|Monday, 22 July 2019|
European Business News (EBN), 97-03-11
European Business News (EBN) Directory - Previous Article - Next Article
From: The European Business News Server at <http://www.ebn.co.uk/>
Page last updated March 11 1530 CET
 Yeltsin approves plan to trim back the Russian Cabinet and focus on economic growthRussian President Boris Yeltsin ordered a cabinet reshuffling that is expected to reflect the economic vision of market reformer Anatoly Chubais.
Yeltsin issued a decree that eliminates several cabinet posts and government agencies. Prime Minister Viktor Chernomyrdin has been given a week to propose a new roster of deputy prime ministers and other Cabinet officials.
Chernomyrdin's plan for trimming the bloated Russian Cabinet eliminates the jobs of the current three first deputy prime ministers - Vladimir Potanin, Viktor Ilyushin and Alexei Bolshakov.
Yeltsin also called for cutting the number of deputy prime ministers, as well as government agencies. Details of the government shake-up haven't been made public, but Chernomyrdin last week said the plan aims to reduce the role of Soviet-era ministries responsible for individual sectors of the economy in favour of the Economics Ministry, which is to be strengthened.
On Friday, Yeltsin named Anatoly Chubais, the architect of Russia's privatisation program, as the only first deputy prime minister, holding broad economic powers.
Yeltsin's decree was an apparent effort to avoid the constitutional mandate requiring parliament to confirm the prime minister in the event the whole Cabinet is fired.
The current Communist-dominated Duma confirmed Chernomyrdin in August, but would be unlikely to vote for a Cabinet including the hugely unpopular Chubais if the issue came up for a vote.
Yeltsin in recent weeks has severely criticised the government for failing to address worsening economic problems, in particular delays in wage and pension payments.
Last week, Yeltsin announced plans to restructure the government to make it more effective, outlining an ambitious economic reform program for this year.
Yeltsin last restructured the government in August, also consolidating ministries, but the measures fell short of the top-to-bottom renovation reformers had sought.
 France names executives to oversee sales of Thomson unitsFrance has officially launched the privatisation of Thomson-CSF and Thomson Multimedia as separate companies and has named the executives who will take responsibility for the sales.
The government recently decided to sell the two units separately after an earlier failed attempt to sell Thomson SA as a whole.
The Industry and Finance ministries said the state 'has just taken the decisions necessary for the privatisation of Thomson-CSF to enter the operational phase.'
Marcel Roulet, chairman or Thomson SA, has been named chairman of Thomson- CSF. He will be succeeded at the helm of the parent by Thierry Breton, formerly an executive of French computer maker Cie des Machines Bull. Breton has also been named chairman of Thomson Multimedia and will soon make proposals on the sale of that unit, the government said.
The state plans to inject 11 billion francs ($1.6 billion) of fresh capital into Thomson Multimedia by the summer, once the plan is approved by the European Union Commission. The multimedia operation will be sold gradually, the government said.
An attempt to sell the whole Thomson electronics group last year floundered when the independent Privatisation Commission rejected the sale of the parent to Lagardere Groupe for a symbolic one franc.
A key objection by the Privatisation Commission to that plan was Lagardere's plan to sell Thomson Multimedia to Daewoo Electronics of South Korea.
Lagardere wanted to retain Thomson-CSF and merge its Matra Defense Espace unit with Thomson to create an integrated defence company with radar, satellite and missile interests.
Detailed terms and conditions are expected to be announced shortly, opening the way for companies to make fresh bids for Thomson-CSF. Both Lagardere and Alcatel Alsthom have said they are interested.
 Zeneca shows solid rise in 1996 earningsZeneca Group showed a 15% rise in 1996 pre-tax profit to top the billion- pound mark for the first time and exceeding analysts expectations in the process.
The earnings gains was propelled by propelled by hardy growth in pharmaceuticals and agricultural chemicals, and Zeneca said it expects to show strong sales growth in the current year as it launches new products.
The international drug company said pretax profit before charges totalled £1.011 billion ($1.62 billion) After £36 million in charges, net profit totalled £975 million, a 57% surge from the year earlier.
Looking ahead, Zeneca said it expects new products to lead to strong sales growth in 1`997, but it warned that the continue costs of market development and launch costs associated with the drugs will continue to ''restrain short-term profit growth. Still, Zeneca added, the launch of Accolate, Seroquel, Zomig and Amistar should 'significantly enhance the long-term prospects of the group,' Chief Executive Sir David Barnes said.
Zeneca showed a 13% rise in drug sales to £2.44 billion, dwarfing the 6% gain reported by rival Glaxo Wellcome last week. Growth was partly driven by a 10% gain in sales of cardiovascular drug Zestril, a 31% gain in sales of prostate cancer drug Zoladex.
The company also announced the approval of its new migraine drug Zomig, acquired from Glaxo Wellcome earlier this week.
 Hoechst and Bayer post disappointing 19096 earningsBayer and Hoechst, two of Germany's big three chemicals companies, posted slightly disappointing earnings, sending their stock prices down.
Hoechst compounded the market's disappointment by increasing it's dividend less than investors had hoped. Bayer raised its dividend more than analysts had expected.
Bayer posted a 6.7% gain in pre-tax profit to 4.46 billion Deutsche marks ($2.62 billion). Analysts had expected the company to show a rise of between 8% and 9%.
Net profit soared 13.5% to 2.7 billion marks, and sales rose 9% to 48.6 billion marks.
But the company said it would raise its dividend 13% to 1.7 marks a share, outpacing a more moderate rise that analysts had been predicting.
Hoechst meanwhile, said its pre-tax profit jumped 29% to 5.28 billion marks while sales slipped 2% to 50.9 billion marks. The earnings were bolstered largely by spin-offs, and came in below analysts predictions of a 50% surge.
Hoechst said business had developed positively in general, but that the chemicals markets in Europe lacked needed buoyancy.
Hoechst said it would raise its dividend 7.7% to 1.4 marks. But that disappointed investors. Last week the markets were swirling with rumours that the company would make large gains through the sale and divestment of assets and that the company might double its payout.
Late last week talk swirled around the market that Hoechst, standing to make large extraordinary gains through divestments, might double its dividend payout to 2.60 marks.
Separately Hoechst reiterated that its supervisory board had approved plans to transform the group into a strategic management holding company.
 Higher sales boost Bayer earnings to a recordGerman chemical giant Bayer posted a group net profit rise of 14% to a record high of DM2.8 billion on a sales increase of 9% in 1996.
Bayer also said it will raise its regular annual dividend for 1996 to DM1.70 marks from DM1.50 per share last year.
The group said it invested DM3.78 billion in capital goods last year, compared to DM3.17 billion in 1995, and spent DM3.61 billion in research and development, up from DM3.26 billion in 1995. The company also spent DM1.43 billion for acquisitions in 1996.
Bayer didn't release additional information. But the chemicals concern will release detailed data for the 1996 business year at its press conference March 18.
 Netherlands Volker Stevin, Kondor in merger talksVolker Stevin said that it is in merger talks with the Dutch construction and real estate company Kondor Wessels Group.
In a joint news release, the two companies said they are discussing a complete merger 'on the basis of equality,' and that they expect to swap shares as part of the plans. Volker Stevin, the Dutch engineering group will receive 2.25 Kondor Wessels Group shares for each of its own shares.
Paul Verbraeken, an ING Barings analyst, said Volker's outstanding capital stands about 1.04 billion NLG, while Kondor's shares are valued around 500 million NLG. He also said the merger is good news for both companies and that the move will increase Volker's per-share earnings. Verbraeken mentioned the market capital ratio between the two companies, which, at current share prices, stands around 1:2.
'It will definitely raise EPS (earnings per share), but I can't yet say by how much. This is a very large strengthening of Volker,' said Verbraeken. He mentioned the relatively small overlap of the two companies' operations, saying Volker will benefit from Kondor's housing, utility and project development activities as well as its strong German market position.
Kondor, on the other hand, will see an improvement in Dutch civil engineering activities.
The deal was also praised by Dutch brokerage Suez Nederland Securities NV, a division of Bank de Suez Nederland NV. The bank said joint turnover will amount to about 4.3 billion NLG, with net profit of 120 million NLG.
In 1995, Volker booked net profit of 58.4 million NLG. Suez Nederland forecasts Volker will achieve 1997 net profit of 81.1 million NLG, with Kondor reaching a net of around 37 million NLG.
Details of the merger will be given in the 'near future,' according to the news release.
 U.S. wholesale sales and inventories show strong gains in JanuaryU.S. wholesalers added to their inventories as the fastest rate since last June as sales rose moderately in January.
The Commerce Department said seasonally adjusted wholesale sales bounced back from a sluggish December, climbing 1% in January to $205.79 billion, the biggest increase since a 1.8% rise in July 1996. Wholesale sales were flat in December and the January level was 6.8% higher than a year earlier.
Wholesale inventories rose 1% in January to $260.80 billion, the largest jump since April 1996 when they increased 1.2%, Commerce said. The inventory-to-sales ratio was unchanged in January at 1.27 months' supply.
Increases in inventories during January were widespread across a variety of goods. They included a 3.7% increase in cars and parts after a 3.1% December drop and a 3.2% addition to furniture stocks, which were flat in December.
The additions to inventories by merchant wholesalers reflect their anticipation of strong demand ahead for the goods they are stocking.
Sales of durable goods rose 0.5% in January to $104.76 billion and were up 5.1% from a year earlier.
January sales of non-durable goods rose 1.4% to $101.03 billion and were up 8.7% from a year ago.
Sales of electrical equipment posted the largest increase, rising 3.8% to $14.73 billion.
Hardware sales rose 2.3% to $6.24 billion, while lumber sales were up 2.0% to $7.17 billion. Sales of metals rose 1.1% to $8.48 billion and sales of machinery climbed 0.9% to $15.78 billion.
Sales of motor vehicles and auto equipment fell 0.7% to $17.51 billion.
 Siemens denies spin-off rumours, reiterates venture planSiemens denied a newspaper report that said it has decided to spin off its defence electronics business, but acknowledged its defence electronics unit had hired a U.S. bank to help find a joint venture partner or buyer for the business.
'Our stance is unchanged from 14 days ago, we're still looking into all options to determine the best solution,' Siemens spokesman Eberhard Dombek said. But the spokeman would not confirm a newspaper report that Siemens had given up interest in a joint venture and was concentrating solely on divesting the electronics group.
An article in the Financial Times said Siemens has abandoned plans to find a joint venture partner, and has hired U.S. investment bank Morgan Stanley to find a buyer for the unit. The newspaper reported Morgan Stanely was talking, on Siemens' behalf, to a handful of potential buyers and expected to help conclude a sale by Semptember.
Siemens defence electronics, which employs 5,000 workers, most of them at Siemens Plessey in Great Britain, had sales of 1.6 billion marks in the year that ended September 30. Pretax profit was 63 million marks.
Two weeks ago Siemens Plessey sent letters to employees saying the company, driven by declining defence expenditures, wanted to find a partner with its core business in defence electronics. Siemens at the time said it had not ruled out selling off the unit.
 Leading UK industrialists attack the spread of EuroscepticismLeaders of 23 of the country's biggest companies expressed concern Tuesday over growing hostility to the European Union in Britain and warned it would suffer if it left.
'We have watched with dismay the spread of extreme Euroskepticism and of the mistaken belief that an arm's length and hostile attitude on Europe is now in the United Kingdom's best interests,' they wrote in a letter in the Financial Times.
'These (economic) benefits (of membership of the EU, which Britain joined in 1973) would be put at risk if this country chose the path of isolation,' they added.
The 23 included British Airways PLC chairman Sir Colin Marshall; Sir Peter Bonfield, chief executive of the telephones group British Telecommunications PLC; Sir Richard Evans, chief executive of planes and missiles maker British Aerospace PLC; and John Jennings, chairman of the oil group Shell Transport and Trading Co. Ltd.
Marshall, who is president of the business organization the Confederation of British Industry, denied the letter was aimed specifically at Prime Minister John Major's Conservative Party.
'This is not party political. There are Euroskeptics on both sides. But we are concerned about the level of anti-European sentiment and we are concerned that it might get worse in the run-up to the election,' he said in a separate interview in the paper.
The next election must be held by May 22 at latest but Major can call one any time before. He hinted last week he has chosen May 1.
Major's Conservative Party has trailed the opposition Labor Party by around 20 points in opinion polls over the last 12 months. One reason for Conservative unpopularity is the savage infighting in the party over the EU plan for a European common currency to replace the national currencies of the individual EU member states by 1999.
The so-called Euroskeptics in Conservative ranks resent growing EU intervention which they say threatens British sovereignty.
 Deutsche Telekom posts profits of 1.6 billion marks ($938.9 million)Deutsche Telekom said 1996 parent company net profit was 1.6 billion marks ($938.9 million), securing the company's planned dividend payment.
'Group net profit will be higher than this,' chief executive Ron Sommer said at a news conference. 'But there will be more details on this at the annual press conference. It is certain today that the dividend payment of 60 pfennig per share is assured.'
In 1995, parent company net profit was 1.3 billion marks. Sommer said parent company operating profit exceeded 6 billion marks in 1996, an increase from four billion marks in 1995. Group turnover in 1996 totalled 63.1 billion marks, an increase of 6%.
'In the current year, we expect the positive sales trend to continue,' Sommer said. 'This estimate is supported by January results, which registered clear growth from the year before.'
Sommer reaffirmed the company's plans to pay a dividend of 1.20 marks for 1997. The company's net liabilities totalled 82 billion marks at the end of 1996, and in 1997 would fall 'well below the 80 billion mark threshold,' he added.
 Corporate and Economic BriefsSome details of the Italian Treasury's plans regarding a golden share for state telecom holding company Societa Finanziaria Telefonica per Azioni and domestic operator Telecom Italia SpA could come out March 26. Such plans were evident from advertisements in Italian newspapers convening special shareholders meetings for the two companies for March 26. According to the ads, Stet and Telecom Italia's shareholders will be asked to approve the golden share powers, which are special rights retained by the Treasury even after the privatization of Stet. If necessary, the meetings could continue the following day as well. If approved by shareholders, the golden share would be inserted into the companies' statutes as of July 15, according to the ads.
From the European Business News (EBN) Server at http://www.ebn.co.uk/
European Business News (EBN) Directory - Previous Article - Next Article