European Business News (EBN), 97-09-02

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

Page last updated Tue, September 02 6:18 PM CET

CONTENTS

[01] French charge Diana photographers with manslaughter

[02] US stocks rally after data eases worries that the economy is expanding too quickly

[03] Preussag to pay $1.55 billion for Hapag-Lloyd

[04] Airbus wins $3.9 billion ILFC order for 65 jetliners

[05] Apple to pay $100 million in stock to buy core of Power Computing

[06] MAN operating profit slips 2% but net gains 6% on lower taxes

[07] Wimpey swings to profit but stock drops 3.1%

[08] UBS chief says second half won't match growth in first six months

[09] Yeltsin won't run for another term in 2000

[10] Germany's Jagoda denies joblessness will hit 5 million this year

[01] French charge Diana photographers with manslaughter

A French judge ordered two French photographers investigated for suspected manslaughter in the car crash which killed Princess Diana, lawyers said.

Judge Herve Stephan released Jacques Langevin of the Sygma agency and Nicolas Arsov of the SIPA agency after placing them under formal examination -the French equivalent to pressing charges-for suspected manslaughter, bodily harm and failure to assist accident victims.

In all, seven photographers were to face Stephan at the law courts next to the police headquarters where they have been held since being detained at the scene of the fatal crash in a Paris road tunnel early on Sunday.

Lawyer, William Bordon, who represents Arsov, said all seven were facing the same charges.

The driver of the armoured Mercedes, the Ritz Hotel's No. 2 security chief Henri Paul - legally drunk at the time of the accident - also was killed.

Judicial sources identified the other five photographers as: Serge Arnal of the Stills agency, Christian Martinez of Angeli, Romuald Rat of Gamma, Laslo Veres, a freelancer, and Stephane Darmon, driver of a Gamma motorcycle.

A written request from the prosecutor's office asked the judge to jail two of the seven photographers.

The French daily Le Figaro reported Tuesday that pictures taken by photographers at the crash scene showed the steaming wreckage but 'not a single helper' trying to help the victims.

Police had confiscated about 20 rolls of their film.

Sygma's director, Hubert Henrotte, told Le Monde that Langevin, a photographer noted for his pictures of the invasion of China's Tiananmen Square. Langevin had worked for the AP as a stringer from 1978 to 1984.

Henrotte said Langevin arrived at the scene by chance, in his car 'a good seven minutes after' the accident.

'He has nothing to do with the band of paparazzi,' Henrotte said.

The driver of the armoured Mercedes, the Ritz Hotel's No. 2 security chief Henri Paul - legally drunk at the time of the accident - also was killed.

Reports in Tuesday's Le Monde newspaper that Paul may have been even more drunk than reported on Monday appeared to bolster the likelihood that a deadly combination of factors was at play on the fatal night.

Le Monde reported that Paul, 41, may have been more drunk than judicial sources indicated on Monday.

It said a second police toxicology analysis came up with a level of 1.87 grams of alcohol per litter of blood - even higher than the initial 1.75 figure, which is the equivalent of drinking nine shots of whiskey in rapid succession.

If confirmed, that would give the driver a blood-alcohol level nearly four times the 0.5 grams per litter legal limit in France.

The car's speedometer was frozen at 196 kilometres per hour (121 mph), a police source said.

The Times of London on Tuesday cited what it called unconfirmed reports that Paul had taunted the photographers by saying 'Catch me if you can,' before speeding away from the hotel.

[02] US stocks rally after data eases worries that the economy is expanding too quickly

Purchasing Managers' index shows manufacturing growth slowed in August

Data showing that US manufacturing growth slowed in August eased worries that the economy had expanded too rapidly in the third quarter and sent href="http://www.ebn.co.uk/Markets/Stocks/MARKET13.HTM">blue-chip stocks</a> rallying.

The National Association of Purchasing Management's composite index dipped to 56.8% in August from 58.6% in July, showing that activity in the US manufacturing sector slowed in the month. Still, it was the 76th consecutive month of overall expansion, according to the NAPM.

A reading above 50% indicates expansion in the manufacturing sector.

The economy continues to show strength with 'almost non-existent' inflation, said Norbert Ore, chairman of the National Association of Purchasing Management's Business Survey Committee.

'I don't think anybody can look at the numbers and be disappointed with what the economy is doing right now,' he added. 'What we're showing is a very strong economy. Inflation is almost non-existent in the economy. We're very efficient right now,' he said.

The prices paid index edged slightly higher to 53.8% from 53.6%.

Ore added that more members expressed concern about prices. 'We did have a greater occurrence of members' mentioning concern about prices,' he said, which he described as 'consistent' with the economy's strong growth.

'In general, there's an expectation that prices will not go up, so any ones that do go up need to be driven by circumstance,' he said. He added that 'a couple of industries' do have price increases, including the paper industry. 'But their prices were at rock bottom just three or four months ago,' he said.

'Purchasing executives' comments on business conditions indicated the perception of a strong economy while major concerns were expressed regarding delivery delays due to the strike in the small parcel industry. Members also expressed concerns about greater upward pricing pressures,' Ore added.

The supplier deliveries index, a closely watched indicator of inflationary pressures in the pipeline, edged up to 55.8% from 55.3%. Deliveries have been reported slower in 15 of the last 16 months, the NAPM noted.

[03] Preussag to pay $1.55 billion for Hapag-Lloyd

The German engineering company said it had agreed to buy 99.2% of the freight and travel group from its seven biggest holders.

Michael Frenzel, Preussag's executive chairman, said Hapag's shipping and tourism businesses complemented the growing logistics services of Preussag.

'With this acquisition, the Preussag group will make a major step forward into the post-commodities era and change more and more distinctly into a services-oriented group,' Frenzel said. 'Including Hapag-Lloyd under the Preussag roof creates a new growth area of logistics and tourism.'

Preussag said it had already purchased 69% of the company, including 18% from Veba for 508 million Deutsche marks, 18% from Gevaert for 7 billion Belgian francs ($189), 15% from Metro for 420 million marks and 18% from Lufthansa.

Preussag said Dresdner Bank will sell its 10% stake for 280 million marks and that it will sign sale agreements with Deutsche Bank for its 10% and Veritas Vermoegensverwaltungs for its 10%.

German insurer Allianz and reinsurer Munich Re said they are selling their stakes were selling their stakes for 280 million marks.

The companies for which no selling price is given did not release a figure.

The transaction must be approved by cartel authorities.

[04] Airbus wins $3.9 billion ILFC order for 65 jetliners

ILFC is also expected to announce a $3 billion order for Boeing commercial aircraft.

Airbus said ILFC has made firm orders for 50 A319, A320 and A321 aircraft, and 15 A330 family aircraft. Deliveries are schedules to begin in 2000 and are spread over 5 years. The consortium didn't provide any details of the engine orders for the aircraft.

At average catalogue prices, the total Airbus order is estimated to be worth around $3.9 billion.

'Aircraft leasing companies, and ILFC in particular, play quite an important role in the distribution of new aircraft,' Airbus managing director Jean Pierson said in the statement. 'Leasing provides both operational and financial fleet-planning flexibility to airlines of all types in the world.'

According to The Wall Street Journal, ILFC is also expected to place an order with Boeing for around 50 commercial jetliners. That order is expected to be valued at just over $3 billion and could also be announced this week, according to the Journal.

The Airbus consortium comprises Aerospatiale, Daimler-Benz's Daimler-Benz Aerospace Airbus, British Aerospace and Construcciones Aeronauticas of Spain.

[05] Apple to pay $100 million in stock to buy core of Power Computing

Apple said it will acquire Power Computing's customer database; the license to distribute the Mac OS operating system; and the right to retain key employees in direct marketing, distribution and engineering.

Apple said Power Computing will retain its name and will sell Mac OS clones through the end of the year. Apple will provide ongoing Mac OS support to Power Computing customers. Power Computing will continue to provide hardware and warranty service to its customers.

As reported Tuesday in The Wall Street Journal, this transaction could resolve the long-running Macintosh licensing dispute between the two companies.

In 1996, Apple reported a loss of $816 million, or $6.59 a share, on sales of $9.83 billion.

'Power Computing has pioneered direct marketing and sales in the Macintosh market, successfully building a $400 million business,' Apple board member and founder Steve Jobs said. 'We look forward to learning from their experience, and welcoming their customers back into the Apple family,' he added.

Power Computing will retain the Power Computing name and will sell Mac Operating System-compatible computers through the end of this year, the company said.

Apple will provide ongoing support to Power Computing customers and Power Computing will continue to provide hardware and warranty service to its customers, it added.

[06] MAN operating profit slips 2% but net gains 6% on lower taxes

Operating profit eased to 493 million Deutsche marks ($273.8 million) from 502 million marks the year before. The German engineering group said lower taxes helped boost net profit 6% to 349 million marks.

MAN raised its dividend 17% to 14 marks. The company noted that the dividend for 1997 will be paid with tax-free income. That means it doesn't include the usual tax credit granted German investors, so that, for domestic MAN shareholders, the 14 marks dividend compares to a dividend of 16.07 marks a year earlier, when the tax credit was given.

Group sales in fiscal 1997 rose 5% to 21.4 billion marks.

The company said the sales gain was based on an export-driven economic upswing and growing domestic demand for capital goods. This led MAN to say it is 'confident' about the current fiscal year. The company said its positive outlook is reinforced by 'a high-quality product range, an increasing ability to compete, the effectiveness of restructuring measures as well as an expanding presence abroad.'

[07] Wimpey swings to profit but stock drops 3.1%

Traders appeared to be disappointed that the construction company didn't raise its dividend or announce any asset sales.

The shares closed at 126 pence, down 4 pence.

The UK construction company showed pretax profit of £12.5 million in the first half on a 19% rise in sales from continuing operations.

'Our result in the first half, with improving margins and a £21 million turnaround in profits, indicates a strong performance for the year and reinforces the benefits of our strategic decision to become a focused home builder,' Chairman Joe Dwyer said.

He added that the 'results are only the first signs of a swing to the even greater financial performance we believe the group will achieve in the foreseeable future.'

The company said that since most of its profits are generated in the second half, it expects strong full year results.

But the company maintained its dividend at 2 pence a share. Analysts said they had been hoping for a rise of 5% to 2.1 pence. The company said it's still on target to raise £50 million in the full year to December 1997 from property disposals used for buying more land bank supplies. Wimpey now focuses on residential property sales in the UK and U.S., and land development in Australia.

[08] UBS chief says second half won't match growth in first six months

Mathis Cabiallavetta said 'We have to be prepared for results in the second half which won't be exactly as good as the ones in the first half,' Cabiallavetta said.

UBS net profit jumped 67% in the first half to 1.86 billion Swiss francs ($1.24 billion) from 1.11 billion francs francs the year before.

Cabiallavetta said provisions for bad loans were likely to rise slightly in the second half of 1997, and financial markets wouldn't perform as exceptionally strong as in the past.

Nevertheless, Cabiallavetta said 1997 will go on record as a very good year for UBS. He added that UBS' accounts in 1997 and beyond would markedly profit from measures taken in 1996.

In 1996, UBS had set aside extraordinary provisions worth 3 billion francs for the future and ordinary provisions worth 1.4 billion francs on top of that.

Meanwhile, the chief executive officer said the bank has no intention of merging with its insurance partner Swiss Life. UBS is satisfied with its holding of 25% of Swiss Life shares, he added.

Rivals Credit Suisse group and Winterthur insurance announced their merger plans early August, a move which fueled speculation on further merger possibilities in the Swiss banking and insurance sector.

While Cabiallavetta ruled out a merger between some of Switzerland's major banks for the time being, he added that looking at overcapacities in the Swiss banking sector such a move in theory remained a possible. The same holds true for a merger between a major Swiss and a German or British major bank, he said.

[09] Yeltsin won't run for another term in 2000

Speaking to children gathered for the first day of school, Yeltsin, 66 years old, said it was time to step aside and allow a younger, more energetic leader to guide the country's reforms.

'My term ends in 2000, and I will not run any more,' he said, as his comments were captured on nationwide television. He didn't spell out his retirement plans.

In a country where leaders have traditionally ruled for life, the announcement showed Yeltsin's growing confidence that his political and economic reforms have taken hold and would be continued under a successor.

By firmly declaring that he will step down at the end of this term, Yeltsin also officially launched a race for his job that already began quietly months ago.

Although the election is three years away, a handful of top politicians have already been positioning themselves, and with Yeltsin out of the picture now, they can campaign freely without fearing that they will alienate him as a possible competitor, political analysts said.

'It's a green light on the road to the Kremlin,' said Andrei Kortunov, a political analyst who heads the Russian Science Foundation. 'Yeltsin's potential successors can campaign without worrying about undercutting him.'

Although Russia's 1993 constitution allows one president to serve only two four-year terms, in recent months members of Yeltsin's administration have been said to be devising ways to get around the clause to allow the president to run a third time. Because Yeltsin was elected for his first term in 1991 under a now-defunct constitution, it could be argued that he could theoretically run once more, observers have said.

However there was no indication that Yeltsin, who underwent heart surgery last autumn and whose family reportedly wants him to retire after this term, was ever seriously considering a third term. Instead, he appears confident that a successor, whom he has yet to endorse, can win.

While he nearly lost to Communist leader Gennady Zyuganov in the presidential election last year, the economy is on the brink of recovery, Prime Minister Viktor Chernomyrdin said, and the government appointed in March is pushing ahead with further reforms. Yeltsin's plan, economists in the government say, is to enact remaining major reforms, such as breaking up the natural monopolies, this year and next, so that most Russians will feel the benefits of reform by the time the election nears.

No single successor to Yeltsin yet stands out, but it is clear that as Yeltsin's new government grows more active and the economy stabilises, support for conservative candidates has slackened in opinion polls.

Russia's most popular politician today is First Deputy Prime Minister Boris Nemtsov, 37, the ambitious former governor of reform stronghold Nizhny Novgorod, and now a point man for the federal government's key economic reforms. But Nemtsov has yet to build a power base, political analysts say.

Viktor Chernomyrdin is another potential successor, but the strength of his own power base fell into question last week when the head of the lacklustre party that supports him, Our Home is Russia, left to join more reformist democrats. Other candidates include Moscow's populist mayor, Yuri Luzhkov; Alexander Lebed, Yeltsin's tough-talking former National Security adviser; and Gennady Zyuganov.

First Deputy Prime Minister Anatoly Chubais is also named, but voters still vilify him for selling state property cheaply in Russia's privatisation program.

[10] Germany's Jagoda denies joblessness will hit 5 million this year

'Considering the current stabilising tendencies on the labour market and the positive signals coming from the export sector, I think such a development is highly unlikely,' Jagoda said in an interview published in the Cologne daily newspaper Express.

DGB Vice President Ursula Engelen-Kefer had said in another newspaper interview that it's possible that Germany may have five million unemployed people by the end of the year.

Engelen-Kefer said her estimate of five million jobless will be particularly likely if there are long cold spells in the coming winter. She also said that Germany's current export boom isn't enough to compensate for job cuts in other sectors, nor is it improving the jobs situation in eastern Germany.

Nevertheless, pointing at last winter's high of 4.67 million people unemployed, which was reached in February, Jagoda said in the newspaper interview his 'goal remains to lower unemployment in Germany via a rise in jobs that require payment into the social security system.'

German jobs that pay below 610 Deutsche marks per month don't require payment into the social security system. Germany's Federal Labour Office has forecast the average number of unemployed around 4.2 to 4.3 million in 1997.

In July, the number of German jobless stood at 4.35 million. In August, Jagoda said he expects the number of jobless to remain above 4 million in 1997, but to dip below that in the course of 1998.

Jagoda also said he thinks the government's 15.1 billion marks payment to the labour office, instead of the 4.1 billion marks initially planned, will be enough to meet the office's additional needs caused by higher than originally forecast unemployment.

'I'm certain that we'll be able to cover the projected extra expenses, especially the additional unemployment benefits,' said Jagoda.

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

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