European Business News (EBN), 97-09-04

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Page last updated Thu, September 04 6:58 PM CET

CONTENTS

[01] France reportedly will sell one-third of France Telecom

[02] ABB denies it's lost $5 billion Malaysian job

[03] Bull chairman steps down; Suez's Panafieu tapped as successor

[04] Jerusalem explosion claims 6 lives, injures 165

[05] Tietmeyer says he isn't promoting a postponement of EMU by saying a delay wouldn't be a catastrophe

[06] Sagem considers merger with Thomson-CSF

[07] Foreign investors abandon Malaysian stocks despite government bid to push up market

[08] Carrefour plans second revamp as earnings drop 34%

[09] UK retail sales data suggests interest rates have peaked and may be lowered

[10] French Socialist government supports partial privatisation of Air France

[11] Sema shows 32% gain in first-half profit

[12] German industrial orders gain a healthy 6.4% on the year

[13] Elf Aquitaine shows 48% jump in first-half earnings

[14] Ahold earnings surge 71% on strong US results

[15] Japanese shipping lines face US sanctions as negotiation deadline passes

[16] Corporate and Economic Briefs

[01] France reportedly will sell one-third of France Telecom

An official at Prime Minister Lionel Jospin's office said state appointed envoy Michel Delebarre will present his report on the future of France Telecom at 14:00 CET tomorrow. The official said a decision would 'probably not' be announced at the same time, but made it clear the government would decide rapidly.

'Between the submission of the report and the subsequent announcement there will be a relatively short time lag,' the official said.

Daily financial newspaper La Tribune reported in today's editions that no later than October Paris plans to sell one-third of the state carrier in two stages, with part of the stake going to Deutsche Telekom.

La Tribune cited labour union sources and Pierre Herisson, deputy chairman of a state commission on postal and telecommunications services.

The report that is due tomorrow will set out the various options for opening up France Telecom's capital in ways that are acceptable to the company's personnel. On the whole, France Telecom's employees have been hostile to the idea of the state reducing its stake below 50%.

Jospin's spokesman, Manuel Valls, said the prime minister hasn't taken any decision so far.

The newspaper quoted Herisson as saying his commission is recommending that France Telecom's German counterpart Deutsche Telekom be invited to take up half of an initial 20% shareholding in the French telecoms company.

The German utility has acknowledged publicly in recent months that it is in talks over the possibility of a cross-shareholding to strengthen its strategic alliance with France Telecom.

Deutsche Telekom, France Telecom and Sprint of the US co-operate in the Global One international telecoms joint venture.

The newspaper article also states that France Telecom employees will be offered the chance to buy about 3% of the capital.

The plan would be for 10% of the capital to be floated before Italian telecommunications company Stet is put on the market.

The final plan will be put before the cabinet for approval next Wednesday, the newspaper said.

The previous conservative government had planned to sell about 49% of the telephone operator in May of this year to prepare the company for a complete liberalisation of the European telecommunications market on January 1, 1998.

The conservative government postponed the move due to a parliamentary election in which a Socialist-led coalition took power, campaigning on a pledge to halt privatisation's.

The newspaper said as a result of the timetable, France Telecom could announce its half year results from the middle of next week.

[02] ABB denies it's lost $5 billion Malaysian job

The international electrical engineering and technology group reacted to an earlier press release by the project manager for the 15 billion ringgit ($5 billion) hydro-electric dam, who said that an agreement with ABB-CBPO consortium is no longer possible.

The ABB press release also said ABB and its consortium partner Companhia Brasileira de Projetos e Obras have been informed that the BHC press release was initiated by one of BHC's shareholders - but without informing BHC's other shareholders. Therefore, ABB said, the release wouldn't constitute a majority opinion of BHC's owners. The consortium also notes that the statement hasn't been confirmed by representatives of the government of Malaysia.

BHC said earlier no agreement between the parties has been reached despite protracted negotiations on the terms under the engineering, procurement and construction works contract signed on Oct. 2, 1996 between BHC and the ABB- CBPO consortium, led by Swiss-Swedish ABB Asea Brown. BHC said it will make other arrangements to complete the project. 'It is now clear after 10 months that the parties are so far apart that an agreement is no longer possible,' it said.

A senior analyst at a bank-backed brokerage firm, who asked not to be named, said it will be difficult for BHC to get a new contractor for the project. 'There aren't many around which have the expertise to replace ABB,' he said. He said the current weakness of the ringgit will also compound the problem of finding a new contractor.

BHC said it won't serve any purpose to continue negotiations between the parties given that the contract 'has not come into legal force and effect yet'. It went on to say, 'more urgent interest of the nation as well as of the parties concerned, demand us to make other arrangements for completing the Bakun Hydro-electric Project.'

Mike Robertson, head of information at ABB in Zurich said ABB is seeking clarifications of the statement made by Bakun Hydro-Electric.'We prefer to seek clarification rather than add confusion so I don't want to comment any further at the moment,' Robertson said.

[03] Bull chairman steps down; Suez's Panafieu tapped as successor

Bull's board has selected Guy de Panafieu, managing director of Suez Lyonnaise des Eaux, a diversified water distribution, construction and telecommunications group, to replace Descarpentries.

Over the past four years, Descarpentries transformed Bull from an anemic state-owned company with chronic financial problems into a dynamic, profitable, privatised concern with a strong shareholder base.

Noting the ground that had been covered since he joined Bull in October 1993, Descarpentries said Bull now has to reach a level of profitability similar to that of its main competitors. He said Bull must continue growing to become the leading European information technologies company.

Bull achieved a 23% rise in 1996 net profit to 376 million French francs ($62.7 million), and the company is projecting another steep rise in 1997.

The three-stage privatisation orchestrated by Descarpentries reduced the state's shareholding to 17% and brought in new industrial partners as shareholders that included France Telecom, NEC of Japan and Motorola of the U.S.

De Panafieu found himself the odd man out in the merger between Cie. de Suez and Lyonnaise des Eaux earlier this year. Panafieu had been the number 2 executive at Lyonnaise des Eaux and the heir apparent to Lyonnaise Chairman Jerome Monod, was expected to take over the top spot when Monod retired in 1998.

However, with the merger, de Panafieu found himself relegated to a managing director position behind Suez Chairman Gerard Mestrallet, who became the chief executive of the combined Suez Lyonnaise des Eaux group.

Mestrallet, a vigorous businessman in his 40s, will likely keep the top job at Suez-Lyonnaise des Eaux for the foreseeable future.

[04] Jerusalem explosion claims 6 lives, injures 165

The Islamic militant group Hamas claimed responsibility in a leaflet faxed to news agencies. The group threatened to carry out more attacks unless Hamas prisoners held by Israel were released by Sept. 14.

The bombs went off at noon GMT as hundreds of shoppers, including many American tourists, crowded the Ben Yehuda Street mall which is lined with cafes, tourist shops and American fast food restaurants, such as Burger King and Sbarro.

'I was having a drink with my friends,' said Abie Mendelson, 18, a Jewish seminary student from Los Angeles.

'We were just sitting down and had got our drinks and were going to toast 'L'haim' to the (upcoming Jewish) new year. We had just clinked our glasses and heard the explosion. I heard my friend screaming. I looked down to make sure I could walk. I saw legs without a body, and then I went into a store. I looked in the mirror and saw blood. I saw my hair was burnt off.'

Some of the wounded were treated on the sidewalk. One young woman, crying, sat under a tree as paramedics bandaged her. An infant, crying, was handed to people in the back of a van, and a man gave the child some water.

Survivors sat on the sidewalk. Many were shaking and crying, and some held their hands to their heads in shock. Paramedics splashed water on the face of one weeping man.

Israel's minister of public security, Avigdor Kahalani, said six people were killed in the blast. Jerusalem police chief Yair Yitzhaki said three of the dead were apparently suicide bombers. Their bodies were completely torn apart by the blast, and Israel radio said one of them had been wearing women's clothes.

An Associated Press reporter saw one disfigured body, with the face torn off. Police said the explosives used Thursday were similar to those set off in the July 30 market bombing. 'We assume it is a suicide bombing, although we cannot say for sure,' Yitzhaki said.

The attack raised questions about next week's Mideast trip by U.S. Secretary of State Madeleine Albright who was to meet with Israeli and Palestinian leaders to try and revive the peace talks.

A senior Palestinian offered full security co-operation with Israel in the wake of the attack - something Israel had been demanding as a condition for resuming negotiations.

'We are ready to co-ordinate with the Israeli side and to cooperage with them to face this terrorism and this criminal act,' said Ahmed Abdel Rahman, the secretary of Yasser Arafat's Cabinet.

Abdel Rahman said the bombers apparently meant to prevent Albright from coming. Hamas is staunchly opposed to the peace agreements between Israel and the Palestinians.

Israel said the Palestinian offer of full co-operation was too little, too late. 'We are looking for a crackdown on the organisations that mastermind these outrages. For that, they don't need co-operation,' said David Bar- Illan, a senior adviser to Prime Minister Benjamin Netanyahu. 'Unless there is action, we have no hope for the peace process.'

In response to the attack, Israel resealed the West Bank and Gaza Strip, barring Palestinians from entering Israel. Israel also imposed an internal closure, meaning Palestinians could not travel between towns and villages in the West Bank.

[05] Tietmeyer says he isn't promoting a postponement of EMU by saying a delay wouldn't be a catastrophe

Clarifying his earlier comments, Tietmeyer said, 'My statements are clearly not a call in favour of a delay in the start-up of the currency union.'

Echoing Tietmeyer's latest remarks, German Foreign Minister Klaus Kinkel stressed that currency union must be introduced as planned on Jan. 1, 1999, and that the Maastricht Treaty criteria for currency union must be strictly maintained.

'No one should be made to feel unsure. The euro must and will come punctually on Jan. 1, 1999, under strict adherence to the treaty's stability criteria,' Kinkel said. 'This is the position of the federal government.'

In an advance copy of an interview published in today's edition of German weekly Die Woche, Tietmeyer's had said that a delay of the single currency would be neither a political nor an economic catastrophe startled markets.

He added: 'I simply can't follow some arguments I've heard lately which presuppose, should there be a delay, that Europe's sky would fall in or the economy would be driven out of control.'

Kinkel said a delay could spell euro's demise because it would render less credible any future attempts to institute a common currency. 'No one would buy the fact that we were really serious in a second go-around,' he said.

He said doubts about the timely start of the currency union harmed the German economy and those in Germany looking for jobs. 'Especially our export economy, the catalyst for the beginning of economic recovery, needs security to plan and calculate,' he said.

The foreign minister said the future currency must be strong and that stability criteria had to be upheld following the euro's introduction.

[06] Sagem considers merger with Thomson-CSF

Sagem said 'it is studying the possibilities of a project to create a large electronics group that might result' from a merger of the two electronics firms.

Sagem said it won't make any further comment on the project until the government makes public its intentions regarding the restructuring of the French defence industry. Industry sources said a possible link-up between Thomson-CSF and Sagem is one of the options being studied by the government in connection with its plan to privatise Thomson-CSF.

Electronics and telecommunications giant Alcatel Alsthom and media and defence group Lagardere both responded to offers by the previous conservative government to submit bids to buy a controlling interest in Thomson-CSF, currently 58%-owned by the state.

The state's controlling interest is held through holding company Thomson. The remaining 42% is currently traded on the Paris Stock Exchange.

As envisaged by the Socialist-led government of Prime Minister Lionel Jospin, the state will reduce its stake in Thomson-CSF to around 40% through exchanges of shares with the other industrial groups.

Sagem's defence electronics business accounted for 3.5 billion French francs of the group's 1996 consolidated sales of 15.4 billion francs. Thomson-CSF had sales of 36.3 billion francs in 1996, of which 23.2 billion francs came from its defence electronics activities.

The government is expected to decide soon on how it intends to restructure the defence electronics sector.

There is already agreement on the need to merge France's two aerospace groups - Aerospatiale and Dassault Aviation - and one option being studied would involve a vast defence/electronics/aerospace grouping that would embrace Thomson-CSF, Aerospatiale and Dassault and be in a better position to compete with the huge defence groups that have sprung up in the U.S. in recent years.

[07] Foreign investors abandon Malaysian stocks despite government bid to push up market

He said the money would be used to buy shares from Malaysians at a premium but that the buyers would pay market value to foreign sellers. He didn't state what the premium would be.

Analysts said the government-linked investment funds came into the market late in the day, buying enough shares to enable the index to recover from the 675.15-point nadir to which it had sunk in across-the-board selling. But they confined their buying to about 20 key blue-chip stocks, leaving decliners outnumbering advancers 588 to 155 at the close. Malaysia's leaders have blamed the weakening ringgit and plunging stock market solely on foreigners, whom they accuse of trying to undermine the economy with racist motives.

'I say openly that these people are racists,' Mahathir said late Wednesday. 'They are not happy to see us prosper.'

But analysts say it wasn't just the rhetoric that prompted foreign investors - who otherwise would have been willing to wait out the turbulence in regional markets - to desert Malaysia but rather the authorities' attempts to manipulate trading and limit criticism with talk of locking up those deemed economic saboteurs.

Many brokerage houses are no longer speaking to the media, and analysts who still give their opinion adamantly demand anonymity for fear of retribution.

'People in our line are starting to be very, very cautious,' said a Malaysian analyst at a foreign brokerage house. 'Everyone's having a neutral stance.'

Those who are still talking wondered how long it would take authorities to raise the 30-billion ringgit they said they would raise through bonds, noting that only 3 billion ringgit worth are to be issued at first.

And they questioned just how big of a premium would be paid to Malaysian sellers of stock and whether they would buy shares from all companies or just a favoured few.

Some were angry that authorities had decided to use money from sources such as the people's retirement fund for the other 30 billion ringgit in the market rescue package. 'You have no right to use my money to buy out your cronies at a premium,' said the Malaysian ringgit dealer.

Sheila McNulty, Dow Jones Newswires, Kuala Lumpur

[08] Carrefour plans second revamp as earnings drop 34%

But the company said net income from recurring operations rose 17% and predicted a 15% rise in full-year earnings.

The company's chairman also said that he approves of the current consolidation in the French retail industry, though he wouldn't comment on Promodes' hostile take-over bid for rival Casino.

Consolidated net profit fell to 1.41 billion French francs from 2.15 billion francs the year before. Net income from recurring operations increased to 1.41 billion francs from 1.21 billion francs. Carrefour said it expects a 15% increase for the full year.

The group's 1996 first-half earnings were affected by a 936 million franc capital gain from the sale of its PriceCostco unit.

Chairman Daniel Bernard said that in general terms he approved of consolidation in the French distribution sector, although he declined to comment on rival Promodes' hostile take-over bid for retailer Casino.

'Globalisation in the distribution sector requires large operators. If France wants a role in that world, it needs large operators,' Bernard said. He added that, were the merger to go through, 'it would give France a strong group which could fight on the world stage.'

Turning to Carrefour's 42%-stake in retailer Cora, Bernard said Carrefour 'isn't in a hurry' to take a majority stake in the company, since Carrefour continues to show strong growth on its own. The remaining 58% of Cora is privately held.

Carrefour also announced a management reorganisation which divides the group into five regional centres and three structural groups. Bernard, not lacking in ambition, defended the reorganisation - the second in five years - as necessary, given the group's growth.

'Eventually, we want each regional zone to be equivalent to the current size of the group,' Bernard said.

The new Carrefour management is divided into managing directors for the Americas, North Asia, Southeast Asia, Europe and France as well as directors for finance, merchandising-marketing, and organisation- information systems.

[09] UK retail sales data suggests interest rates have peaked and may be lowered

But some warn that price pressures are still present and that seemingly benign August inflation data may reflect seasonal factors, rather than a real deceleration in consumer spending.

The Confederation of British Industry's distributive trade survey for August, published Thursday, showed that a net 22% of retailers said sales were above year-ago levels in August, while 32% had expected to see sales rise.

Retailers continued to regard business as above average for the time of year, however.

Alastair Eperon, chairman of the survey panel, blamed the growth slowdown on high interest rates and the strong pound.

His view was echoed by Sonja Gibbs, an economist at Nomura International in London, who said the survey supports the view that the need for further rate rises is 'extremely limited'.

But some onlookers were sceptical, arguing that the growth slowdown might prove to be a temporary blip, rather than evidence of a turnaround in sentiment.

'I'm not sure it's not better to gloss over these figures and wait for next month,' said James Barty, UK economist at Deutsche Morgan Grenfell in London. 'We had a very hot and humid August here in Britain, which has surely dampened retail sales, and we expect to see sales rebound in September.' The survey showed that 25% of retailers expect prices to rise in the fourth quarter, compared with 38% in the third quarter and 33% in the second.

Another economist suggested that the August slowdown showed that the impact of windfall gains from the demutualization of building societies was diminishing. He noted that growth in sales of household goods fell to 5% in August from 52% in July after receiving a boost from windfalls in preceding months.

'It remains an open question whether the windfall effect is finished, though,' he added. 'I expect windfalls to support very strong sales in the run-up to Christmas.'

Catherine Evans, Dow Jones Newswires, London

[10] French Socialist government supports partial privatisation of Air France

A spokesman for French Prime Minister Lionel Jospin said the government supports the position of Transport Minister Jean-Claude Gayssot on selling a part of Air France. The spokesman said, 'Gayssot has expressed the opinion of the government.'

Gayssot reaffirmed Tuesday his hostility to the idea of privatising Air France, but said he's not keen on maintaining the status quo, either.

Gayssot is understood to be considering a middle-ground solution in which Air France's capital would be opened up to outside investors such as its commercial partners Delta Airlines or Continental Airlines, while the state will retain a majority interest.

The spokesman also said no decision has been made regarding the future of Air France Chairman Christian Blanc, whose mandate comes up for renewal Sept. 12.

Blanc has said he wouldn't seek to renew his mandate if Air France isn't privatised.

The spokesman wouldn't comment on whether or not Air France's new board members would be chosen at next week's cabinet meeting, ahead of Air France's Sept. 12 board meeting.

The government spokesman was speaking on condition of anonymity after a bi- weekly meeting between Jospin and his cabinet.

The spokesman didn't provide any details on the meeting which focused on France's 1998 budget.

Rocard, himself a Socialist, said in an interview with Europe 1 radio that the Communist Party, which opposes a privatisation, was trying to force the government to keep control of the airline in the name of ideology.

Rocard said a restructuring to meet modern competitive requirements was essential and also said a privatisation was required because a previous French government had promised one to the European Union in exchange for authorisation for a massive recapitalisation of the airline.

He said international consolidation in the industry meant Air France had to adapt so it could be more nimble and make alliances with other airlines.

'We are in a world-wide economic war... We have to admit that in air transport, Air France is too small. It must make alliances.'

[11] Sema shows 32% gain in first-half profit

First-half pretax profit rose to £26.2 million ($41.7 million), despite the cost of high sterling levels. Some impact had been expected, since over a quarter of turnover comes from France alone, and the group said first-half profit growth would have jumped to 46% if exchange rates hadn't risen.

'Sema always described this as a year of consolidation, and the results are bang in line,' said UBS's Ross Jobber.

However, the Anglo-French information technology group remained tight- lipped on the details of its planned move into U.S. markets.

The group said its underlying rate of growth in turnover was around 16% - a figure broadly in line with the overall growth rate of the IT services market estimated by rival CMG earlier this week. However, actual reported turnover rose 31%, helped by the three businesses which Sema has purchased over the last year.

France Telecom's systems integrator Telis, acquired last year, helped boost Sema's previously-declared move into the telecoms sector. With a 91% year- on-year growth rate, this part of the business now accounts for around 17% of total sales and has superseded defence in a planned move away from slower-growth markets.

The next key move for Sema will be into the US now that it has rearranged shareholdings to stop US authorities classing it as a subsidiary of French bank Paribas. This had severely limited the types of business that regulators would let it conduct. However, Director of Communication Marie- Claude Bessis said Sema would take its time: 'I don't think we will acquire a company by the end of the year,' she said.

Sema is currently working on its strategy, and expects to have more to say next year.

[12] German industrial orders gain a healthy 6.4% on the year

The data, which is adjusted for seasonal influences, shows that German factory orders from abroad rose 1% while domestic orders were up 0.6%.

Orders also climbed 6.4% in July from July 1996, the ministry said. Year-on- year orders data are price adjusted but not seasonally adjusted.

The figures are slightly higher than analysts' expectations. Manufacturing orders were estimated to have risen a price- and seasonally adjusted 0.5% in July from June, and 6.0% on the year, according to a survey by Dow Jones Newswires.

The ministry pointed out that the growth in orders from abroad increased 1% on the month, while domestic orders increased 0.5% during the period.

Breaking down the seasonally adjusted figures, western German orders rose 0.8% in July from June, while manufacturing orders in eastern Germany rose 4.6%, the ministry said.

July data are preliminary and may be subject to revision.

[13] Elf Aquitaine shows 48% jump in first-half earnings

But the company wouldn't forecast earnings for the full year.

Elf said net profit in the first six months jumped to 5.26 billion French francs ($863 million) from 3.56 billion francs the year before. The profit figure outpaced the company's own forecast of a 35% rise.

Chairman Philippe Jaffre attributed the gain to the level of crude-oil prices and 'especially the rise in the dollar rate'.

Chief Financial Officer Bruno Weymuller said July and August business activity had been 'good,' but because of the changing dollar and crude price he wouldn't forecast total 1997 earnings.

He did say that Elf will provide a five-year forecast of the company's profit goals before the end of 1997.

The results fall in line with analysts predictions of a strong first half for France's two main oil companies, due partly to a higher dollar and the depth of past recession. On Tuesday, Elf's smaller rival Total reported a 51% rise in net income.

Attractive European margins fuelled by the dollar helped the company more than double its earnings from refining, marketing and trading to 848 million francs, while income from exploration and production rose 26 percent to 9.16 billion.

[14] Ahold earnings surge 71% on strong US results

President Cees van der Hoeven said the 'second quarter results once again showed sustained, healthy growth.' He added that he was pleased with the performance, but said he was aware that very much remains to be done.

Looking ahead to the full year, van der Hoeven said 'we expect net earnings for 1997 as a whole to be significantly higher than last year, and that earnings per share will also show considerable growth.'

Quantifying the forecast, van der Hoeven said the group expects overall net profit growth of between 30% and 45% and a 12% to 20% increase in net earnings per share.

But he added that the 'forecasts do not completely take into account the positive effects of the higher dollar, which rose so clearly against the guilder in recent weeks. All in all we are on track for another outstanding performance this year.'

In overall U.S. operations, the company said, sales increased 56% to $3.3 billion, with all four units making higher contributions to the bottom line.

[15] Japanese shipping lines face US sanctions as negotiation deadline passes

The US Maritime Administration had earlier warned that the sanctions would take effect today at 0400 GMT in the absence of an agreement. 'We continue to believe the solution to this problem is entirely in Japan's hands,' acting Maritime Administrator John Graykowski said. Three major Japanese shipping lines, Nippon Yusen KK, Kawasaki Kisen Kaisha and Mitsui OSK Line, stand to be fined $100,000 every time a vessel owned or operated by them enters a US port. The US Federal Maritime Commission claims that Japanese port practices are restrictive because they require shipping companies to conduct 'prior consultation' with the Japan Harbour Transportation Association, a group representing stevedore companies, on matters such as route and schedule changes. The penalties are the first US trade sanctions against Japan since the imposition of semiconductor sanctions in 1987, officials at Japan's Ministry of International Trade and Industry and the transport ministry said. Anti-dumping tariffs are not counted as trade sanctions, they said.

The FMC had originally planned to impose the sanctions on April 14, but extended its deadline to give more time for negotiations. Japanese and foreign carriers met with Transport Ministry officials 37 times since July 21 to try to find a solution, the US embassy in Tokyo said. If the Japanese ministry does agree with the shipping associations, it will still have to reach agreement with the Japan Harbour Transportation Association on a settlement that would cause the US to lift the sanctions. The Japanese government's reaction to the sanctions was muted, perhaps because of Tokyo's desire to avoid fuelling trade frictions with the US at a time when Japan's bilateral trade surplus is growing rapidly.

By Kenneth McCallum, Dow Jones Newswires, Tokyo

[16] Corporate and Economic Briefs

German June corporate insolvencies rose 26% from the year-ago period, the Federal Statistics Office in Wiesbaden reported. 'The strong increase is out of step with the development in the past months, which pointed more to a stagnation,' the agency said. A spokesman said the agency was 'completely surprised' and couldn't provide any specific reason for the big rise. 'We always warn that the data for a single month aren't as reliable as something more oriented on the long term,' the spokesman said. 'There was also great divergence among developments in individual states.'

Producer prices in the Netherlands rose 3.0% in July from the same month a year ago and were up 0.5% from June, the Central Bureau for Statistics reported. The increase was caused mainly by higher oil prices, the CBS said.

Denmark's July seasonally-adjusted unemployment rate was 8.1% of the work force, slightly up from June's 8.0% the national statistics agency reported.

Italy's consumer price index excluding tobacco was unchanged in August over July and was up 1.5% over August 1996, Istat reported. When tobacco prices are included in the index, prices were also unchanged on the month and up 1.5% from August 1996. Market expectations had been for a rise in inflation of 1.5% to 1.6% on the year. The index excluding tobacco is comparable to consumer price data released by prior to January, 1996. That month, Istat changed both the categories and the weightings of the index.

Sales of small commercial vehicles in Italy rose 14.62% in July, according to figures released by the national association of car makers, Anfia. In the first seven months, commercial vehicle sales dropped 1.99% from same year-earlier period, Anfia said. Commercial vehicles are small trucks and buses with a weight of up to 3.5 metric tons.

Oil-rich Norway's economy is expected to grow strongly again this year and next, the government statistics office said. In a third-quarter forecast, Statistics Norway revised upwards the 1997 gross domestic product growth to 3.4% from 3.1% in a similar outlook in June. The GDP outlook for 1998 was revised down to 3.8% from 4.2%. Mainland GDP, which excludes the booming offshore oil and gas sector, was seen growing 2.9% this year, up from 2.8% in the June forecast. Mainland GDP growth for 1998 was seen at 2.7%, down from 3.2%.

Retail sales in Switzerland recovered strongly in July from a sharp drop a month earlier, the Swiss statistics bureau reported. Nominal retail sales rose 3.1% in July from a year earlier after a decline of 1.8% in June. On a real basis, retail sales rose 2.7% from a year earlier. The gain in July spread across the spectrum of products, the bureau said. For the first seven months, nominal retail sales rose 0.2% from the same period of 1996, while real sales fell 0.3%.

KLM Royal Dutch Airlines' August load factor rose to 80% from 77% last year. KLM said it flew 5.3 million revenue passengers kilometres in August, a 14% increase from a year ago. Passenger load factor was 85%, compared with 81% in August 1996. In April-August, total load factor was 79%, up from 75% a year earlier, KLM said. KLM Royal Dutch Airlines' August load factor rose to 80% from 77% last year. KLM said it flew 5.3 million revenue passengers kilometres in August, a 14% increase from a year ago. Passenger load factor was 85%, compared with 81% in August 1996. In April-August, total load factor was 79%, up from 75% a year earlier, KLM said.

Finnish engineering group Metra's unit Waertsilae NSD has singed a letter of intent to extend cooperation with US Cummins Engine, Metra said. The two companies are to extend their current cooperation on heavy diesel engines to include design, marketing and servicing of power stations, as well as marine and industrial applications for such engines. The two partners currently have a 50/50 joint venture which constructs and builds two series of heavy engines. The new joint venture will be 50/50 owned and will manufacture, service and market heavy diesel engines globally through Waertsilae's and Cummins' sales channels.

Laird Group's reported pretax profit in the first half of 1997 roughly unchanged from year-earlier levels at £34.7 million ($55.5 million), after sterling strength cut £4.1 million from the figure. However, stripping out sterling's rise, underlying profits grew 18% before new business start-up costs of £2 million. The service industries arm, Fullarton, was a main driver behind the rise, increasing profits by 47% to £12.7 million. Earnings per share rose to 18.2 pence from 16.8 pence, and the dividend increased to 5.4 pence from 4.9 pence.

Enterprise Inns said it acquired 94 pubs from brewing and leisure group Whitbread for £9.4 million ($15 million). The pubs, which sold about 10, 500 barrels of Whitbread supplied beer in the year through February, have a net asset value broadly in line with the consideration, Enterprise said. Closing is expected Sept. 17. The outlets formed part of the Whitbread Pub Partnership estate and are currently run as leases or tenancies. Enterprise Inns will incorporate the pubs into its existing divisional organization.

Hillsdown Holdings posted first-half profits at the upper end of analysts' forecasts, stating the performance from its housing unit had been 'excellent,' but dimmed by an outbreak of fowl pest which hit the poultry division. Pretax profit rose to £56.9 million ($91 million) from £43.7 million, on sales of £1.51 million, down from £1.55 million a year earlier. Chairman John Nott said the group was 'defining more closely' its core operations - which he said could lead to further disposals.

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