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Wednesday, 14 August 2024
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European Business News (EBN), 97-07-09European Business News (EBN) Directory - Previous Article - Next ArticleFrom: The European Business News Server at <http://www.ebn.co.uk/>Page last updated Wed, July 09 6:29 PM CETCONTENTS
[01] BA hints it may seek a legal remedy to strikeBritish Airways has hinted that it may seek a legal remedy unless the unions accept its proposals, after strike action left the company with only 20% of flights operating today.But the airline said many planes would still fly even as its Heathrow hub faced huge disruption. 'On a normal day, we would expect to carry 40,000 passengers out of Heathrow. The number carried today will be about 14,000, which is about 35% of the usual numbers,' said BA spokeswoman Terri Urquhart. The 8,500 members of the British Airline Stewards and Stewardesses Association said they would stay off the job for three days, although negotiators from the Transport and General Workers Union suggested overnight that a solution to the crisis might be found in the near future. British Airways said it would keep operating with help from 3,500 members of a breakaway union, Cabin Crew 89, as well as some members of the striking union it expected to cross the picket lines being set up at London's Heathrow and Gatwick airports. British Airways faces more potential labour troubles in the near term. The Transport and General Workers Union said it would announce later today whether ground staff will stage a separate strike at Heathrow over the airline's plans to sell off its remaining in-flight catering operations. British Airways refused to estimate what a strike might cost, but the mere threat of a pilots' strike last summer scared off enough passengers that the airline lost some £15 million ($25 million) as people booked trips with rival airlines. The two sides held informal meetings on Tuesday, and both said British Airways expressed interest in hearing a proposal from the union on how it might achieve management's cost-saving targets from the flight attendants. But no proposal was immediately made, and the union said not enough progress had been seen to delay the strikes. [02] Vilvoorde workers accept new severance packageAfter 15 hours of negotiations, Renault offered workers at its suburban Brussels factory a new severance package, and warned that it would be their final offer.The plan offered by Renault differed only slightly from an offer rejected by workers last week as too meagre. In addition to keeping 400 administrative positions at the plant, company officials said they would find employment for another 200 people. Renault said the additional jobs would be based outside of the Vilvoorde factory, but offered no additional details. 'On the jobs front we have secured 400 jobs with a Renault contract and 200 additional jobs on the Vilvoorde site with other companies,' union leader Karel Gacoms told Belgian radio. The car maker also agreed to provide partial salaries to workers at the idled factory, in addition to lump sum payments averaging around $30,000. The buyout offers pensions for laid-off workers 50 years old or older. After the Socialists swept to power in French elections June 1, hopes were raised, but quickly dashed, that the closure of the plant could be avoided. [03] Japan's contentious trade surplus more than doublesThe surplus in Japan's broadest measure of trade more than doubled in May compared to the same month last year on surging exports of autos and computers, raising the possiblity that US trade officials may seek a weaker dollar.Japan's current account surplus, which measures trade in merchandise, services, tourism and investment, surged to 906.8 billion yen ($8.02 billion) in May, up 154.9% from the same month last year, the Finance Ministry said. May marked the second straight year-on-year rise in Japan's current account surplus. The current account surplus jumped 92.7% in April compared with the same month last year. The jump in Japan's current account surplus in May was less than expected, but analysts said the mounting surplus will likely continue. 'Japan is importing and imports are growing, but exports are growing a lot faster,' said Mineko Sasaki-Smith, senior economist at CS First Boston in Tokyo. Japan's exports rose 20.2% in May from a year earlier, while imports increased by 5.8%, the government report found. Market players said the rising trade surplus would mean more pressures on Japan to stimulate domestic demand and curb export growth in the coming months. The growing trade imbalance may also prompt U.S. officials to seek a weaker dollar . A weaker dollar tends to help decrease Japan's trade surplus with the United States by making U.S. goods cheaper in Japan, while making Japanese goods more expensive abroad. On Tuesday, Eisuke Sakakibara, a senior Japanese finance official, sought to ease such worries by saying that Japan won't use the foreign exchange rate for a trade policy. The dollar was traded at 112.52 yen mid-morning Wednesday, down 0.54 yen from late Tuesday in Tokyo. 'There was a lot of initial relief that the surplus wasn't larger than expected, but that didn't change the overall picture,' said Kenneth Landon, senior currency strategist at Deutsche Morgan Grenfell in Tokyo. 'Japanese accounts are still nervous about the trade issue, and that will continue to limit the dollar's topside.' [04] Nomura indicted second time over racketeer scandalNomura has been indicted for a second time, paving the way for financial authorities to take action over the firm's involvement in a racketeering scandal. Prosecutors also filed formal charges against the former president and another former executive of Japan's largest brokerage, accused of making illegal payoffs to a suspected racketeer.The company itself, Nomura Securities, was charged with violating Japan's securities and exchange law, which bans dealings with racketeers known as 'sokaiya.' Sokaiya extort money by threatening to disrupt shareholders' meetings by shouting angry questions and making embarrassing revelations. Former president Hideo Sakamaki and former executive Nobutaka Fujikura paid 320 million yen ($2.8 million) in cash to suspected sokaiya Ryuichi Koike in March 1995, the Tokyo District Prosecutors Office said. The payment was intended to ensure that Koike, who owned more than 1,000 Nomura shares, and colleagues would remain quiet during the company's annual shareholders' meeting in June, the prosecutors said in a statement. They said the payment was in the form of compensation for Koike's investment losses. Fujikura, along with another managing director, had been charged last month in another payoff to Koike. Former and current executives of Japan's Dai- Ichi Kangyo Bank also have been formally charged with making illegal payoffs, in the form of loans, to Koike. [05] Deutsche Telekom reaches deal with unions to accomplish workforce reduction without layoffsDeutsche Telekom and the German Postal Workers Union have reached an agreement to reduce the telecommunications company's workforce to 170,000 employees by 2000 without any lay-offs.In exchange for DPG concessions allowing greater flexibility in deploying staff, Telekom agreed that the remaining 30,000 job cuts under an earlier plan would be carried out by early retirement and natural wastage. 'We think the result is a good compromise,' said Guenter Heidorn, chief DPG wage negotiator. Telekom has always said it would not resort to forced lay-offs in a plan to cut the workforce by 60,000 from the 1995 level of 230,000 employees. In November 1995 Telekom and the DPG union agreed on a contract that ruled out any forced lay-offs to the end of 1997. The new agreement extends that pledge for another three years. At the end of March, Deutsche Telekom had around 199,000 employees. [06] German Cartel Office allows consortium to buy STN AtlasThe German Cartel Office is to allow the consortium of Rheinmetall, Badenwerk and the U.K.'s British Aerospace to acquire STN Atlas Elektronik, Rheinmetall said.In April, the European cartel authority had referred the proposed acquisition back to Germany's cartel office. According to the consortium's plans, STN's automotive systems and air defense division will be brought into a new company to be called Elektronische Fahrzeugesysteme (Electronic Automotive Systems). Rheinmetall, British Aerospace, Krauss Maffei - a Mannesmann subsidiary - and Wegmann will each hold 25% in EFS, Rheinmetall said. STN will have total sales in 1997 of 1.4 billion deutschmarks ($900 million), Rheinmetall forecast. The company employs 4,800 people and will be an important part of Rheinmetall's defence electronics division, Rheinmetall said. EFS will employ 150 people and will have sales of 120 million marks in 1997, Rheinmetall said. Badenwerk isn't directly involved in the establishment of EFS but owns a 49% stake in STN Holding, the company which owned STN Atlas. The remaining 51% is owned by Rheinmetall. [07] Remy Cointreau reports 70% profit drop to 36 million francs ($6 million)Shares in drinks group Remy-Cointreau fell sharply after the company reported a drop in its full year profits to March 31.The company said its net profit dropped to 36 million francs ($6 million) from 120 million ($20 million). Its first quarter sales were up by 13 percent, it added. Remy added it expected to benefit only partly from the dollar's rise. Remy-Cointreau's Managing Director Francois Heriard-Dubreuil said the group expects to post a rise in its net profit in fiscal 1998 compared to fiscal 1997. When asked if the rise in Remy-Cointreau's sales at the end of June, combined with company projections for a drop in its debt level and reduced restructuring charges, implied a rise in the company's net profit, Heriard- Dubreuil said: 'We like to remain cautious, but yes, that is our goal.' Marc Heriard-Dubreuil also said the drinks group was unruffled by the possible merger between the UK's Guinness and Grand Metropolitan, or by the possible three-way merger between the two UK groups and Moet Hennessy. [08] Dixons reveals plans to create 3000 jobsDixons plans to open over 80 new stores in the next year, including 12 new PC world stores. Earlier, the U.K. electronics retailer reported a rise in pretax profit to 200.2m pounds (320.3m dollars) in the year ended April 30, 1997, from 101.5m pounds a year earlier. The earnings came at the top end of analysts' expectations.The profit includes an exceptional gain of £19 million on the disposal of its 40% interest in The Link Stores, and a charge of £9 million for the cost of updating its computer system to function effectively after the year 2000. The earnings came at the top end of analysts' expectations of between £183 million and £200 million. Dixons recommended a final dividend of 8.10 pence, up from 6.70 pence a year ago, boosting its total dividend to 10.5 pence from 8.75 pence in 1996. Commenting on the prospects for the current year, the chairman, Sir Stanley Kalms, said: 'Retail division sales for the first nine weeks of 1997/98 have increased 32% overall and 17% like for like over the comparable period last year, which itself delivered strong year-on-year growth. The sales improvement was broadly spread across product categories. Gross margins have remained stable.' Dixons said the figures were helped by the windfall gains from demutualization which had increased consumer spending. [09] Motorola's profits fall 18%Motorola Inc.'s decision to stop making computer memory chips dragged second-quarter profits down by 18% but was not enough to keep the company from easily topping Wall Street's expectations.Motorola earned $268 million, or 44 cents a share, in the quarter ended June 28, down from $326 million, or 54 cents a share, in the same period a year ago. Sales rose 10% to $7.52 billion from $6.84 billion a year earlier on strong demand for cellular phones and other types of chips. Motorola's profits were eroded by costs of $170 million, or 18 cents a share, to end production of the poorly performing microprocessors known as dynamic random access memory, or DRAM, chips. Without the charge, the company would have earned 72 cents a share, easily beating Wall Street expectations for earnings of 56 cents a share, according to analysts surveyed by First Call Inc. The report was released after trading ended, but Motorola stock jumped to a 52-week high Tuesday on the New York Stock Exchange as investors bet the company would exceed market expectations. It closed up $2.12 1/2 at dlrs 82.50, after touching a one-year high of $ 83 a share. Motorola chief executive Christopher Galvin credited stronger sales in emerging markets, notably Latin America, and predicted solid growth in profits as demand strengthens in Europe and Japan. Sales of cellular products rose 6% to $2.8 billion, reflecting the company's shipment of new mobile phones. Sales for microprocessors rose 3 percent to $2 billion. Sales of high-tech gear such as digital networks jumped 22% to dlrs 1.2 billion. Motorola, hoping to turn around following a difficult 1996, also said it was reviewing underperforming assets and may take charges in the second half of the year to divest itself of them. The company last week announced it was phasing itself out of the DRAM chip market, a move generally greeted by Wall Street. For the first six months of the year, Motorola earned $593 million, or 97 cents a share, down from $710 million, or $ 1.17 a share, because of the one-time charge. Sales rose 2.7% to $14.2 billion from $13.8 billion. [10] US budget deficit may be wiped out as early as next yearNewspaper reports out today say that strong growth in the U.S. economy has generated a surge in tax receipts that could wipe out the nation's budget deficit as early as next year.The newspaper quoted administration and congressional sources saying that a jump in taxes flowing into federal coffers in June suggested that in the fiscal year ending September 30, the deficit could narrow to $45 billion, down from the $67 billion deficit the White House and Congress had forecast for fiscal 1997. That figure would amount to less than a fifth of the deficit -- the difference between government expenditures and revenues -- when it peaked at $290 billion in 1992. Some economists say a balanced budget may be achieved as early as next year, but only if politicians failed to pass tax and spending proposals that are expected to push up annual deficits over the next several years, the Post said in its report. Congressional and administration officials cautioned against a return to gridlock, and said bipartisan cooperation on budget issues had contributed heavily to recent improvement in the deficit outlook. 'We're benefiting from a positive cycle of credibility on deficits leading to a stronger economy leading to lower deficits,' the Post quoted Gene Sperling, chairman of Clinton's National Economic Council. 'It would be a profound mistake to return to the negative cycle of complacency and gridlock leading to less confidence, higher interest rates and bigger deficits,' he told the paper. [11] Ukraine to sign special agreement with NATOUkraine is to sign a special cooperation agreement with NATO similar to one with Russia setting out a framework for relations in the aftermath of the alliance's enlargement. The Ukraine agreement, which was to be signed on the second day of the alliance summit in Madrid, creates a new NATO-Ukraine Commission to make continuing assessments of the relationship and plan for the future.Alliance officials said the NATO-Ukraine Commission would not be at the same high level as the new NATO-Russia Permanent Joint Council created under an agreement signed in Paris last May. It would not have its own permanent staff or secretariat and would not involve continuous consultation, as the Russian agreement does. Ukrainian officials would, however, meet at least twice a year with the North Atlantic Council, NATO's top policy making body. 'NATO allies will continue to support Ukrainian sovereignty and independence, territorial integrity, democratic development, economic prosperity and its status as a non-nuclear weapons state...' says the document, officially called the Charter on a Distinctive Partnership between the North Atlantic Treaty Organization and Ukraine. Ukraine, the second most populous former Soviet republic after Russia, has had mixed relations with the Kremlin since the collapse of communism in 1991. Although the Slavic neighbours have a shared historical and cultural tradition, some tensions have arisen over territorial, economic and security issues in the post-Soviet world. As in the NATO-Russia agreement, the NATO-Ukraine deal stresses 'the inherent right of all states to choose and to implement freely their own security arrangements' and said both parties shared the view that NATO enlargement 'is directed at enhancing the stability of Europe ... without recreating dividing lines.' The document praised Ukraine's participation in the NATO-led Bosnia peace force. Ukraine is a member of NATO's Partnership for Peace program, which allows non-member countries to participate in nearly all NATO activities, but has not asked to join the alliance, at least not at this stage. The agreement pledges both parties to consult and cooperation in a wide range of areas, including political and security-related subjects, conflict prevention, nuclear, biological and chemical non-proliferation, disarmament and arms control issues and arms exports. [12] Corporate and Economic BriefsU.K. food retailer J. Sainsbury same-store sales rose 4.2% in the first 16 weeks of its fiscal year. Total sales for the period rose 8.3%. Speaking at the annual general meeting, Chairman David Sainsbury said the company had achieved the growth despite a decline in sales inflation, which is now less than 1.0%, mainly due to lower prices for fruit and vegetables.French oil group Total said it had signed a three-and-a-half year agreement with the Kuwait Oil Company to provide technical knowledge and support regarding KOC's upstream petroleum operations. Under the agreement, Total will provide technical assistance in the management of operations related to exploration, production, transportation and export of crude oil. A consortium of Spain's Repsol oil firm and Britain's Enterprise Oil signed a deal with Kazakhstan to explore its north-western Baiganinsk oil field, Repsol said in a statement. Willy Hernandez, Repsol Exploracion Kazakhstan S.A. General Manager, told a news briefing prior to the signing at the former Soviet republic's energy and natural resources ministry that the consortium would invest $25 million in the first six year. Zeneca Group's Zeneca Ag Products unit submitted to the Environmental Protection Agency an application for extension of the labeled uses for the company's Touchdown herbicide. In a press release, the company said the application seeks to add new uses for Touchdown in wheat, pome fruit trees, fruiting vegetables, legume vegetables, pre-harvest soybeans and post emergence applications on glyphosate tolerant soybeans. Unemployment in the 15-nation European Union was 10.8% in May, down slightly from 10.9% in the year-ago period, the E.U.'s statistical agency Eurostat said. The amount of people out of work is down slightly from the 10.9% rate in May 1996. Despite the overall jobless rate remaining stubbornly high, Eurostat said that unemployment is falling in the U.K., Ireland, the Netherlands and Spain. The jobless rate is creeping up however in the E.U.'s core members Germany, France and Italy. In Finland the number of jobless is also on the increase. [13] World News BriefsFive prisoners were killed following an overnight riot at a high security prison in Istanbul, the justice minister said. Hundreds of prisoners started a fire at Metris prison to protest what they called poor security conditions after an inmate was stabbed to death by another prisoner, regional Gov. Ridvan Yenisen said. Firefighters failed to extinguish the fire for some six hours when the inmates blocked entry into their wards and took a warden hostage.Police surrounded the University of Nairobi and fired tear gas canisters to prevent students from marching downtown. The students planned to march into the city and then to a mortuary where they claimed some of their colleagues lay dead after they were shot by police trying to stop rallies called by reformists Monday. Tension was high overnight after reports circulated on campus that police shot three students dead Monday, the privately-owned Daily Nation newspaper reported. An Italian soldier was killed and another wounded in an explosion in Vlora, the multinational force in Albania said. Spokesmen for the force would not divulge any other details, saying it had first to clarify what happened and notify the soldiers' families. It was the first death in the 7,000-strong multinational force, which was deployed in Albania in April to help secure humanitarian aid shipments. At least 116 people have drowned in Moscow's ponds and rivers since the swimming season began in May, the city's ambulance service said. The dead included seven children, it said, according to the Interfax news agency. 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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