European Business News (EBN), 96-10-17

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

Page last updated 1000 October 17 CET

CONTENTS

[01] Russia's Chernomyrdin says there is much truth in Kulikov's charges

[02] Bundesbank says Bonn will overshoot its deficit target this year

[03] Two Finnish forestry companies show sharp profit declines

[04] France public sector workers stage one-day strike

[05] SGS-Thomson shows 2.6% rise in third quarter net profit

[06] Thomson-CSF to examine Lagardere's takeover offer

[07] Apple Computer posts unexpected profit for the fourth quarter

[01] Russia's Chernomyrdin says there is much truth in Kulikov's charges

Chernomyrdin's comments came after a meeting with top security officials to discuss accusations by the interior minister that security tsar Alexander Lebed was plotting to seize power.

Referring to the allegations, Chernomyrdin told a meeting of security officials: "I do not conceal my concern over the fact that a considerable part of what Minister Kulikov said corresponds with reality."

Kulikov accused Lebed of plotting a "creeping coup" while Yeltsin was preparing for heart surgery. That accusation may force Yeltsin to choose between the Kulikov and Lebed. Lebed has denied the charges and said there could be no talk of a coup d'etat in Russia. Lebed said he believed Interior Minister Anatoly Kulikov would be fired over the incident.

Kulikov said he had ordered extra security measures to cope with what he said was a threat of attacks by rebels from the breakaway Chechnya region.

Yeltsin's spokesman said the president was "highly concerned" by the and had demanded an urgent accounting from Kulikov and Chernomyrdin.

[02] Bundesbank says Bonn will overshoot its deficit target this year

In fact, the Bundesbank noted, the federal deficit on a cash-transactions basis more than doubled to 54 billion Deutsche marks in the first nine months of the year. That development indicates that the annual budget will significantly exceed the 60 billion Deutsche marks ($39 billion) estimated in the 1996 budget, the central bank said in the report.

The central bank also warned in the report that the Government must rein in the amount of transfer payments to eastern German states to pare its deficits and lower tax burdens. Transfer payments have topped 600 billion marks since unification in 1990.

The Bonn government may be particularly interested in reducing subsidies to the east as it scrambles to get its finances into shape in order to be among the first nations to join Europe's planned currency union at the end of the decade.

The Bundesbank didn't specify how far the deficit would overshoot the forecast, but last month German Finance minister Theo Waigel said he would do his best to keep the country's 1996 federal budget deficit below 70 billion marks.

The central bank attributed the swelling deficit to continuing weak tax revenue and the social costs of Germany's persistently high unemployment, both of which stem from the continued slowing in economic growth.

In September alone, the federal cash deficit stood at nearly 5 billion marks, up from almost 4.5 billion marks the year before. The Bundesbank noted that the federal cash situation continued to deteriorate in the month, but not to the extent of previous months.

In September, the federal government took on a gross 18 billion marks in new credits, 8 billion marks of which came from the first-time issue of two- year bills, or _Schaetze_.

However, redemptions took the edge off gross borrowings, the Bundesbank said, leaving net borrowings of around 5 billion marks for the month. That compared with 3.5 billion marks in net credits in August.

[03] Two Finnish forestry companies show sharp profit declines

Kymmene, Europe's largest forestry concern, said its pretax profit nearly halved to 2.67 billion markka ($582 million) from 4.54 billion markka the year before. Sales slid to 33.82 billion markka from 35.62 billion markka.

Kymmene said it expects profit levels to remain weak for the rest of the year because of a drop in sales price and weak demand.

Further ahead, it said economic growth was forecast to strengthen gradually in Europe, its main market, which would increase paper consumption. But market pulp prices -- which appear to be strengthening only gently after slumping from peaks last year -- are still difficult to predict.

Metsa-Serla, Finland's third biggest forestry group, said its pretax profit plummeted to 254 million markka from 1.29 billion markka a year earlier. Sales rose to 9.53 billion from 8.64 billion. And the company said it expects to post a loss for the final four months of the year, though it still expects to show a profit for the year. "Market pulp prices bottomed out during the spring and a slight upward trend was visible by the end of the summer," Metsa-Serla said."Prices for fine papers are expected to embark on a modest rise."

Metsa said an improvement in ikn prices hasn't come soon enough to have any effect on the remainder of the year. And it noted that a one-time charge of about 300 million markka would dampen full year earnings growth.

[04] France public sector workers stage one-day strike

Trains, flights, schools and public services were all hit in the first big wave of union unrest since late 1995.

But while opinion polls indicate that the majority of citizens sympathise with the strike, unions appear divided over whether the unrest presages a repeat of the 24 days of disruption that all but paralysed France last November and December.

Louis Viannet, head of the Communist-led CGT union, called for a united front between public and private sector workers, 'on the ground there is a growing anger which will be expressed more and more strongly because people are fed up,'

But Nicole Notat, head of the pro-Socialist CFDT who did not back last year's strikes and who favours a single European currency, said: 'I find it unpleasant and incongruous that this strike is progressively becoming a catch-all'. She told RTL radio that striking doctors, for instance, were wrongly diverting the protest from its focus on the public sector. She accused Viannet of constantly criticising and failing to offer realistic alternatives.

The strikes, spearheaded by five million civil servants worried by job cuts, closed many public administration offices, and striking teachers forced many children off school for the day.

Post offices and the state electricity and gas utility were also hit by the protests, called largely in anger at Juppe's austere economic policies aimed at achieving French qualification for the planned single European Union currency by 1999.

Unions are due to hold marches across France throughout the day, and in Paris all civil servants' unions are expected to march from the Place de la Republique.

SNCF railways said that about a third of trains were running in France. The first Eurostar train of the day from Paris to London via the Channel Tunnel did not leave but SNCF said other trains were meant to run as normal on the route.

Most lines on the Paris Metro railway were running close to normal and about 75 percent of buses in the capital were unaffected. Many commuters took to their cars, causing bigger rush-hour jams than usual around the capital.

A strike by air traffic controllers and staff at airlines Air France and Air Inter Europe hit flights. Air France expected to provide a third of its normal flights and Air Inter one in five.

The civil servants are protesting at government plans to trim their numbers by 6,000 next year as part of a drive to cut the budget deficit.

Teachers will bear the brunt of the austerity drive, with a loss of 2,300 permanent jobs and the layoff of around 15,000 short-term contract staff. A teachers' union estimated that 65 percent of school teachers heeded Thursday's strike call.

Workers punished conservative President Jacques Chirac with the strikes last year after he was elected in May 1995 on promises of a war on unemployment and had raised hopes of a miracle cure of tax cuts and wage hikes.

The unemployment rate has since risen to a record 12.6% of the workforce and taxes have gone up. Chirac changed his tone a year ago by abruptly urging austerity.

[05] SGS-Thomson shows 2.6% rise in third quarter net profit

"While we are experiencing pricing pressures of varying degrees throughout our product portfolio, we have been able, so far, to maintain reasonable gross margins," said SGS-Thomson chief executive officer Pasquale Pistorio.

Gross profit margin in the third quarter improved to 40.4% from 40.1% in the year-earlier period.

Revenue rose 7% to $988.4 million. That figure included $16.7 million from license fees, which in turn contributed $13.4 million to net profit.

The company said nine-month net profit rose 35% to $483.5 million on a 19% gain in revenue to $3.1 billion.

[06] Thomson-CSF to examine Lagardere's takeover offer

The company said its president, Marcel Roulet, will appoint an expert to look into the transaction and that further details will be released at its next board meeting October 30.

Lagardere said it offer 156 francs a share for a total of 7.8 billion francs ($1.56 billion) to acquire the Thomson-CSF's minority shares outstanding.

The French government said on Wednesday that it has chosen Lagardere, over telecommuniations giant Alcatel Alsthom, to acquire Thomson when it is privatized before the end of the year.

The government's decision still needs approval from France's independent Privatization Commission, as well as the European Union Commission.

[07] Apple Computer posts unexpected profit for the fourth quarter

The earnings represented a 58% drop from year earlier profit of $60 million, or 48 cents a share, but the California-based computer maker had been expected to show a loss of 30 cents a share. Apple itself hadn't been forecasting that it would return to profitability until March 1997.

Revenue in the quarter slid 23% to $2.32 billion. Analysts attributed the profit to aggressive cost cutting, a bigger-than- expected exodus of employees and lower prices for key components, such as memory chips.

While not promising a profit in the current quarter, Apple said it expects "sustained profitability" beginning in March and forecast that the new fiscal year will show a profit.

The fourth-quarter results signaled a remarkable comeback from deep trouble earlier this year, when over two successive quarters, Apple reported roughly $800 millions in losses.

Nonetheless, the company faces many serious long-term challenges, most notably declining year-to-year sales because of the relentless juggernaut of powerful and easy-to-use computers based on products from Microsoft and Intel.

For the full fiscal year, Apple swung to a loss of $816 million, or $6.59 a share, on sales of $9.83 billion. The previous fiscal year, it earned $424 million, or $3.45 a share, on sales of $11.1 billion.

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

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