European Business News (EBN), 97-04-04

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

Page last updated April 4 1400 CET

CONTENTS

[01] Pace of US jobs growth slowed in March as wages gain slightly

[02] France rejects GEC bid for Tomson-CSF

[03] Renault is barred from closing Belgian plant by French court

[04] Clariant International posts net profit jump of 29%

[05] CGIP more than doubles profit for 1996

[06] Rubin against exchange rate manipulation

[01] Pace of US jobs growth slowed in March as wages gain slightly

The Labor Department said 175,000 non-farm jobs were added to payrolls in March, fewer than the 293,000 that were created in February. Economists had predicted that at least 196,000 jobs would have been created in the month, with some estimates ranging as high as 300,000.

Traders in the financial markets had been edgy all week, awaiting this first indication of the economic health of the US during March.

In March average hourly wages rose by 5 cents to $12.15, after edging up a revised 5 cents in February, instead of the previously reported 3 cents, the department said. Over the past 12 months, wages rose 4%, matching their highest growth rate since the 12 months ended June 1990, it said.

In the interest sensitive bond market, European bonds were generally higher after the data. US Treasury bills rose sharply immediately following the release of employment data Friday, but have since come off their highs as cash flows continue into the short end.

Traders quickly focused on the rate-rise implications of the earnings component of the report, and bearish sentiment dominated. European stock markets ended the week on a positive note, despite the US data, but New York stocks lost ground in early trading on the inflation indications of the jobless report.

The dollar was largely unaffected by the unemployment data, but it was surging against the yen in the wake of Treasury Secretary Robert Rubin's assurance that the US will not seek to drive the dollar lower against the yen.

[02] France rejects GEC bid for Tomson-CSF

The ministry said, however, it has accepted bids from the remaining two candidates, defence and media group Lagardere, and telecommunication conglomerate Alcatel Alsthom, which has formed an alliance with Dassault Industrie.

Lagardere and Alcatel now have until May 7 to submit final offers for Thomson-CSF.

The government, which said in March that foreign companies were free to submit bids, has pledged to select the winning candidate before the end of June.

Yesterday, French Finance Minister Jean Arthuis wouldn't even confirm that GEC had expressed interest in the government's 58% stake in Thomson-CSF, while GEC has also declined to comment.

But Lagardere officials did confirm GEC's interest, saying it hadn't surprised those involved in the process.

[03] Renault is barred from closing Belgian plant by French court

The court in the Paris suburb of Nanterre said Renault had failed to respect its duty to inform and consult the works council before announcing its intention to shut down the Vilvoorde plant.

It said advance consultations were required as the decision concerned Renault's 'strategic orientation and was a major change in a European subsidiary that would have repercussions at the European level.'

The court said it was barring Renault from pursuing, 'even through subsidiaries, the closing procedure for the Vilvoorde plant until it has fulfilled its obligation to inform and consult its European works council'.

Renault had no immediate comment on the ruling. But Renault has said it will appeal a ruling from a Belgian court Thursday that Renault had broken labour law by not consulting properly about the plan to shut down the plant.

Meanwhile, Renault workers from France Spain and Belgium are due to converge on Brussels this morning in protest at the car makers decision to close a Belgian plant and slash jobs across Europe, as rationalisation continues to sweep through the French motor industry with Automobiles Citroen also announcing big job losses.

The French car-maker - which lost 5.2 billion French francs ($900 million) - is to close a plant in Belgium with the loss of over four thousand jobs and will cut nearly 3,000 jobs in France.

Renault, which recently indicated it could keep the plant open weeks or even months beyond its stated July 31 deadline, has countered by suggesting that it may it may close the Vilvoorde assembly plant before the end of July if its workers do not resume production. Workers have halted production at Vilvoorde since the announcement on February 27 of the closure.

Asked why Renault had not adopted a strategy similar to that of Volkswagen, which reduced employees' hours, Schweitzer told Liberation, 'Reducing work time and wages would not have saved Vilvoorde. Beyond job reductions, we have an industrial problem. We had to cut one assembly site...'

Meanwhile, Automobiles Citroen, a branch of the car manufacturing group Peugeot Citroen, has proposed plans that include 800 job cuts between May 1997 and September 1998. Citroen, which employs around 28,000 people, says the cuts will be achieved mainly through early retirements. The plan, scheduled to be presented to the works council on April 15, will also include 382 transfers and job conversions. The plan will have the most impact on the Aulnay and Rennes sites and the Paris headquarters.

Citroen, which employed 40,000 people in 1984, cut 689 jobs last year after eliminating 1,180 in 1995. Peugeot Citroen is expected to report a fall in profit for 1996 later this month. Although it does not break out the Peugeot and Citroen branch results, Citroen is believed by analysts to be the weaker division.

[04] Clariant International posts net profit jump of 29%

'The main factors were improved cost structures and more dynamic business in the second half (of 1996) as well as favourable exchange rates,' Clariant said in a statement released before its annual news conference.

The rise in group net profit to 137 million Swiss francs ($95.5 million), from 106 million francs the year before, prompted the stock market to raise Clariant's price by 3% in initial trading.

The company also announced plans for a dividend of 10 francs a share after a half-year payment of 4.50 francs the year before.

Operating income last year rose 11% to 235 million francs, making for a margin of 10.1%, an improvement over the prior year's 9.8%. Clariant said sales rose nine percent to 2.33 billion francs despite stiff global competition in its main businesses - textile, leather and paper dyes and chemicals as well as pigment/additives and so-called masterbatches.

Clariant plans to grow by taking over the specialty chemicals business of German pharmaceutical group Hoechst, a proposal that will be submitted to the Clariant annual shareholder meeting on April 29.

The Clariant board has already agreed to the deal announced last December after Hoechst agreed to sell its specialty chemicals business and to take a minority stake in the expanded Swiss group.

[05] CGIP more than doubles profit for 1996

CGIP, which still owns 10% of Crown Cork and has a 20% stake in car parts maker Valeo of France among other holdings, said its operating profit rose 43% to 628 million francs from 440 million francs.

The company also reported one-time gains in 1996 of 670 million francs, compared with 74 million francs the previous year.

CGIP last year sold 10%, or half of its stake, in Crown Cork to help pay for its stake in Valeo, Europe's second-largest car parts maker. The sale of the Crown Cork shares netted CGIP a one-time gain of 480 million francs.

Chairman Ernest-Antoine Seilliere said CGIP was capable of raising several billion francs should Valeo or other companies in which CGIP is a major shareholder need cash. Mr. Seilliere has said he would like Valeo to expand via acquisitions.

[06] Rubin against exchange rate manipulation

'Avoiding a significant increase in the current account surplus and increasing market access are of enormous importance to the nations of the global economy,' Rubin told a press conference at the U.S. Embassy in Tokyo.

Rubin also reiterated his warning that if Japan's current account surplus rises significantly, 'It would create the risk of reigniting trade friction between Japan and its trading partners.'

Financial markets are paying close attention to Rubin's comments during his visit to Japan today. The dollar fell in New York overnight to 122.65 yen but rallied in Tokyo to above 123 yen immediately after the remarks.

Rubin has also renewed his call for Japan to open its markets through deregulation and expand its domestic demand. 'I don't believe that a nation's currency should be used as an instrument of trade policy' he said.

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

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