Browse through our Interesting Nodes for Legal Services in Greece Read the Convention Relating to the Regime of the Straits (24 July 1923) Read the Convention Relating to the Regime of the Straits (24 July 1923)
HR-Net - Hellenic Resources Network Compact version
Today's Suggestion
Read The "Macedonian Question" (by Maria Nystazopoulou-Pelekidou)
HomeAbout HR-NetNewsWeb SitesDocumentsOnline HelpUsage InformationContact us
Friday, 29 March 2024
 
News
  Latest News (All)
     From Greece
     From Cyprus
     From Europe
     From Balkans
     From Turkey
     From USA
  Announcements
  World Press
  News Archives
Web Sites
  Hosted
  Mirrored
  Interesting Nodes
Documents
  Special Topics
  Treaties, Conventions
  Constitutions
  U.S. Agencies
  Cyprus Problem
  Other
Services
  Personal NewsPaper
  Greek Fonts
  Tools
  F.A.Q.
 

European Business News (EBN), 97-05-12

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

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

Page last updated Mon, May 12 6:57 PM CET


CONTENTS

  • [01] Grand Met, Guinness merger may spark a round of consolidation in the industry
  • [02] UK's new Foreign Secretary, unveiling foreign policy goals, says that Britain will not join EMU in first wave
  • [03] German construction strike likely as union commission rejects arbitration
  • [04] Gehe expects 'significant' rise in full-year profit
  • [05] Telekom shares surge to record high
  • [06] E.U. sees probe of BSkyB's digital joint venture with BT as 'complex'
  • [07] Telefonica of Spain's profits show healthy increase to $195 million
  • [08] Yeltsin signs peace accord with Chechen counterpart
  • [09] Meanwhile, Spain and Portugal praised for efforts at structural reform and budget consolidation
  • [10] UK PPI rises slightly above expectation
  • [11] Kvaerner sells its share of Bergesen to SBC Warburg
  • [12] British Biotech says phase III trials of Zacutex successful
  • [13] Metsae-Serla's profits drop sharply
  • [14] Corporate and Economic Briefs

  • [01] Grand Met, Guinness merger may spark a round of consolidation in the industry

    The merger of Britain's Guinness and Grand Metropolitan will create the world's largest spirits and wine business and likely leave competitors with a big hangover.

    The £21 billion ($35.5 billion) deal will blend some of the world's best- known liquor brands, including Guinness' Johnnie Walker whisky and Gordon's gin with Grand Met's Smirnoff vodka. The combination is powerful enough that analysts and corporate financiers are already predicting rival companies will be forced to consolidate to catch up with the new company.

    ''It's going to make all the others run around and blow the dust off their files,'' said one analyst at a brokerage involved in the transaction.

    GMG Brands, as the merged company will be known, will also be the world's seventh largest food and drink company, stacking up alongside players such as PepsiCo, Unilever and Nestle.

    Despite its size, the combined spirits business, United Distillers & Vintners - from Guinness' United Distillers and Grand Met's International Distillers & Vintners - will still only command 5% of the global spirits market.

    Much of the global spirits sector is still accounted for by small, local producers, particularly in Eastern Europe and Asia, but GMG said Monday it hopes to use its combined muscle to steal market share from those players.

    And with annual spirits profits of an estimated £1.3 billion from a shipping volume of around 110 million cases, UDV will dominate Allied Domecq and Seagram, the second and third largest players, respectively, in terms of annual sales.

    Indeed, GMG's combined, annual spirits' sales should be more than twice those of Allied Domecq, if past numbers are any indication, and the companies are hoping they'll be able to grow even faster under one roof. 'The real reason for the merger is to raise the rate of growth in both businesses,' Guinness Chairman Tony Greener said in a conference call with reporters. Greener will be joint chairman of the GMG along with George Bull, Grand Met's chairman. Elsewhere in the financial snapshot, grandma and Guinness had a combined pre-tax profit of about £1.94 billion for the year ended Dec. 31. But a pro-forma earnings sheet for the two would have produced pre-tax earnings closer to £2.2 billion on sales of about £13.7 billion, the companies said. Spirits and wine would have accounted for about 59% of that total turnover.

    It's those sector-leading numbers that led many analysts to voice concern about whether the European Union's competition authorities will approve the deal.

    The EU Commission hasn't yet been formally notified of the deal's details by either company and hadn't decided whether to investigate, a spokesman said.

    But the commission tends to vet most of the big deals that have impact across the 15-nation bloc.

    'The deal is broadly bullish, and the companies are a good fit, despite our concerns about regulation and getting competition approval in Brussels,' said another analyst interviewed after a meeting with the two companies in London. However, others said getting regulatory approval won't be impossible. 'I think its got a good chance of getting through,' said Nikko Securities sector analyst Dermot Carr, adding that the companies' portfolios don't overlap enough to create a monopoly.

    Merger costs are another concern.

    Although GMG said it identified areas for cost cutting that will lead to annual savings of £175 million by the third year after the deal's completion, it also said it would cost approximately £375 million over the three years to achieve those savings. And of that figure, £300 million will come from cash, GMG said, with the balance obtained by accounting writedowns.

    'I think that's a figure higher than we would have expected,' said Ed Robinson, analyst with Thornton Investment Management, of the cash costs to GMG. Most of the savings will come from the newly formed UDV when the company goes ahead with plans to axe around 2,000 of its total payroll of 20,000 spirits employees.

    Regardless, Bull and Greener - long-time friends who reportedly agreed the deal over dinner at Bull's house last month - repeatedly denied cost- cutting was the driving force behind the deal.

    Bull stressed that the merged business will be able to achieve 'a faster growth rate than either of us can manage individually at this time,' later adding that scale is critical to building a global business in GMG's markets.

    _ By Emma Dandy, Stephen Jack and Rupert Cocke, Dow Jones Newswires, London_

    [02] UK's new Foreign Secretary, unveiling foreign policy goals, says that Britain will not join EMU in first wave

    At a press conference to launch the new Labour government's policy goals, British Foreign Secretary Robin Cook has repeated that the U.K. isn't likely to be an entrant when European economic and monetary union begins in 1999.

    Cook said: 'We think it unlikely that we will join in the first wave, or immediately afterwards.' Cook repeated, however, that should the government decide to proceed, the matter would be put to a referendum.

    Cook said there is little support for a 'federal superstate' among E.U. members and set out his vision of a community of interdependent nations, sharing common policies where necessary.

    He said he is determined that Britain should have the same status within the E.U. as France and Germany. Cook said a Britain with influence in Europe will also give the U.K. more influence in dealings with the U.S. He plans to visit Secretary of State Madeleine Albright in Washington within the next 10 days.

    Cook also said the government will make it a top priority to boost British exports and jobs with its network of overseas posts. A package of specific measures to inject business experience into this drive will be announced Wednesday in the Queen's Speech.

    Cook said Britain would seek an enlarged NATO with strengthened security partnerships throughout Europe. A key priority will be the successful transition to Chinese rule in Hong Kong, which promotes the colony's prosperity and preserves its freedoms.

    [03] German construction strike likely as union commission rejects arbitration

    The collective bargaining commission of Germany's largest construction union, IG Bau, rejected an arbitrator's proposal, making a strike likely in the German construction industry.

    The IG Bau's collective bargaining commission will make a recommendation on the proposal to the union's federal board, which will make the final decision on whether to approve or reject the arbitration proposal next week.

    IG Bau Chairman Klaus Wiesehuegel said the union is ready for talks 'day and night' with management. However, IG Bau is prepared to strike if no solution is reached by May 21, he added. A strike would be the first in the German construction industry since 1950.

    A majority of the union's state associations had already rejected the arbitrator's proposal over the weekend. The proposal would reduce sick-pay benefits, cut workers' 13th monthly salary and raise wages by 1.3% for construction workers in western Germany.

    Employers have warned the union that a strike would endanger thousands of jobs in the construction industry.

    The German construction industry has been depressed in recent years. Its construction industry association, IG Bau, said in February it expects a further 10,000 of the 80,000 construction companies throughout Germany to go bankrupt in 1997. Some 7,000 went bankrupt in 1996. In 1996, 110,000 construction workers lost their jobs. The industry currently employs 1.3 million workers.

    Meanwhile, two bank workers' unions Deutsche Angestellten Gewerkschaft and Handel, Banken und Versicherung called on Germany's banks to grant their members full sick-pay benefits and more job security as the unions entered the second round of wage talks with management Monday.

    While bank management hasn't outright rejected paying sick workers 100% of their wages, it has called for full cost compensation in other areas. The first round of wage talks ended in April without concrete results.

    [04] Gehe expects 'significant' rise in full-year profit

    German pharmaceutical maker Gehe said it expects a 'significant' rise in full-year 1997 operating profit and sees 1997 sales increasing by 10%.

    In fact, Gehe expects 1997 ordinary profit before taxes between 450 million Deutsche marks ($267.9 million) and 500 million marks, up from 470 million marks in 1996.

    Gehe didn't specify whether this figure includes financial results or not.

    Gehe sees 1997 sales at 24.0 billion marks, up from 21.43 billion marks. Gehe said the sales increase will be due entirely to the hard-won acquisition of U.K. pharmaceutical wholesaler Lloyds Chemists in January.

    Gehe also estimated its earnings per share to come in 'above' 4.00 marks in 1997 versus 3.75 marks in 1996. This figure is calculated according to the German DVFA accounting standard, which is adjusted for one-time effects and extraordinary items.

    While Gehe didn't publish its first quarter 1997 pretax profit, it said it expects first quarter pretax profit to be 5% above the year-earlier period.

    [05] Telekom shares surge to record high

    Shares in Deutsche Telekom surged to record levels as investors bet on upbeat earnings news from the newly listed German telecommunications giant, which holds its annual news conference tomorrow. Telekom shares led turnover in Frankfurt through the day and hit an all-time high of 41.95 Deutsche marks ($24.9), a rise of 47% from its issue price last November of 28.50 marks a share.

    Telekom's popularity was largely due to its upcoming news conference, at which it is expected to confirm glowing earnings expectations for the coming years.

    Preliminary results for Telekom have already been released, apart from group net profit figures for 1996, so that analysts are mainly focusing on its prospects for the coming years, with most expecting steady profit growth through to 1998.

    Analysts predict that Telekom's dividend will rise to between 1.30 marks and 1.50 marks in 1997 after a payout of 60 pfennigs per share in 1996. Telekom itself has said it expects to double profits and dividend payments this year.

    Telekom's surge was partly because it is approaching a six-month deadline on May 19, after which its shares can be sold without incurring tax, dealers noted. The stock's recent gains are already seen as reflecting a growing perception on the market that Telekom's would-be competitors in a market due for deregulation next year have been slower off the mark than had been expected, analysts say.

    A report in Der Spiegel magazine that the company was moving into commercial television in a bid to turn to profit on its cable business was also well received by the markets.

    In reponse to the report, Telekom said it hasn't yet made any final decision to expand its cable television business. A Telekom spokesman added, however, that the company is currently talking with private television stations and publicly owned stations in the German states about the prospects for digital transmission of programming and expansion of capacity for analogue programming in its cable network.

    Telekom doesn't want to enter into direct competition with the German media giant Bertelsmann or German media magnate Leo Kirch, the spokesman said.

    [06] E.U. sees probe of BSkyB's digital joint venture with BT as 'complex'

    The European Union Commission's regulatory probe of British Telecommunications digital television venture with British Sky Broadcasting Group will be 'a very complex case,' commission officials said.

    'At first sight, this is going to be a very complex case,' they said.

    BT and BSkyB unveiled plans last week to launch digital television and interactive services in the U.K. in mid-1998 in cooperation with minority partners Midlands Bank and Matsushita Electric, which owns the Panasonic Electronics brand.

    Commission officials said the investigation would be complicated by the fact that the venture, to be called British Interactive Broadcasting, will be operating in a new market.

    'This is a new situation anyway and there's different issues related to it, ' one said. 'We'll have to look into it very seriously.'

    The omens fot the venture are not great, with the EU competition body having come down hard and heavy in the past on alliances in the media sector. In 1994, it blocked a digital alliance which grouped German telecommunications operator Deutsche Telekom with media giants Bertelsmann and the Leo Kirch Group.

    Of the seven corporate link ups blocked by the commission since 1990, three were in the television sector.

    Meanwhile, BSkyB shares dropped nearly 2% on news that Sports Minister Tony Banks may expand the list of protected sporting occassions, which prevents major events from going on pay-per-view.

    The plunge came despite Banks admitting that pay-per-view is not necessarily a bad thing.

    [07] Telefonica of Spain's profits show healthy increase to $195 million

    Spanish telecommunications company Telefonica de Espana said a strong growth in consolidated revenues led to a 16% increase in consolidated net profit in the first quarter of this year to 27.87 billion pesetas ($195 million), from 24.08 billion pesetas for the same year-earlier period.

    Telefonica shares rose 700 pesetas at 3980 pesetas on the news.

    The company reported revenue of 543.46 billion pesetas in the first quarter of 1997 from 447.70 billion pesetas in the same period a year ago. Basic telephone services brought revenue of 368.31 billion pesetas, while mobile telephone service contributed 82.82 billion pesetas and international business 108.46 billion pesetas.

    Latin American divisions and affiliates of the company contributed 3.90 billion pesetas to the company's consolidated net profit, Telefonica added. First quarter results for 1997 incorporate for the first time Telefonica's participation in Brazilian Companhia Riograndense de Telecommunicacoes, acquired in December 1996.

    'That marks the entrance of the group in the important Brazilian market,' the company noted.

    InfoVia, the company's internet access provider, has received an average of 365,000 daily calls, six times more than the 54,270 calls in the same period in 1996 - the year the company started InfoVia. But growth is more reflected in Latin America and in the rest of the 'market that speaks Spanish.'

    The company's lines in service in Spain and other countries reached 26.85 billion in the first quarter of 1997, while the company managed 10.54 billion lines in service outside of Spain.

    Clients in Brazil and Chile, as well as other regions, brought mobile telephone services to 1.15 billion users in the first quarter of the year, Telefonica added in a press release.

    [08] Yeltsin signs peace accord with Chechen counterpart

    Russian President Boris Yeltsin and his Chechen counterpart signed a new peace agreement in a bid to end continuing antagonism between the two sides.

    Yeltsin called the pact he signed with Aslan Maskhadov a historic document, 'putting an end to a 400-year-old war.' But the latest treaty apparently ducked the key remaining issue: whether Chechnya will ultimately be allowed to gain independence.

    The republic considers itself an independent state, while Moscow considers it part of Russia. There was no new sign either side is willing to compromise on that issue.

    While details of the treaty were not immediately released, it represents an attempt to resolve festering problems between the two sides.

    Relations between Russia and Chechnya have been rocky despite the signing of peace accords last August that ended their 20-month war and led to the withdrawal of Russian troops from the secessionist republic. Each side accuses the other of stirring up trouble that could lead to new conflicts.

    Chechnya also remains troubled by lawlessness, casting doubt on Maskhadov's ability to return stability to the war-torn region. Several armed groups operate outside his authority, and a wave of kidnappings this year has targeted Russian journalists.

    The latest hostage-taking occurred Saturday when masked Chechen gunmen seized a prominent Russian TV journalist and two of her crew members, bringing to seven the number of journalists held by kidnappers in the breakaway republic.

    There was no immediate word of demands by the gunmen holding the three journalists from the independent NTV network.

    [09] Meanwhile, Spain and Portugal praised for efforts at structural reform and budget consolidation

    Italy's chances of joining Europe's single currency in 1999 were cast into doubt when Rome's European Union partners found it falling short in efforts to get its economy in order.

    EU finance ministers, meeting in Brussels, approved a sharply worded report on the state of Italy's finances, suggesting that many of the measures taken to cut the budget deficit were not sustainable.

    Rome played down the report, pledging to meet criteria for the single currency.

    The ministers' view on Italy contrasted sharply with their findings for other countries - notably Spain and Portugal - whose efforts to catch up with the EU's northern economies were praised in separate reports.

    Germany was also applauded for taking deficit-cutting measures viewed by ministers as sustainable over the long term.

    Ministers approved nine reports in all as part of the EU's so-called excessive deficit procedure in which countries seen running high budget deficits are urged to take action.

    Finland and the Netherlands were taken off the list, joining Luxembourg, Ireland and Denmark. Britain's report was delayed, pending a budget from the new Chancellor Gordon Brown, who was attending his first EU finance ministers meeting.

    And meanwhile, Spain and Portugal appeared to improve their EMU credentials. Once considered rank outsiders for the first-wave of EMU membership, both were praised for their efforts at structural reform and budget consolidation

    [10] UK PPI rises slightly above expectation

    UK April producer output prices rose an unadjusted 0.2% from March, while producer input prices fell a seasonally adjusted 1.9%, largely reflecting declines in the price of crude oil.

    The rise in output price was slightly larger than the 0.1% increase economists were expecting. But the fall in input prices significantly exceeded expectations for a 0.5% decline.

    Measured against the currencies of Britain's major trading partners, sterling rose 1.9% in April, making exports more expensive and the prices of imported raw materials cheaper.

    The Office for National Statistics also reported that the core output price index - which excludes food, beverages, tobacco and petroluem - rose a seasonally adjusted 0.1% in April from March. This was in line with forecasts.

    The ONS said the 0.8% annual rate of increase in output prices was the lowest since September 1986 when it rose by 0.7%. Prices of petroleum products have fallen by 5.1% since December.

    The 10.5% fall in input prices in the year to April was the largest annual rate of decrease since November 1986 when it fell by 12.0%. Over the past year there have been widespread falls in the prices of imported commodities such as crude oil, newsprint and some cereals which have all declined by more than 20%

    Crude oil prices fell 12.8% between March and April to stand 25% lower than in April 1996. Ample supplies and refinery maintenance continue to depress the market. There were also continued falls in the prices of electricity to industial consumers.

    [11] Kvaerner sells its share of Bergesen to SBC Warburg

    Anglo-Norwegian construction and engineering company Kvaerner said it had sold its entire shareholding in Norway's largest shipping company Bergesen.

    Kvaerner said in a statement to the Oslo bourse that it would use the gains from the sale to help repay a loan taken when it bought British conglomerate Trafalgar House last year.

    Kvaerner said it had sold 9,057,227 Bergesen A shares at 156.50 crowns ($110.2) per share and 3,865,385 B shares at 155.50 crowns to SBC Warburg. The shares accounted for 17.06% of Bergesen's shares.

    Kvaerner had previously announced that it intended to sell its Bergesen stake as part of a 10 billion crown asset sale programme.

    The company said the transaction would not have any significant impact on the group's financial results apart from reducing interest expenses.

    [12] British Biotech says phase III trials of Zacutex successful

    British Biotech's Phase III clinical trial of Zacutex, an acute pancreatitis treatment, showed the drug resulted in fewer deaths than a placebo.

    Zacutex is the registered trademark for lexipafant, which British Biotech submitted for European approval in March.

    If Zacutex is approved by regulators, it will be the first British Biotech drug to be marketed commercially.

    In anticipation of that, the company said it is establishing sales units in the U.K., France, Germany, Italy, Scandinavia and Spain. The company intends to market its products throughout Europe from those bases.

    Also, the company announced a series of senior appointments to support its transition into a fully integrated pharmaceuticals company from just research and development. Three of the four appointments are in the commercial field.

    British Biotech said it appointed Roy Carlisle, 39 years old, as its international marketing manager. Prior to joining the company, he was SmithKline Beecham's marketing manager for new pharmaceutical products.

    The company has also appointed Tim Edwards, 40, as its director of business development. Prior to joining British Biotech, he was a director of corporate finance at NatWest Markets, specializing in pharmaceuticals and healthcare.

    The third commercial appointment was of Adrian Haigh, 37, as managing director of the company's operations in the U.K., Ireland and the Netherlands. He joined from Schering-Plough, where he was the director of its U.K. hospital business.

    The fourth appointment was Tony Bainbridge, 35, as director of human resources.

    [13] Metsae-Serla's profits drop sharply

    Finnish forestry product group Metsae-Serla reported a sharp drop of 53% in pretax profits for the first quarter of 1997 to 129 million markkaa ($25 million) from 239 million markkaa in the corresponding 1996 period.

    Lower prices, especially for wood pulp and coated magazine paper, dented earnings, together with running-in costs at the new fine paper machine at Kirkniemi.

    The group's sales rose to 3.93 billion markkaa from 3.75 billion markkaa in the corresponding year-earlier period, while net profit per share plunged to 0.22 markka from 1.15 markkaa a year earlier.

    In the coated paper division, profitability was 'significantly poorer than for the same period a year ago,' Metsae-Serla said, noting prices for coated paper, one of the company's main products, were around 20% lower.

    In the fine paper sector demand continued to be strong and delivery volumes were up 10%, but prices were on average 10% down on year-earlier levels.

    Metsae-Serla said both prices and profitability for magazine paper are expected to improve in the second quarter, while demand for fine paper is expected to slacken somewhat.

    Meanwhile, Metsae-Serla sees prices for market pulp rising before the summer as a result of several producers curtailing output, but if the price increases are successful, then there is a risk of oversupply re-emerging by the end of the year again.

    [14] Corporate and Economic Briefs

    Annual inflation in the European Union fell to 1.7% in March, down from 2.0% in February and 2.6% in March last year, the EU announced. The EU's statistical agency Eurostat said the March inflation rate was below 1.7% in nine of the 15 EU member countries. By contrast, the March inflation rate in the US was 2.8%; the figure for Japan was 0.5%. Greece had the highest inflation rate of the EU member countries, at 5.9%. Finland had the lowest rate, at 0.8%, followed by Sweden at 1.0% and France at 1.1%. Britain's rate was slightly above the EU average at 1.8%. Ireland's rate was not available. The EU member countries with rates above 2.0% were Italy, Portugal, Spain and Greece.

    European construction giant Bouygues said first-quarter 1997 sales rose 6.1% to 14bn francs (8bn dollars)from the same period in 1996. In a legal filing, Bouygues noted that the rise in sales came largely from the consolidation of its CISE unit, acquired Jan. 15, 1997. Excluding acquisitions and divestitures, sales rose 1.5%. Bouygues Offshore, a 60%- owned unit of French construction company Bouygues SA, said its first- quarter 1997 sales rose 4% to 949m francs (542.3m dollars) from the similar 1996 period. Bouygues, which published the figures in a legal filing, didn't provide any further details.

    French cosmetics company Clarins said its first-quarter 1997 sales rose 13% to 807.8 million francs ($504.9 million)from 716.7 million francs in the same period a year earlier, helped by makeup and perfume growth. Excluding acquisitions, divestitures and currency fluctuations, sales for the three-month period ended March 31 rose 8.9%, the company said. Clarins said sales from makeup and perfumes rose 28% and 34% respectively. No figures were given.

    French pharmaceutical company Synthelabo said first quarter 1997 sales rose 7.7% to 2.8 billion francs ($1.6 billion) from a year earlier. In a legal filing, the company said that it had consolidated sales from its Synthelabo Slovakia SRO pharmaceutical unit starting the first quarter. On a constant structural and foreign exchange basis, reflecting the situation in the first quarter of 1997,, sales in the first quarter 1996 were adjusted to 2.7 billion francs, reducing sales growth to 3.7%, the company said.


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


    European Business News (EBN) Directory - Previous Article - Next Article
    Back to Top
    Copyright © 1995-2023 HR-Net (Hellenic Resources Network). An HRI Project.
    All Rights Reserved.

    HTML by the HR-Net Group / Hellenic Resources Institute, Inc.
    ebn2html v1.01a run on Monday, 12 May 1997 - 17:50:23 UTC