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Wednesday, 14 August 2024
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European Business News (EBN), 97-07-22European Business News (EBN) Directory - Previous Article - Next ArticleFrom: The European Business News Server at <http://www.ebn.co.uk/>Page last updated Tue, July 22 5:32 PM CETCONTENTS
[01] UK telecoms regulator, Oftel, sets out plans to cut British Telecom chargesUK telecoms regulator Oftel has laid out final plans for the way British Telecommunications charges other network operators for carrying calls. U.K. Director General of Telecommunications Don Cruickshank unveiled the plans which will reduce BT network charges by 28% in real terms over the next four years.The regulator said that there will be a one-off downward adjustment to charges on Oct. 1, 1997, of about 10%. Under the new arrangements there will be no direct regulatory control over charges for services where network operators have a choice of supply. Meanwhile, for services which are likely to become competitive by 2001 there will be a safeguard cap so charges cannot increase in real terms. Cruickshank said 'BT's interconnection charges make up a large proportion of other operators' costs. At the moment OFTEL set these charges. However today I am announcing a new framework which reflects developing competition in the telecoms market.' He added that the degree of control on prices will depend on the level of competition in each service. [02] Volvo posts earnings of over $1 billion for the first-half of 1997Posting a pretax profit of 7.95 billion kronor ($1.02 billion) for the first six months of 1997, Swedish automotive group Volvo more than doubled its profit from a year earlier.The pretax profit came in above market expectations of around 7.83 billion kronor and includes capital gains of 3.03 billion kronor from the sale of Volvo's share holdings in Pripps Ringnes, and 221 million kronor from the sale of Volvo's stake in SAS Sverige. Sales grew to 89.02 billion kronor, up 14% from the corresponding year earlier period as Volvo Cars sales increased 21% to 48.16 billion kronor. Volvo Cars' operating profit rose sharply, to 2.15 billion kronor in the first half of 1997, compared with 187 million the first six months of last year. Meanwhile Volvo Trucks operating profit dropped to 688 million from 1.08 billion kronor as deliveries fell 5% to 31,540 vehicles. [03] Clinton becomes personally involved in proposed Boeing, McDonnell Douglas mergerPresident Clinton has become personally involved in the efforts to ensure Boeing's proposed merger with McDonnell Douglas isn't rejected by the European Commission.Some see Clinton trying to pre-empt the EC's expected blocking of the merger when it makes a decision tomorrow. A Commission spokesman said there has been no further progress with Boeing on the issue. He also said that the Commission's Merger Task Force, charged with handling the case, hasn't had any new contacts with Boeing officials since last week. German Foreign Minister Klaus Kinkel said that 'something' may happen which would enable the European Commission not to ban the proposed merger between Boeing and McDonnell Douglas. 'It is possible that something hoppens so that this Commission decision does not have to happen', Kinkel told reporters. He declined to elaborate, but said he had discussed the issue with U.S. Secretary of State Madeleine Albright by telephone. White House Spokesman Mike McCurry said Clinton made private phone calls to some European leaders to argue that the merger should be allowed to proceed. McCurry declined to say which leaders Clinton had called. 'He has been involved closely in following it, and he has made some calls on the issue. We remain hopeful the European Commission will consider the proposed merger based on the competitive criteria used by the FTC (Federal Trade Commission),' McCurry said. 'Discussions continue. We don't rule out the prospects there will be some efforts before tomorrow to resolve the issue,' McCurry added. Meanwhile, chief Commission spokesman Klaus van der Pas said he had no knowledge of a letter apparently sent by a group of U.S. senators to E.U. Commission President Jacques Santer regarding the Boeing case. Van der Pas also said he has 'no knowledge' of high-level contacts between the U.S. and the E.U. about the case. The likely rejection of the aircraft merger by the E.U. Commission is fuelling expectations of a transatlantic trade war. Last week, the anti-trust committee of the European Commission unanimously voted to reject the proposed merger of the two U.S. aircraft makers. The Commission itself is scheduled to consider the merger in a vote on Wednesday. If the European Commission rejects the merger, it couldn't block the merger from taking place but it could place penalties on Boeing's operations in Europe. [04] Britain tells EU to improve its controls on meat safetyBritain threatened to impose restrictions on beef imports from other European Union nations unless they match public health controls introduced in Britain to counter 'mad cow' disease.Agriculture Minister Jack Cunningham said British beef farmers are now subject to tougher safety controls that the rest of Europe and that other EU nations must bring their standards into line. If not, he warned Britain would start screening European beef imports to ensure they complied with British rules. 'Beef imported to Britain must be subject to the same treatment ... the same rigorous safeguards for public health as our own beef in this country, or it will not be allowed into the country,' Cunningham told BBC radio before heading to Brussels to meet other EU farm ministers. Cunningham said he was 'reasonably optimistic' a majority of his fellow ministers would vote for the tougher controls at their regular monthly meeting. Last week, experts from the 15 EU nations voted 8-to-7 against introducing the tougher measures. Belgium, Denmark, Greece, Germany, Finland, Italy, Austria and Portugal opposed the new controls. EU officials said there were signs Belgium and Portugal might change their minds and back the proposed regulations which would ban the sale of food products containing the brains, eyes and spinal cords of cattle, sheep and goats over 12 months old. The British beef industry was at the epicentre of last year's 'mad cow crisis' when beef sales plummeted across Europe amid public fears that humans could contract a deadly strain of the brain-wasting cattle disease bovine spongiform encephalopathy. The EU slapped a worldwide ban on British beef exports which remains in force despite London's claims that its new safeguards are tighter than those in mainland Europe. 'I believe our beef is as safe as beef produced anywhere in Europe, probably the world, and we have a very strong case for the lifting of the ban,' Cunningham told the BBC. [05] Waigel says customs revenue for 1996 totalled around $80 billionGerman Finance Minister Theo Waigel said that national customs revenue totalled 'around 143 billion Deutsche marks ($79.8 billion)' in 1996. Most of the revenue derived from consumer taxes totalling 99 billion marks, up 4% from the previous year, Waigel said.Petroleum taxes accounted for some 68 billion marks in revenues, while taxes on tobacco comprised around 21 billion marks. Taxes on spirits brought in 5.1 billion marks, coffee 2.2 billion marks, sparkling wine 1.1 billion marks, intermediate products (such as sherry) 100 million marks and beer 1.7 billion marks, Waigel said. In addition, 6.6 billion marks in customs revenue flowed to the European Union, while customs charges on products originating outside the E.U. brought in 37 billion marks, he said. [06] SmithKline Beecham reports second quarter profits up 4% to $595.7 millionSmithKline Beecham reported second-quarter profits of £356 million ($595.7 million), a jump of 4% from the same quarter last year.As expected, the effects of sterling made their mark on figures and the group said that if currency factors were stripped out, pretax profit would have been £398 million - an underlying increase of 16%. Underlying sales rose 8% in the second quarter. Due to currency changes, sales actually dropped 1% to £1.9 billion. A second interim dividend of 4.41 pence is comprised of a 1.96 pence conventional dividend and a 2.45 pence foreign- income dividend. The group joined in the debate about the U.K. government's plans concerning foreign income dividends, saying it will continue to pay foreign-income dividends until they are abolished. 'As SmithKline Beecham has a low effective tax rate, it is unlikely we will be able to increase the proportion of the dividend paid as a FID from the current level of 50% without incurring additional costs,' the Anglo- American company said in a statement. Underlying growth was aided by strong pharmaceuticals sales, with revenue from new products ahead 42% at 382 million GBP. Sales of the group's new antidepressant product Seroxat/Paxil, were up 33%. New pharmaceutical products - those that have been introduced within the last five years - accounted for 36% of total pharmaceutical sales in the quarter, with antibiotic Augmentin continued to perform well by posting a sales increase of 17%. Consumer healthcare also showed strong sales growth, driven by 'stop- smoking' products Nicorette and Nicoderm, and by the Aquafresh and Odol oral-care brands. [07] PepsiCo second quarter profit rises 13% to $656 millionPepsiCo posted a 13% gain in second-quarter income, exceeding market forecasts, as improved performance in its snack food and restaurant businesses offset a flat period in soft drinks.PepsiCo said it earned $656 million, or 42 cents a share, on sales of $7.7 billion. A year earlier, the company earned $583 billion, or 36 cents a share, on sales of $7.7 billion. The results were better than Wall Street's projections of 37 cents a share, based on estimates compiled by First Call. PepsiCo's stock climbed $1.875 to $37.50 a share in early composite New York Stock Exchange trading. The results included a one-time gain of $135 million, or 2 cents a share, partly in connection with the company's sale of its restaurant distribution business. Pepsi said North American soft drink sales were lower than expected due to cold weather and intense competition. Soft drink sales, as measured by shipments of cases from bottlers, grew 2 percent for the quarter, resulting in profit and sales that were about steady with year-ago levels, it said. However, an exception was the company's Mountain Dew brand, which posted double-digit growth. PepsiCo said results also were affected by increased spending for advertising, marketing and placement of new vendors and cold bottle equipment to help build brand recognition. [08] Walt Disney profit jumps 18%Broadcasting and entertainment giant Walt Disney has reported an 18% jump in profits, boosted by strong gains in its movie and theme parks businesses.Total revenues rose a scant 2% to $5.2 billion, but net income climbed to $473 million from $401 million. Earnings per share rose to 69 cents, 2 cents higher than Wall Street expected, compared with 58 cents a year ago on a pro forma basis. Revenues from creative content, or movies, for the quarter decreased 4% to $2.2 billion, but operating income rose 17 percent to $333 million. It did not immediately explain the reason for the decrease in revenues. Disney's theme parks posted record results, with revenues up 10% to $1.4 billion, and operating income adding 11 percent to $390 million. Broadcasting revenues for the quarter increased 5% to $1.6 billion, and operating income rose 7 percent to $337 million. [09] IMF praises the UK's fiscal and monetary positionsThe new UK Labour government's fiscal and monetary positions should alleviate the 'increased uncertainty' facing the country's economy, a report by the International Monetary Fund says.But the report released by the U.K. Treasury, warns that the U.K.'s economic climate is becoming 'challenging.' 'Behind (its) impressive macroeconomic performance, strong growth, declining unemployment, and low inflation there now loom imbalances rooted in powerful divergent forces,' the report said. The forces it cited include surging domestic demand and 'the incipient weakness of the tradeable goods sector resulting from the strength of sterling.' Output, it said, is now close to potential, which carries the associated risks of rekindling inflation. But the new government has made 'an excellent start' with its economic policies, including a decisive move to give the Bank of England independent monetary policy decision powers, its introduction of a sound budget and its efforts to boost employment, the report said. [10] French Industrial production falls 1.6% in May; lower than market expectationsA day after the government slapped on new corporate taxes, more bad news came for French business leaders with the announcement of a drop in industrial production.The National Statistics Institute said industrial production fell 1.6% in May compared to April but noted the level of output was 2.2% above that recorded in the same time period in 1996. All important industrial sectors were hit by the weakening in output, especially the automobile industry which experienced a slump of 3.2%, following a 3.5% increase in April. The slowdown in industrial production followed the government's announcement yesterday of a sharp hike in corporate taxes to bring the budget deficit down to qualify for Europe's single currency. The measures are a 'a good way to correct the escalation of public spending and at the same time don't endanger growth,' Henri Emmanuelli, a Socialist lawmaker and head of the finance committee in parliament, told France 2 television. The government audit released yesterday showed a budget deficit running from 3.5% to 3.7% of gross domestic product, above the 3% set by the Maastricht treaty on European monetary union. Corporate income taxes are to rise from 36.6% to 42% and increase long-term corporate capital gains taxes from 19% to 42%. Those increases are expected to raise 22 billion francs ($3.6 billion.) The government said it would cut 10 billion francs ($1.6 billion) in spending this year. The corporate tax hike won't apply to small and medium-sized companies, which create the majority of jobs in France. Earlier plans to tax households were scrapped. The government has justified targeting big businesses by saying they will be the first to benefit from a single European currency. [11] LVMH Chairman, Arnault, resigns from Guinness boardBernard Arnault, chairman of French luxury goods group LVMH-Moet Hennessy Louis Vuitton, has resigned from Guinness board. And shares in prospective merger partners Guiness and Grand Met are doing a brisk trade in London today as traders took a gamble on the next twist in the LVMH-Guinness-Grand Met saga.'There's speculation that LVMH is selling its stake in Guinness and is going to try and make a takeover bid for GrandMet,' a trader said. Arnault's resignation came just five days after Guinness and Grand Metropolitan rejected Arnault's proposal for a three way tie-up in the companies' drinks activities. In a statement, LVMH said the resignation was in response to that rejection. 'He made the decision in order to promote the alternative solution which he proposed,' the company said. No one was immediately available at LVMH to explain exactly how Arnault's protest resignation would help his cause. LVMH last week proposed to merge its Moet Hennessy unit with the spirits businesses of Grand Metropolitan and Guinness. LVMH would exchange its 66% shareholding in Moet Hennessy and its holdings in Grand Met and Guinness of 6.4% and 14.2% respectively, for a 35% stake in the new drinks company, Drinksco. The proposal also called for GrandMet and Guinness to spin off their food, fast-food and beer activities. Arnault has been in a battle with Guinness and GrandMet since the two announced they would merge in May. LVMH currently holds 14% of Guinness and 6% of GrandMet. [12] Corporate and Economic BriefsDutch entertainment company Polygram said net profit over the first six months dropped 0.7% to 270 million guilders ($551 million) from a year ealier. Sales over the first half of 1997 rose 5.1% to 4.53 billion guilders, income from operations was up 2.4% to 430 million guilders while earnings per share dropped to 1.50 NLG from 1.51 guilders in the first half of 1996. The six-month profit is at the lower end of expectations. The group, which is about 75% owned by Dutch giant Philips Electronics, said operating income in the music division rose 14% to 522 million guilders and sales in the unit were 3.94 billion guilders, up from 3.63 billion guilders.The Netherlands' gross domestic product rose 3.3% in 1996, according to final government statistics. The latest figure shows that the Dutch economy grew 0.6% more strongly than indicated by preliminary figures released late June. The government's Central Bureau for Statistics published a preliminary GDP of 2.7%. The CBS said the latest figure was revised upward because of higher foreign trade. Dutch GDP hasn't grown so strongly since 1990, it added. French supermarket group Casino said that first-half consolidated sales, excluding taxes, rose 5.4% to 33.33 billion francs ($5.47 billion) from 31.63 billion francs ($5.2 billion). The company had reported a 4% rise in first-quarter sales to 15.9 billion francs from 15.3 billion francs. Sales from retail operations for the first half rose 5.8% to 31.55 billion francs, while sales from other activities fell 2.6% to 1.78 billion francs, the company said in a statement. The Czech Republic's foreign trade deficit widened to 74.418 billion koruna at the end of the first half of 1997, compared with 68.057 billion koruna for the same period in 1996, the Czech Statistics Office reported. The Czech trade deficit rose 9.5 billion koruna in June from May, the CSU said. By comparison, the trade deficit rose 11 billion in May from the previous month. The data was within consensus estimates gathered from analysts by Dow Jones. Commercial Union said that worldwide new business - including life, pensions and investment sales - rose 21% to £1.58 billion ($2.64 billion) in the first half of the year. New annual premium sales rose 38% to £154 million and sales of new single premiums rose 17% to £1.22 billion. Sales of investment products rose 28% to £206 million. The figures confirm the strong growth the company reported in April. Chief Executive John Carter said the results reflect particularly strong growth at the company's Netherlands unit, Delta Lloyd, in the U.K. and in Poland and Italy. The U.K. operations account for about 38% of the company's sales, while 48% comes from continental Europe. Commercial Union is the U.K.'s largest listed composite insurer. China's gross domestic product is forecast to increase between 9.0% and 10.0% in 1997 from 1996, somewhat above the official government target of a GDP rise of about 8.0% this year, the State Statistical Bureau said. However, a one-percentage-point increase or decrease on either side of the official target makes little difference in terms of the government's overall economic policy, said Qiu Xiaohua, chief economist and spokesman for SSB. A full-year GDP rise of 9.1% or 9.2% would be 'ideal,' he said. China wants to keep its economic development at stable and sustainable levels. The GDP must advance at fast enough a rate to create jobs for the millions of workers made redundant by the reform of state enterprises, but an overheated economy runs the risk of refuelling inflation. British transport group Stagecoach posted a 176% jump in annual profit which reflected the impact of its recent acquisition spree and the first full-year contribution from South West Trains. Profit was well above analysts' expectations for a 130% increase to £100 million ($169 million). Results include the first full-year contribution from South West Trains and bus operator Manchester, as well as the impact of more recent acquisitions including Porterbrook Leasing, Scandinavian bus operator Swebus, rail operator Island Line and a number of regional U.K. bus companies. UK B.A.T Industries said its insurance subsidiary Eagle Star is to buy Preferred Direct Insurance from its joint owners, Friends Provident and Eureko of the Netherlands, for £50 million ($83.6 billion). B.A.T said in a statement Preferred Direct is a top 10 UK direct writer, with around 300, 000 policies, primarily in Personal Lines motor and household business. The company said the acquisition will increase the direct policy count of Eagle Star Insurance by 50% and raise its market share to the fourth largest direct writer. The agreement is subject to the approval of the UK regulatory authorities, which is expected in the next few weeks. [13] World BriefsChina's gross domestic product is forecast to increase between 9.0% and 10.0% in 1997 from 1996, somewhat above the official government target of a GDP rise of about 8.0% this year, the State Statistical Bureau said. However, a one-percentage-point increase or decrease on either side of the official target makes little difference in terms of the government's overall economic policy, said Qiu Xiaohua, chief economist and spokesman for SSB. A full-year GDP rise of 9.1% or 9.2% would be 'ideal,' he said. China wants to keep its economic development at stable and sustainable levels. The GDP must advance at fast enough a rate to create jobs for the millions of workers made redundant by the reform of state enterprises, but an overheated economy runs the risk of refuelling inflation.A helicopter raced to fill a tear in the dykes and thousands of soldiers, homeowners and volunteers piled on more sandbags in a struggle to hold back the raging Oder River, swollen to record levels by weeks of rain. German Chancellor Helmut Kohl flew to one of the most threatened cities, Frankfurt an der Oder, to check on efforts to reinforce the 160 kilometre (100 mile), waterlogged dyke. Skies cleared over eastern Germany for the first time in days but the danger grew nonetheless, with the Oder continuing its rise as a second flood wave passed through. 'If the wall breaks, then all you can do is run,' said one soldier as he stapled sandbags. 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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