European Business News (EBN), 97-09-11

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Page last updated Thu, September 11 6:45 PM CET

CONTENTS

[01] BTR to shed businesses to finance growth in core activities

[02] Bundesbank members say inflation currently is no problem in Germany

[03] BNP earnings surge 75%, surprising analysts and the bank

[04] European stock markets fall, tracking Wall Street

[05] Renault first-half profit leaps to $274 million

[06] Japanese economy grows at its slowest pace in 23 years

[07] US current account deficit narrows on strong exports of domestic goods

[08] Coats Viyella posts poor first-half results and issues warning for full year

[09] Centrica impresses investors, despite reporting a widening first-half loss

[10] British Aerospace reports a 29% rise in first-half profit to $441 million

[11] Roche Holding plans overhaul following takeover of Corange

[12] Vickers to sell medical division to prop up core businesses

[13] Bank of Tokyo-Mitsubishi to report a first-half loss of $7.39 billion

[14] Rio Tinto shows small earnings gain

[15] Minorco posts 7% rise in first half profit

[16] Corporate and Economic Briefs

[01] BTR to shed businesses to finance growth in core activities

The UK industrial conglomerate said it hopes to sell all its non- engineering businesses over the next year. These include all packaging, materials, building products and polymerics operations.

BTR plans to use the sale proceeds to grow its core engineering operations through acquisitions and increased capital spending. It is also considering a share buy back 'or such other method of returning value as appropriate.' The majority of its disposal program should be completed by the end of 1998.

Commenting on the company's current trading performance, Chief Executive Ian Strachan said he expects profit performance in the second half to be better than in the first half.

The company said its profit of £608 million was before interest, tax, exceptionals and the impact of exchange rate movements. It said pretax profit before exceptionals, but after interest and exchange rate changes, was £534 million, compared with £605 million a year ago.

Strachan said in a media briefing that the company is accelerating its transformation into a focused engineering group. 'We have determined this is the right way to go to add value to shareholders,' he said. 'The core businesses have higher returns and higher growth prospects. We believe this will accelerate the delivery of value to shareholders,' he added.

BTR said earnings in the first half were hit by the strength of sterling during the period and 'difficult' conditions in certain markets.

The chief executive said a 'significant' proportion of returns from asset sales will be returned to shareholders, possibly in the form of a share buyback.

'But the extent of that will depend on whether there are attractive acquisitions to be made or not,' he said. In the profit statement, BTR said earnings at its automotive division fell 9.2% to £69 million ($110 million) in the first half.

'In overall terms, difficult trading conditions in Australia offset positive performances in the sealing systems and anti-vibration businesses, ' the company said.

[02] Bundesbank members say inflation currently is no problem in Germany

Hans-Juergen Krupp, president of the regional central bank in Hamburg. said there aren't currently any inflation dangers in Germany, and that the Bundesbank's present policy has been very successful.

But he declined to say how long the Bundesbank would stick to its current interest rate policy. Separately Chancellor Helmut Kohl said he saw Germany's economy growing faster than the government had previously forecast. 'I am pretty sure that growth will be near to three percent,' Kohl told the opening reception of the Frankfurt international car show. Kohl said growth would mainly be driven by exports and said despite weak domestic growth there was reason to be optimistic.

Otmar Issing, the Bundesbank's chief economist, concurred that he doesn't see any reason for German inflation to further worsen in the next six months.

And he noted that the Bundesbank doesn't make its interest rate decisions based on short-term inflation data. 'The Bundesbank's monetary policy isn't oriented toward current inflation,' he said.

But issing warned that Germany's period of low inflation is over and that the country's price development trend has turned around.

'Unfortunately we have seen the turning point in German inflation, and the period of low German inflation is over,' Issing said, speaking at the European Summer Institute in Berlin.

The Bundesbank is concerned about the inflation turnaround, which is 'not dramatic' but is 'substantial,' Issing said. However, the current inflation rate is important inasmuch as it plays a crucial role in the public perception, he noted. In the six months through August, German inflation rose an annualized 2.2%, up from 1.7% in the six months through July. In August alone, German inflation rose 2.1% on the year, up from July's 1.7% year-on-year rate.

He added, however, that a further slowdown in M3 money supply is still 'advisable.' M3 is the Bundesbank's favoured indicator of future inflation trends.

Turning to Europe's planned 1999 currency union, Issing said he is concerned about the possibility of a disruption in the financial markets in the period between the spring 1998 selection of currency union participants and the Jan. 1, 1999, start date.

'Speculation in the financial markets during that period could lead to foreign exchange rate turbulence and may even jeopardise the entire EMU project,' he said. In order to defuse any speculation opportunity, Issing said, it would be best to set conversion rates for the euro at the same time participating countries are selected.

[03] BNP earnings surge 75%, surprising analysts and the bank

The bank, one of France's `big three' also hinted that it might be interested in acquiring CIC when it is privatised.

Net profit in the period jumped to 3.04 billion francs ($505.1 million).

That profit surge beat the best predictions of investment analysts, gave the shares a lift and prompted BNP chairman Michel Pebereau to admit that even he was a little surprised by the pace of the bank's rise since it left state ownership in 1993. Pebereau noted that after having returned to break- even last year, BNP's branch network in France had returned to good profit levels.

'This is an incontestably good result, one which we had not been countenancing at the time of our privatisation in the first half of 1997,' Pebereau told a news conference. 'We are in advance on our game plan.'

BNP attributed the gains to good results in all of its operating units due to favourable market conditions. The bank noted that first-half results benefited from a favourable market climate, a positive result from debt management and a strong dollar rise.

But the bank conceded that conditions in the second half aren't likely to permit the bank to duplicate its first-half performance. Despite this, and barring unforeseen circumstances, BNP said results for the full year should also see a significant rise.

'We will continue to reduce the number of employees in France by about 1, 000 per year,' Pebereau said.

Asked whether BNP was again interested in buying the soon-to-be-privatised CIC banking group, Pebereau said, 'we'll have to look at the terms and conditions of the sale...but CIC continues to have a fine regional banking activity.'

In November 1996, then-Finance Minister Jean Arthuis cancelled the planned privatisation of CIC after the privatisation commission found that only BNP's offer for CIC met the requirements set by the government. But because there was only one solid offer and because of strong opposition by local authorities and bank officials to the sale, Arthuis suspended the sale.

Last week, current French Finance and Industry Minister Dominique Strauss- Kahn said GAN and CIC would be 100% privatised 'in coming weeks.'

Asked whether a BNP offer for CIC could be made in conjunction with Germany's Dresdner Bank AG, Pebereau said the two banks' agreement only covers international activities, but he didn't categorically rule out a joint bid. BNP and Dresdner have an 'exclusive and equal' agreement on international operations which means they will each offer the other a 50%- stake in any new international activity to be launched. They also consult with each other on international strategies.

[04] European stock markets fall, tracking Wall Street

The FT-SE 100 has been lanaguishing around its lowest levels of the day, while in Frankfurt, stocks were sold off, extending losses into the second straight session, after being hit by a barrage of negative factors.

Frankfurt traders cited fresh concerns over possible negative consequences for the German market after the turmoil in Southeast Asian currencies and stock markets rippled through to Wall Street.

In Paris, shares were lower, but buoyed by a surge in bank stocks following some good earnings reports.

But despite Wall Street's recent slump, US analysts say blue-chip stocks are due for a rebound, if only on a technical basis.

Those blue-chip names have been haunted throughout the month of September by worries that the strong dollar will hurt multinationals' currency translations, and that episodes of economic distress in Southeast Asia will cut into foreign sales of US goods.

In fact, this third month of the quarter has become a time of distress, as investors start to size up the outlook for the upcoming earnings reporting season. Analysts indicate that the worst is not over. If recent trends hold, some 300 companies will issue earnings forecasts.

According to First Call, which tracks earnings data, fewer than 100 have done so. That leaves a lot of time, and a lot more anxiety, to get beyond before what has come to be called the confession period ends.

[05] Renault first-half profit leaps to $274 million

Car maker Renault said its first-half 1997 profit rose sharply to 1.67 billion francs ($274 million) from 158 million francs a year earlier as auto sector losses narrowed and the finance division continued to contribute profits. Renault, which posted a loss of 5.2 billion francs in 1996 due to major restructuring charges, said it expected to turn to a net profit in 1997, not including capital gains. Renault expects the automobile division to continue to benefit from an improved passenger car market in Europe seen in the first part of the year. The French market's downturn will continue, however, with 1,750,000 in unit sales expected for the year.

Total operating profit turned positive in the first-half of 1997 to 364 million francs from a loss of 225 million francs a year earlier.

The auto sector had an operating loss of 162 million francs compared with a loss of 911 million francs a year earlier. The company attributed the improvement to better product mix, a favourable trend in exchange rates and progress from the cost-cutting program began in 1996.

Renault also said that the 2.8 billion francs provision taken in 1996 to account for the closure of the Vilvoorde, Belgium plant will be sufficient to cover future costs.

Unlike the auto sector, commercial vehicles turned to an operating loss of 216 million francs after having posted an operating profit of 26 million francs a year earlier. That loss was due mostly to a fall in billings in the European branch and a price war in Europe that eroded margins.

The finance division continued to grow as loans outstanding increased, pushing operating profit up 12% to 742 million francs from 660 million francs a year ago.

[06] Japanese economy grows at its slowest pace in 23 years

Japan said its economy shrunk by a surprisingly large 2.9% in the April- June quarter, or an annualised 11.2%, according to the government's Economic Planning Agency (EPA), mainly due to a drop in private consumption after an April 1 hike in the national sales tax.

The 2.9% fall in the second quarter was a sharp turnaround from January- March, when GDP had been 1.6% bigger, a 6.6% annual growth rate.

This was the first time GDP had contracted from the prior quarter since April-June 1996 and marked the worst shrinkage since the first quarter of 1974, when Japan's economy, reeling from the first Middle East oil shock, declined 3.4%.

Real GDP discounts inflation and, by excluding often volatile net inflows of income from abroad, is considered a more accurate picture of Japan's economy than gross national product, the total output of Japanese goods and services.

Compared with the previous quarter, real GNP declined 3.0% in the second quarter, after expanding 1.5% in the first quarter.

The figure for quarterly growth was worse than the most pessimistic of forecasts by economists, who had on average predicted that real GDP for the April-June period would contract 1.4% from the previous quarter. Some analysts said the latest gloomy data may renew a call for the government to produce an economic stimulus package to spur domestic demand.

Shimpei Nukaya, deputy director of the Economic Planning Agency, which released the data, said the April 1 increase in Japan's consumption tax to 5% from 3% and other tax changes were the biggest factors weighing on the economy during the period.

The government also terminated 2 trillion yen ($17 billion) worth of special annual income tax cuts, which had been in place for two years.

Nukaya said the despite the second quarter figures, Japan's economic recovery is continuing and is expected to gather momentum in the second half of the year. 'Although the recovery has slowed, the overall picture hasn't changed,' he said. He did acknowledge, however, that the decline was larger than expected and that it will be difficult to achieve the official government GDP growth rate forecast of 1.9% for the fiscal year ending March 31, 1998.

Reflecting the tax increase, private consumption fell 5.7% from the previous quarter to 278.79 trillion yen ($2.35 trillion).

While economists expressed surprise at the scope of GDP contraction, some saw it as an anomaly, coming as it did after an unusually strong first quarter. 'This is a temporary development. It's extremely unlikely we'll see another 5.7% drop in personal consumption,' said Andrew Shipley, an economist at Schroders Japan.

'I don't think the back of the recovery has been broken,' he added.

A rise of 4.6% in private consumption had been the main engine behind the first quarter's performance as consumers rushed to buy goods before the tax increases. Consumption comprises about 60% of GDP. Exports were a bright spot, growing 6.4% for the period, much faster than the 0.7% increase in the first quarter. Imports were down 2.0%.

Japan's current account surplus came to 2.6% of GDP in the period. GDP stood at 474.23 trillion yen ($3.99 trillion). A ratio of 2.5% is widely seen as an upper limit for containing trade friction with the United States, which has said Japan is trying to export its way out of recession while failing to ease barriers to foreign products. 'The ratio will definitely raise the issue of Japan's trade surplus at the G-7 meeting,' said Akiyoshi Takumori, senior economist at Sakura Securities, referring to a meeting of top finance officials from Group of Seven nations next week in Hong Kong.

[07] US current account deficit narrows on strong exports of domestic goods

In the three-month period from April through June, the deficit fell 2.4 percent to $39.03 billion from a revised $39.97 billion in the first this year. Wall Street analysts had forecast a $38.1 billion second-quarter shortfall.

A decrease in the deficit on goods and services more than offset an increase in the deficit on investment income, the Commerce Department said.

The current account is the country's most important trade statistic because it includes trade not only in goods and services but also measures investment flows between countries as well as government grants and other payments sent overseas by private citizens.

The U.S. registered a $148.18 billion deficit in its balance of payments on the current account in 1996.

The trade figures included in the current account data show that U.S. merchandise exports, excluding military goods, totalled a seasonally adjusted $171.49 billion in the second quarter, up from an adjusted $162.53 billion in the preceding quarter.

Imports totalled an adjusted $218.39 billion in the latest quarter, up from $212.31 billion in the preceding quarter.

That produced a deficit on merchandise trade of an adjusted $46.90 billion, compared with a deficit of an adjusted $49.79 billion in the preceding quarter.

Foreign assets in the United States increased $151.65 billion in the second quarter, down from a $182.24 billion rise in the first quarter.

Net foreign purchases of U.S. Treasury securities and U.S. currency flows fell to $50.82 billion in the second quarter from $51.29 billion in the first quarter.

The decline in net foreign purchases of Treasury coupon securities was mainly the result of a drop in purchases by the United Kingdom and a shift to net sales from international bond funds based in the Caribbean, Commerce said.

Net foreign purchases of U.S. securities other than Treasurys was a record $51.54 billion in the second quarter, up from $38.82 billion in the first.

[08] Coats Viyella posts poor first-half results and issues warning for full year

The poor results, as well as a lack of ideas from the company on how to boost shareholder value, weighed heavily on Coats's shares.

'Life is not good for the company,' BZW Securities analyst Liz Crouchman said.

Coats said pretax profit at the interim stage was £44.4 million ($70 million), up from £41.1 million the year earlier.

Analysts, who had forecast profit of around £50 million, had been anticipating some disappointment on the back of sterling's strength but few expected the impact to be so dramatic.

One major London broker promptly cut its full-year profit forecast for the group, and another was said to be considering a profit downgrade.

Coats warned that 'second-half reported operating profit before reorganisation costs is unlikely to exceed that for the same period last year.'

Sterling strength reduced profit by £4.6 million in the first half, the company said, though investors make take some encouragement from news that the currency's impact is likely to lessen in the second half.

The stock is unlikely to win back the market's favour until the group shows fundamental improvements, particularly in clothing division, analysts said. But Coats Viyella said that little, if any, of the profit shortfall seen in the first half in contract clothing - the business that makes clothes for retailers under their own labels - will be clawed back in the second half, and it sees a further decline in the contribution from Berghaus, its Russian apparel brand.

Contract clothing losses widened to £8 million from £2.4 million, while fashion retail profit slipped to £3.5 million from £9.2 million.

Analysts had also been hoping for a radical move by new Chief Executive Michael Ost, such as a break-up, dividend cut or possibly a share buyback. Instead, they heard Ost talk of more restructuring to come.

BZW's Crouchman said restructuring has not created shareholder value and with a break up valuation of 150 pence to 170 pence - well above the current share price - that option would be a logical option.

Analysts are also concerned at the extent of restructuring at the company and the possible lack of benefits, particularly since Coats' won't provide any timescale for its already sketchy plans. _Emma Dandy and Stephen Jack, Dow Jones Newswires, London_

[09] Centrica impresses investors, despite reporting a widening first-half loss

The results showed a pretax loss of £216 million ($342.5 million) widening from last year's interim loss of £53 million. The widening losses were blamed on warmer weather, but the latest numbers were less important to London's financial district than Centrica's apparent willingness to take control of its woes.

Some of those problems - which inflicted massive harm on the credibility and performance of British Gas before that company split in two in February to form exploration and production company BG and Centrica - have already been sorted out, the company said.

For instance, customer service, especially the group's billing systems, has been substantially improved, and progress is being made in resolving the group's exposure to 'take-or-pay' contracts, with Chief Executive Roy Gardner saying he expects three more of these contracts to be renegotiated at more favourable prices within six months.

'The company is emerging into the light,' said Panmure Gordon's sector expert Liz Butler, who maintains a strong buy stance on the stock.

However, Centrica admitted its customer-service enhancements were coming off a low base - 'unacceptably low levels' last year, when it was still part of British Gas - and one analyst who remains bearish on the stock pointed out that improving the billing system is only a one-time fix.

Still, as a result of the renegotiations of take-or-pay contracts so far, Centrica expects 'substantial' decreases in its prepayments on those contracts, which were valued at £511 million at the end of 1996.

Solving these dual problems has helped the group staunch the haemorrhage of cash. Operating activities generated £418 million in the half, up a whopping £651 million on last year.

One analyst who believes the company's share price is overvalued said that, nevertheless, the company is still making the right moves.

'All the objective set out at the time of the demerger are being delivered, which is good for the group's management,' Societe Generale Strauss Turnbull analyst Irene Himona said.

However, the obstacles ahead for the company remain sizeable, she said. The main problem, all analysts agreed, was the opening up of the domestic gas market to competition next year.

Himona reckons Centrica may lose between 20%-25% of its business when that happens, and she says the company's attempts to make up the shortfall by entering financial services or the electricity market, are not capable of filling the shortfall.

Panagiotis Pylas, Dow Jones Newswires, London

[10] British Aerospace reports a 29% rise in first-half profit to $441 million

The interim dividend was raised 25% to 7.82 pence a share, in line with analysts' forecasts, and BAe said orders stood at a record £19.5 billion at the end of June, up from £19.4 billion at the end of 1996.

Sir Richard Evans, Chief Executive, said: 'The business is performing well and to plan. The order book is good within both defence and commercial aerospace and under pins our confidence in increasing our dividend per share for the half year by 25%.'

However, as previously announced by the company, it took a charge of £250 million for the cessation of its JetSteam 41 aircraft, which combined with other exceptional items pushed the company into the red, for a post exceptional loss of £70 million against £199 million a year ago. Evans had nothing new to say on consolidation in the European defence industry other than BAe is striving to overcome barriers to further progress.

'Meanwhile we will continue to drive value through today's business operations to enhance the relative economic interests of our shareholders in future consolidation,' said Evans.

BAe said the defence business showed a strong performance in the period with profit before interest up to £291 million from £255 million last year. The order intake in the first six months was 3.175 billion to put the total book value at £12.1 billion at the half year stage against £11.7 billion at the end of December.

'Sales continue to benefit from rising military aircraft activity including continuing deliveries of Tornado aircraft to Saudi Arabia,' said BAe.

The company said all seven Eurofighter development aircraft are now participating in the flight development program and approval for funding of the next phase of the program is well advanced.

[11] Roche Holding plans overhaul following takeover of Corange

The Swiss pharmaceutical maker said that orthopaedics and prosthesis maker DePuy will likely become a fifth business unit alongside the existing pharmaceuticals, vitamins, fine chemicals and flavours divisions.

Boehringer Mannheim's therapeutics operations are expected to be integrated into the pharmaceutical division, while the German company's diagnostics business will significantly strengthen Roche's diagnostics division. The latter will be renamed Roche Boehringer Mannheim Diagnostics.

A company spokesman said that Roche hopes to have detailed its plans by the time US and European regulators approve the deal. The approval process should be completed 'in the next few months,' he said.

Roche's due diligence review of DePuy and Boehringer Mannheim is close to completion, the company said.

[12] Vickers to sell medical division to prop up core businesses

The U.K. engineering and defence company said first-half pretax profit plummeted to £15 million ($23.2 million) from £31.8 million the year before.

Chairman Sir Colin Chandler said that after the disposal of the medical division the company will be able to concentrate on its core businesses.

'Our increased focus on the prime businesses of automotive, defence and propulsion technology will over time further strengthen their market positions and substantially enhance their prospects in the years ahead,' Chandler said.

He said margin pressure at Rolls-Royce Motor Cars will be compensated by the introduction of new four-door models, for which is strong market demand is anticipated.

He said the defence division is pursuing export prospects, and the unit as a whole is seen continuing its steady performance.

'Potential demand is very encouraging. We are confident that our land defence systems business is well placed as a significant player to take advantage of the opportunities in the expected consolidation of the European land defence systems industry,' Chandler said.

He said looking back over the first half of the year the company's performance was influenced by margin pressures in the automotive grouping and weak market conditions in the medical division, partially offset by improved performance in Defence Systems and Propulsion Technology.

[13] Bank of Tokyo-Mitsubishi to report a first-half loss of $7.39 billion

Industry analysts said that while Japan's biggest commercial bank would suffer in the short term, it would become better prepared in the long term to deal with fiercer competition and new business opportunities stemming from Japan's 'Big Bang' financial deregulation over the next few years.

Bank of Tokyo-Mitsubishi forecast a parent pretax loss for the six months ending Sept. 30 of 880 billion yen ($7.39 billion), a far remove from its previous forecast of a pretax profit of 50 billion yen. For the full fiscal year ending March 31, 1998, the bank forecast a pretax loss of 730 billion yen.

Analysts also said Bank of Tokyo-Mitsubishi's move would put its Japanese rivals under pressure, prompting other strong banks to consider following suit while leaving weak banks, which lack the financial cushion to undertake aggressive write-offs, increasingly uncompetitive. 'The fact that (Bank of Tokyo-Mitsubishi) is moving so aggressively has to be welcomed because it puts it back in financial condition in the long term,' said Brian Waterhouse, a senior bank analyst at HSBC James Capel.

Waterhouse believes that the bank's share price could get a lift from the news in Tokyo trading tomorrow. Bank of Tokyo-Mitsubishi shares closed 30 yen lower at 2,130.

The bank said its credit expenses for the full fiscal year ending March 31, 1998, which are related mainly to dealing with its bad debts, would total 1.120 trillion yen - 1.076 trillion yen in the first half and 44 billion yen in the second half.

Expenses include as much as 100 billion yen in financial assistance to subsidiary Nippon Trust Bank.

By James Paradise AP-Dow Jones

[14] Rio Tinto shows small earnings gain

The world's biggest miner said net profit rose to $595 million in the half for the half-year ended June 30 and said the modest rise in earnings hid a much improved performance among its major commodities of copper, aluminium, iron ore and coal.

Rio Tinto executive chairman Robert Wilson said that although continued strong growth is expected from China, recent turmoil in the 'Tiger' economies of south-east Asia 'casts a bit of a shadow,' the chairman said. Consumption in these countries, while still relatively modest, has been growing rapidly, he noted.

Wilson said the 8% rise in net earnings was 'satisfactory,' especially as there were lower so-called non-operational credits than in the first half of last year.

'We also implemented an important restructuring of the group along product lines. This, together with other measures taken in the 18 months since the merger, will yield substantial savings,' he said.

Wilson said the general outlook is for global economic growth to be 'sustained at a satisfactory rate into 1998 and for continued strong demand for minerals and metals.'

Global economic growth during 1997 has been stronger than expected at the start of the year, 'with consequent benefits' for these markets, he said. Wilson said U.S. growth will 'surely ease back at some point, but may well be balanced by faster growth in Europe and Japan, where monetary policies have been loosened.'

Chief Executive Leon Davis said most of the 'significant cost savings' achieved from a corporate restructuring along product lines aren't reflected in the group results because of associated one-off costs.

'When all the reorganisation measures taken since the merger are complete by the end of this year, the on-going annual cost savings will amount to about $250 million before tax,' Davis said.

[15] Minorco posts 7% rise in first half profit

Minorco attributed the performance to generally satisfactory operating performances across the group, higher copper and zinc prices, and successful cost-cutting.

Hank Slack, the group's chief executive, said 'we did better than we thought we would and produced our best ever first half net earnings.'

He told analysts in London and Johannesburg that expectations are for the group's commodities to 'operate in similar ranges in the second six months.'

Minorco's sales rose to $3.078 billion from $2.770 billion and operating earnings increased to $408 million from $342 million.

Net earnings per share before exceptional items grew to 95 cents from 89 cents and the interim dividend increased to 22 cents from 21 cents.

The base metals division was the group's star performer increasing its operating earnings by 274% to $73 million.

Tony Lea, the director responsible for base metals, said the Mantos Blancos operation in Chile produced $52 million of the profit from base metals, mainly due to receiving a much higher copper price of 116 cents per pound compared with 97 cents per pound in 1996.

He said restructuring of the Hudson Bay copper and zinc operation in Canada had been successful and enabled this operation to move from the red into profit.

Commenting on the projects that Minorco is currently developing, director Guy Young said the Collahuasi copper project in Chile is on schedule to come on stream in mid 1998.

'The infrastructure is 60% complete and the engineering 90% complete and there are 8,500 people on site,' he said.

He said the Cerro Vanguardia gold project in Argentina is also on schedule to begin production in mid 1998.

Lisheen, Minorco's 62%-owned zinc and lead project in Ireland, is expected to begin commercial production in mid 1999.

Young said the Loma de Niquel nickel project in Venezuela 'has been given the green light' and should begin production at the end of 1999.

Minorco CEO, Hank Slack, said the group's 50/50 joint venture with Anglo American to participate in the international coal business 'is something we are keen on developing but we do not expect significant earnings until about 2002.'

[16] Corporate and Economic Briefs

French media and communications group Pathe said that its net profit in the first-half of 1997 rose 16% to 153 million francs ($21.8 million) from 132 million francs a year earlier, helped by increased profits in television. Overall EBITDA (earnings before interests, taxes, depreciations, and amortisation's) fell to 251 million francs from 325 million francs a year earlier. Pathe was spun off from Chargers in February of 1996.

Hungarian consumer prices rose in August by 0.2% on the month and by 18% from August 1996, the Central Statistics Office (KSH) announced. In the first eight months of 1997, consumer prices were on average 18.5% higher than in the same period last year. Average annual consumer price inflation stood at 23.6% last year. In August 1996, consumer prices increased by 0.3% on the month and by 23% on the year.

Credit Commercial de France said that its first-half 1997 profit rose 27% to 870.2 million francs ($143.6 million) from 686.6 million francs, as both commercial and investment banking improved. Net banking income rose to 5.56 billion francs from 4.81 billion francs a year earlier as activity in its branches picked up slightly due to an improved economic climate. Low interest rates also helped increase activity. The company noted that low interest rates and weak margins kept value-added products from growing faster. For 1997, CCF said that it expects to be able to decrease its provisions for bad loans, based on smart risk decisions, and therefore sees 1997 as a 'good' year.

Chargeurs, the industrial and textile group, said that in the first-half of 1997 net profit more than doubled to 147 million francs ($24.3 million) from 54 million francs as operating profits in its fabric and canvas businesses improved. Operating profits in fabrics improved to 103 million francs from 76 million francs despite a decrease in sales after having sold its automobile fabric activities. Canvas activities operating profits rose to 114 million francs from 89 million francs helped by a rise in sales and by favourable foreign exchange rates. The purchase of a Czech Republic canvas maker also helped results.

German retail sales fell a real, or inflation-adjusted, 0.9% in July compared to a year earlier, according to preliminary data published by the Federal Statistics Office. In nominal terms, retail sales were down 0.1% from a year earlier, the office said. In the period from January through July, retail sales fell 1.0% from the like period a year earlier, and were unchanged on a nominal basis, the office said.

Tarkett said that the German cartel authority approved its planned merger with Sommer-Allibert, a French plastics group. According to a previously announced agreement, a new company, Tarkett-Sommer, will have annual sales of about 8.9 billion francs (1.47 billion) and will be based in Germany. As part of the merger, Tarket will take over Sommer's floor and wall-covering operations. Sommer, in exchange, will receive 20.1 million of Tarkett's outstanding shares, the companies said earlier this year. Sommer's covering business had 1996 sales of 4.4 billion francs.

Dutch construction company NBM Amstelland posted a 65% gain in net profit in the first half of 1997, due largely to improved weather conditions in that period. NBM said that a 10% rise in sales over the same six months was almost completely autonomous and that acquisitions made up only a small part of the increase. Looking to the full year, NBM said it expects earnings per share growth of about 35% from a year earlier, while sales are seen increasing to four million NLG.

Austria's current account deficit narrowed sharply to 2 billion schillings ($157.7 million) in July from 7.2 billion schillings in June and 7.9 billion schillings in July 1996, the Austrian National Bank reported. Also in July, the merchandise trade deficit narrowed to 3.6 billion schillings from 4.8 billion schillings in June and 8 billion schillings a year earlier, the central bank said.

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