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European Business News (EBN), 96-11-07

European Business News (EBN) Directory - Previous Article - Next Article

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

Page last updated November 7 1000 CET


CONTENTS

  • [01] German joblessness surges an unexpected 41,000, to 10.1%
  • [02] Daimler-Benz sales gain 4.3%
  • [03] SBC sees `96 profit below earlier estimates
  • [04] French business leaders optimistic
  • [05] Russian president making good progress
  • [06] Kwik Save plans restructuring and refocus

  • [01] German joblessness surges an unexpected 41,000, to 10.1%

    German unemployment surged by an unexpectedly large 41,000 people on a seasonally adjusted basis in October from September. That puts the jobless rate at 10.1%.

    That rise far exceeds economists' forecasts, which had generally been for a rise of less than 10,000. And the economic recovery to date in the country isn't strong or stable enough to improve the weak jobs situation, a senior official from the Labour Office warned. German Finance Minister Theo Waigel said that high unemployment was fuelling a steep rise in the Labour Office budget that had to be capped. 'The requirement would be around 13 billion marks ($8.6 billion) next year.

    We cannot afford that. There must be further savings of around one billion marks in social welfare budgets,' he said. But he said it was it was necessary to cut government spending on social welfare by another one billion marks next year to fill the widening budget gap. He wants to save one billion marks in the labour office budget and another two billion marks across the board. The Labour Office said that the jobs market was also hit by a plunge of 55,000 in the number of people employed in August, the latest month for which the labour office has such data.

    The severity of the problems in the German labour market was signalled by some marked revisions upward in the seasonally adjusted number of people registered as unemployed in September. The September seasonally adjusted increase in all-German joblessness was 42,000, up from the originally reported 39,000.

    For western Germany alone, the month-earlier seasonally adjusted jobless rise was revised up to 37,000 from 34,000 while the eastern German rise was adjusted up to 6,000 from 4,000. These figures are rounded by the Labour Office. 'The situation in the jobs market remains precarious despite the economic recovery already under way, Klaus Leven vice president of the office told reporters. 'The economic revival that has occurred so far isn't strong or stable enough to improve the situation in the jobs market,' he added.

    On an unadjusted basis, the total number of people without work rose to 3, 866,831 in October from 3,848,449 in September. Leven told AP-Dow Jones that the unadjusted number of jobless will stay under 4 million in November, but will probably exceed that number by the year end. He added that joblessness will also probably stay above 4 million in the early months of 1997.

    German unemployment peaked at a post-war high of 4.27 million in February, but dipped back below the 4 million mark in April.

    [02] Daimler-Benz sales gain 4.3%

    German industrial giant Daimler-Benz said sales grew 4.3% in the nine months and predicted that sales for the year would climb at least 8.4%.

    Sales through September 30 climbed to 75.9 billion Deutsche marks ($50.2 million), largely on the back of the performace of Mercedes-Benz, the company's car and truck unit. Mercedes sales rose 8.2% to 56.90 marks, three-quarters of the parents' total sales figure.

    Daimler-Benz predicted that total sales for the year would climb to more than 105 billion marks. Chairman Juergen Schrempp said the sales increases was evidence that his plans for streamlining the company and targeting shareholder value where paying off. 'This development confirms the course of focusing on a growth strategy and stronger earnings,' he said.

    Daimler-Benz is Europe's largest industrial group. Its operations include the Mercedes-Benz, Daimler-Benz Aerospace and financial services unit Daimler-Benz Interservices, known as Debis. Debis contributed 12% of sales, and DASA contributed 10%, with sales totaling 8.28 billion marks when adjusted for the disposal of some assets.

    [03] SBC sees `96 profit below earlier estimates

    Swiss Bank Corporation the country's third biggest bank said 1996 profit growth would be lower than earlier forecast after trading income from world financial markets slowed in the third quarter.

    SBC said net profit after taxes rose 27% in the nine months from the year earlier, slower than the 36% growth shown in the first half. The slowdown reflected `lower trading volumes on the financial markets which affected trading income,' the bank said. It said net operating income rose 17% for the first three quarters as against the same 1995 period.

    SBC said it now believed group profit after taxes for 1996 would be 'some percentage points below original estimates but still substantially higher than in 1995.' SBC had forecast in September that ordinary net profit would rise 33% in 1996 to around 1.4 billion Swiss francs ($1.1 billion). 'Profit performance in the fourth quarter will be influenced by trading volumes on the financial markets and by provisioning requirements,' SBC added.

    SBC plans to post an extraordinary loss of 1.9 billion this year as its pays for a major restructuring programme announced in September that will slash its ailing domestic bank business, create a new loss reserve for bad loans and change the way it calculates loan risk.

    SBC's nine month report said provisions for risky loans, fuelled by five years of virtual economic stagnation in its Swiss home market, remained at an unchanged high level in the third quarter. 'Loan loss provisions were almost exclusively related to exposure in Switzerland, where the economic recovery has been slow to materialise,' it added. Personnel expenses were lower in the third quarter than in the two previous quarters, mainly due to smaller provisions for performance-related compensation.

    Personnel costs therefore grew less strongly in the first nine months than in the first half when compared to last year, SBC said.

    [04] French business leaders optimistic

    French business leaders expect a moderate rise in industrial demand in the fourth quarter of 1996, according to a survey conducted in October by the national statistics institute (INSEE).

    The business chiefs said they saw a rebound in third quarter demand in all branches of industry except consumer goods. The French business leaders said they see a rise in fourth-quarter foreign demand in all manufacturing sectors. The outlook for foreign demand is particularly strong for the automobile industry, INSEE said. The business chiefs said third-quarter demand was strong in the auto sector and average in capital goods, while remaining fairly weak in intermediate and consumer goods.

    Foreign demand in the third quarter was stable for capital goods and fairly strong in the auto sector and consumer goods, but remained weaker for intermediate goods, according to the survey.

    The corporate leaders said their operating results were stable in the third quarter, with no change seen in the fourth quarter.

    [05] Russian president making good progress

    Michael DeBakey, the American heart-surgery pioneer, said Russian President Boris Yeltsin's doctors are delighted with his rapid recovery from open heart surgery.

    As Yeltsin formally resumed the official powers he had handed over to Prime Minister Viktor Chernomyrdin for the period of surgery, DeBakey said: 'He is recovering beautifully. If you scripted it you couldn't do better.' But he was quick to add that he had personally warned the president of the danger of trying to resume a heavy workload too soon, and will decide today if he is fit enough to move to a more comfortable clinic to convalesce.

    Yeltsin will be eased gently back into paperwork and other mental activities 'as long as he does not get fatigued,' DeBakey said. 'He has lost strength and he needs to get it back with rest.' Visitors will be limited at most to an hour in the morning and another hour later in the day.

    But he noted that the 65-year-old leader, had no evidence of neurological complications from the operation and 'was absolutely alert - I didn't expect him to be that alert, and he was even joking a bit,' DeBakey said after joining Russian doctors in examining the president at a cardiology hospital.

    Yeltsin, a workaholic known to resent the restrictions his illness imposed, may even be allowed to walk a little but his wife Naina vowed to stop him trying to do too much just two days after the gruelling quintuple bypass operation.

    Yeltsin hopes the surgery will reinvigorate both his heart and his presidency, allowing him to cement the political and economic reforms he believes are needed to block a return to the communist past.

    Problems awaiting Yeltsin's attention include industrial unrest over unpaid wages, the crisis in breakaway Chechnya and a strong showing by political opponents in regional elections. Gennady Zyuganov, whose Communist Party dominates the State Duma lower house of parliament, went on the offensive at a rally of the party faithful. 'The country is run by thieves and drunkards,' he said, standing beneath a giant poster of Lenin and recalling the glory days of the Soviet superpower.

    Zyuganov, who won 40 million votes in the presidential election earlier this year that gave Yeltsin a new four-year lease on power, has said the president is too sick to govern and has urged him to resign.

    The West, which sees Yeltsin as the best guarantor of Russian stability and reforms, has been alarmed by the political drift accompanying his prolonged absence from the Kremlin.

    [06] Kwik Save plans restructuring and refocus

    U.K. discount food retailer Kwik Save Group posted a 28% drop in fiscal 1996 pretax profit and said it plans to close 89% of its stores as part of a strategic overhaul of its business.

    Pretax profit fell to £90.3 million, or $144 million, before an £87.5- million restructuring charge. Sales rose 8.8% to 3.5 billion pounds.The company said it will close 107 of its 979 stores in the current fiscal year and that it plans to launch a high-quality own-label brand. The first 100 lines of the new brand will be available next spring and eventually include a full selection of everyday products, Kwik Save said.

    The retailer's new focus is designed to fend off the fierce competition from superstores and continental discount groups, which have robbed Kwik Save of its traditional customers. Kwik Save's repositioning will remain firmly committed to discount retailing, but will aim to model itself more closely on traditional supermarkets, said the group's financial director, Derek Pretty.

    Chief Executive Graeme Bowler said the new company would become more focused on customer needs, using `the systems and technology to know what shoppers want, and to get it to them quickly and efficiently.' The revamp will be phased in over a three-year period and will likely involve a further 18 million pounds in charges over the next two years. An investment in systems and technology will further help curb costs, Pretty said. The group plans to replace 75% of all business systems.

    A review of the company's operations by outside consultants, initiated in February, showed a need for the group to improve its existing stores and invest in staff and technology. Kwik Save said it plans to spend some £50 million pounds on its New Generation programme in the next year and £100 million the year after as the new concept is rolled out into its stores.


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


    European Business News (EBN) Directory - Previous Article - Next Article
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