold's the E.U.'s rotating presidency, said he ''totally excludes'' such a scenario.

[04] Woolwich joins other de-mutualised banks

Early estimates are that Woolwich will have a market capitalization of around £5 billion. The bank joins a rush of other former mutually owned building societies to convert to listed banks, including Alliance & Leicester and Halifax.

Woolwich will present its first set of results to the city in August, when it reveals its 1997 interim profit.

Chief Executive John Stewart said shareholders will learn more about the bank's plans and ideas when it holds it first annual general meeting next year. As for entering a highly competitive and speculative banking sector, Stewart conceded a perfect time can never be chosen for conversion.

Stewart said Woolwich is in 'no hurry to do anything major,' but will keep all options open. He did say, however, that price will determine any acquisitions in the near future.

'We will be investing our capital, have no fear of that,' Stewart told Dow Jones. 'We may or may not make an acquisition, a lot depends on costs.' While declining to give an exact figure, Stewart conceded Woolwich has 'lots' of capital on hand for its future development, and didn't rule out the possibility of a share buyback.

'But we have a solid business, and are confident we have most of the things we need to deliver shareholder value,' he said. Stewart also alluded to the idea that Woolwich may favour joint ventures or partnerships as part of its future strategy, as opposed to outright acquisitions.

'But on the other hand, if there's a change in the marketplace, we may well be looking at an acquisition,' he said. 'The whole secret is to invest carefully.'

[05] Bertelsmann expects $1.1-1.7 billion start-up losses for its pay-TV service

Woessner said the startup losses would be inevitable, but that the long- term prospects justified them.

He noted he is aiming to have six million subscribers to Bertelsmann's pay- TV products within 10 years - a goal which, if realized, would bring in revenues of 6 billion marks annually.

For Bertelsmann's TV operations as a whole, Woessner said he expects turnover to hit 7 billion marks within two to three years, and to post an operating profit of '10% of sales in the core areas.'

[06] UK's Tomkins plans share buyback

The company said that, in order to maintain efficient capital structure, it will repurchase up to £100 million of its shares within the next three months. The company also said the current year's trading has started well and most of the markets that it serves are maintaining their advances.

Commenting on the outlook, Gregory Hutchings, executive chairman said 'order books in aggregate are ahead of the same time last year. Our result will be boosted by a full year contribution from Gates and the first-time benefit from Stant. Tomkins is well set for another year of growth in earnings, dividends and net cash generation.'

Gates Corp., an automotive parts manufacturer, was acquired in July 1996 for $1.16 billion. Stant Corp. was acquired in May for £372 million.

Hutchings said 'Each of our reporting sectors, with the exception of Professional, Garden & Leisure Products, delivered higher operating profit and margin.'

[07] Private sector seeks self-regulation of Internet

They said government ministers should regulate the Internet with a 'light hand.'

Customers are already forcing online service providers and other companies to secure personal and financial data and restrict illegal content like child pornography, even without government mandates.

'Our consumer customers want us to give them protection against child pornography,' said George Vradenburg, senior vice president of America Online Inc . 'Businesses are demanding that we make electronic commerce secure.' Klaus Mangold, head of the financial services unit of German car maker Daimler-Benz AG , said 'many of these issues will be answered without governments taking action.'

[08] Corporate and Economic Briefs

Retail group Metro and its majority shareholder Metro Holding said they are in talks with the Dutch retailer SHV Holdings NV about taking over its cash and carry business, the Utrecht-based Makro. 'The negotiations are to be concluded as soon as possible,' Metro said in a statement.

Vickers said sales of its Rolls-Royce and Bentley motor cars rose 13% in the first six months of 1997, to 1,029 from 912 a year earlier. The company said product development as well as innovative leasing programs contributed to the sales growth. Chief Executive Graham Morris said new product development will continue as the company invests in a new generation of four-door models.

Norwich Union Life Insurance Society and _Barclays_ agreed to a new 5-year insurance partnership that will extend a previously established relationship signed in 1996. Under the agreement, Norwich Union is the preferred supplier of personal general insurance products and the related claims service for Barclay's customers for a further five and a half years.

KLM Royal Dutch Airlines is to acquire the remaining 55% stake in Air U.K. Holdings, boosting its ownership to 100%. In a press release, the Dutch flag carrier said it will acquire the stake from British Air Transport Holdings for an undisclosed sum.

Annual inflation in the European Union remained at 1.5 percent in May, unchanged from April and well down from 2.6% in May 1996. In a statement, the EU's statistical office Eurostat said the lowest inflation rates were in France and Finland - both 0.9% - and Luxembourg at 1.1%.

Norway's central bank, Norges Bank was inviting Norwegian and foreign management companies to submit offers for the management of the equity portfolio of the Government Petroleum Fund.

[09] World News Briefs

Leftist rebels in Colombia were believed responsible for shooting down a helicopter carrying 29 people to the site of an oil pipeline attack. The army said there were four survivors. The Russian-made Mi-17 helicopter apparently caught fire in the air during the attack Sunday and exploded when it hit the ground near Saravena, 335 kilometers (220 miles) northeast of the capital, Bogota, the army said. The helicopter was carrying 24 soldiers and five civilian crew members employed by Helicol, the company that rented the helicopter to the army, the defense ministry said.

A small bomb has exploded outside the perimeter wall of the heavily fortified New Barnsley police station, in west Belfast this morning. A gunman also fired at the police station and officers returned the fire. Nobody was hurt. Over the weekend catholics across Northern Ireland rioted and attacked police after British authorities forced the orange parade through the town of Portadown. The Irish Republican Army shot at police units in Belfast and in a rural town, wounding a policewoman in the face.

Victorious soldiers rampaged through the Cambodian capital, carting off televisions, washing machines and air traffic control equipment in a looting spree throughout the city. The mayhem followed two days of fighting in Phnom Penh that ended when forces loyal to coup leader Hun Sen, who held the title second premier, overran the key strongholds of their loyalist opponents. Supporters of deposed First Premier Prince Norodom Ranariddh were organizing resistance and fighting broke out in the northern city of Battambang between troops loyal to the rival premiers. The prince, safe in France, said his top general in Cambodia was regrouping his forces.

From the European Business News (EBN) Server at http://www.ebn.co.uk/

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