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Asia quake increases poverty risk
Nearly two million people across Asia could be thrown into poverty because of the Indian Ocean tsunami, the Asian Development Bank (ADB) has said.
In its first overview of the disaster, the ADB said the impact on economic growth would be slight because major cities and factories escaped damage. But the blow to many low-income people could be "enormous". The Paris Club of rich creditor nations on Wednesday offered to freeze debts owed by tsunami-hit countries.
The move was aimed at helping South Asian governments find budgets to rebuild devastated coastal areas, though so far only Sri Lanka, Indonesia and the Seychelles have indicated that they will take it up.
Other countries believe their economies are strong enough to cope or wish to avoid being viewed as credit risks. "Poverty is potentially the most important impact of this natural disaster," said ADB chief economist Ifzal Ali. Donor nations have promised to give $717m (£379m) in disaster relief over the next six months, according to the United Nations.
Mr Ali added his voice to those warning that aid pledges must be promptly delivered, saying the number of people at risk of poverty hinged on "concerns over sanitation and health conditions, and other basic needs" being "properly and quickly addressed".
There are 1.9 billion people in Asia living on less than $2 a day. The ADB fears that 1 million Indonesians could join them, while in India just over half a million people - 645,000 - are at risk of falling into poverty. A quarter of a million Sri Lankans and 23,500 people in the Maldives are also facing poverty. In the Maldives, where 43% of the population already lives on less than $2 a day, this could rise to half. Sri Lanka and the Maldives are the two countries the ADB fears are most at risk of suffering lasting economic damage from the tsunami. Sri Lanka's government has estimated reconstruction costs at nearly $3bn. A government task force held meetings to discuss an emergency rebuilding plan with the ADB, World Bank and Japanese aid agencies on Wednesday, and promised to publish the plan within 10 days.
Indonesia, Malaysia, Thailand and India have enjoyed strong economic growth in recent years, which should cushion them against reconstruction costs. Although Indonesia's northern province of Aceh suffered the worst death toll, the region's oil and natural gas production facilities "have survived intact", the report said. However, it remains too soon to asses the damage to poor people's livelihoods in Aceh because it would depend on how much farm land had been flooded by seawater. "This is a profoundly tragic event for the region and for the millions who are suffering. But the economies of the affected countries except Sri Lanka and the Maldives should emerge with minimal damage," the ADB report said. Some businesses may even gain from the reconstruction efforts, thereby creating jobs. At a meeting in Thailand, ABD president Thadao Chino said he was confident of the country's "own capabilities to restore normalcy to the affected areas and meet the rehabilitation requirements". Thailand has said it does not wish to opt for a debt repayment freeze, while India has also rejected international aid, saying it can cope on its own resources. Debt repayment holidays carry the risk of credit ratings downgrades, making it more expensive to borrow money in future. Indonesia, however, is pressing for greater help with its debts than the current freeze would bring. It is one of the world's most indebted countries.
| Nearly two million people across Asia could be thrown into poverty because of the Indian Ocean tsunami, the Asian Development Bank (ADB) has said.The ADB fears that 1 million Indonesians could join them, while in India just over half a million people - 645,000 - are at risk of falling into poverty.Sri Lanka and the Maldives are the two countries the ADB fears are most at risk of suffering lasting economic damage from the tsunami.But the economies of the affected countries except Sri Lanka and the Maldives should emerge with minimal damage," the ADB report said.A quarter of a million Sri Lankans and 23,500 people in the Maldives are also facing poverty.Thailand has said it does not wish to opt for a debt repayment freeze, while India has also rejected international aid, saying it can cope on its own resources.In its first overview of the disaster, the ADB said the impact on economic growth would be slight because major cities and factories escaped damage."Poverty is potentially the most important impact of this natural disaster," said ADB chief economist Ifzal Ali.Sri Lanka's government has estimated reconstruction costs at nearly $3bn.Indonesia, Malaysia, Thailand and India have enjoyed strong economic growth in recent years, which should cushion them against reconstruction costs.The Paris Club of rich creditor nations on Wednesday offered to freeze debts owed by tsunami-hit countries. |
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Egypt and Israel seal trade deal
In a sign of a thaw in relations between Egypt and Israel, the two countries have signed a trade protocol with the US, allowing Egyptian goods made in partnership with Israeli firms free access to American markets.
The protocol, signed in Cairo, will establish what are called "qualified industrial zones" in Egypt. Products from these zones will enjoy duty free access to the US, provided that 35% of their components are the product of Israeli-Egyptian cooperation. The US describes this as the most important economic agreement between Egypt and Israel in two decades.
The protocol establishing the zones has been stalled for years. There has been deep sensitivity in Egypt about any form of co-operation with Israel as long as its peace process with the Palestinians remains blocked. But in recent weeks an unusual warmth has crept into relations between the two countries. Both exchanged prisoners earlier this month, with Egypt handing back an Israeli who has served eight years in prison after being convicted for spying.
Egyptian President Hosni Mubarak has described Israeli Prime Minister Ariel Sharon as the best chance for the Palestinians to achieve peace. The government in Cairo now believes Mr Sharon is moving towards the centre and away from the positions of right wing groups. It also believes the US, pressed by Europe, is now more willing to engage seriously in the search for a settlement. But there are also pressing economic reasons for Egypt's decision to enter into the trade agreement. It will give a huge boost to Egyptian textile exports, which are about to suffer a drop after new regulations come into force in the US at the beginning of the year.
| In a sign of a thaw in relations between Egypt and Israel, the two countries have signed a trade protocol with the US, allowing Egyptian goods made in partnership with Israeli firms free access to American markets.The US describes this as the most important economic agreement between Egypt and Israel in two decades.There has been deep sensitivity in Egypt about any form of co-operation with Israel as long as its peace process with the Palestinians remains blocked.Both exchanged prisoners earlier this month, with Egypt handing back an Israeli who has served eight years in prison after being convicted for spying.The protocol establishing the zones has been stalled for years.Egyptian President Hosni Mubarak has described Israeli Prime Minister Ariel Sharon as the best chance for the Palestinians to achieve peace. |
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Markets signal Brazilian recovery
The Brazilian stock market has risen to a record high as investors display growing confidence in the durability of the country's economic recovery.
The main Bovespa index on the Sao Paolo Stock Exchange closed at 24,997 points on Friday, topping the previous record market close reached the previous day. The market's buoyancy reflects optimism about the Brazilian economy, which could grow by as much as 4.5% in 2004. Brazil is recovering from last year's recession - its worst in a decade.
Economic output declined 0.2% in 2003 and President Luiz Inacio Lula da Silva - elected as Brazil's first working-class president in 2002 - was strongly criticised for pursuing a hardline economic policy.
Investors have praised his handling of the economy as foreign investment has risen, unemployment has fallen and inflation has been brought under control. Analysts believe the stock market will rise above the 25,000 mark for the first time before too long. "There should be more space for gains until the end of the year, somewhere up to 27,000 points," said Paschoal Tadeu Buonomo, head of equities trading at brokers TOV. Brazil's currency, the real, also rose to its highest level against the dollar in more than two years on Friday. Although interest rates still stand at a punitive 17.25%, inflation has fallen from 9% to 7% while exports are booming, particularly of agricultural products. "For the first time in decades, we have all three economic policy pillars in line during a recovery," Finance Minister Antonio Palocci told the Associated Press news agency. "Government accounts are in surplus, we have a current account surplus and inflation is under control."
Investors were deeply suspicious of President da Silva, a former trade union leader who campaigned on a programme of extensive land redistribution and a large rise in the minimum wage. However, Mr da Silva has stuck to an orthodox monetary policy inherited from his predecessor even in the face of last year's economic crisis. This has earned him the disapproval of rural farm workers, thousands of whom who took to the streets of Brasilia on Thursday to protest against government policies. President da Silva has defended his policies, arguing that Brazil cannot afford to continue the cycle of boom and bust which afflicted it in recent decades.
| Investors have praised his handling of the economy as foreign investment has risen, unemployment has fallen and inflation has been brought under control.The Brazilian stock market has risen to a record high as investors display growing confidence in the durability of the country's economic recovery.However, Mr da Silva has stuck to an orthodox monetary policy inherited from his predecessor even in the face of last year's economic crisis.President da Silva has defended his policies, arguing that Brazil cannot afford to continue the cycle of boom and bust which afflicted it in recent decades.Economic output declined 0.2% in 2003 and President Luiz Inacio Lula da Silva - elected as Brazil's first working-class president in 2002 - was strongly criticised for pursuing a hardline economic policy.Analysts believe the stock market will rise above the 25,000 mark for the first time before too long.Although interest rates still stand at a punitive 17.25%, inflation has fallen from 9% to 7% while exports are booming, particularly of agricultural products. |
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Google shares fall as staff sell
Shares in Google have fallen 6.7% after employees and early investors in the web search took advantage of the first chance to sell their holdings.
Restrictions were imposed ahead of its flotation in August, to prevent shares being dumped quickly onto the market. In one of the most closely-watched initial public offerings in stock market history, the US-based company sold 19.6 million shares at $85 each. Google shares have risen since but fell $12.33 on Tuesday to close at $172.55. The restriction - known as a lockup - is being eased piecemeal: in all, some 227 million additional shares will become free to trade by February 2005. Selling the shares could turn many of Google's workers into millionaires.
There were fears that the potential increase of shares in circulation from Tuesday would ease demand for stock. However, analysts say they expected most shareholders would be holding back from selling all their shares immediately, as Google's good performance and future growth potential means demand will hold.
In its first earnings report since floating on the stock market, Google said it made a net profit of $52m in the three months ending 30 September. Sales surged to $805.9m in the third quarter, up from $393.9m a year earlier. Google's main service - its internet search - is free to users, so the firm makes much of its money from selling advertising space linked to the words for which its users search. It also sells the use of its technology to companies who need to make either their websites, or their internal information systems, searchable.
| Google shares have risen since but fell $12.33 on Tuesday to close at $172.55.There were fears that the potential increase of shares in circulation from Tuesday would ease demand for stock.In one of the most closely-watched initial public offerings in stock market history, the US-based company sold 19.6 million shares at $85 each.Selling the shares could turn many of Google's workers into millionaires.However, analysts say they expected most shareholders would be holding back from selling all their shares immediately, as Google's good performance and future growth potential means demand will hold. |
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Fosters buys stake in winemaker
Australian brewer Fosters has bought a large stake in Australian winemaker Southcorp, sparking rumours of a possible takeover.
Fosters bought 18.8% of Southcorp, the global winemaker behind the Penfolds, Lindemans and Rosemount brands, for 4.17 Australian dollars per share. A bid at that price would value the company at A$3.1bn ($2.4bn; £1.25bn ). Fosters said it was currently in discussions "which may lead to a major corporate announcement".
In a separate statement, Southcorp confirmed the brewer had asked for talks. Both firms asked the Sydney stock market to suspend trading in their shares until Monday. Southcorp's shares were suspended at A$4.25.
Fosters bought the 18.8% stake from Reline Investments, the family investment firm for the Oatleys, who founded the Rosemount Estates label and sold it to Southcorp in 2001. Robert Oatley and his son Sandy Oatley have both resigned from Southcorp's board following the share deal. Southcorp employs 2,700 people and is the largest single investor in rural Australia, according to its website. The prospect of Fosters launching a major acquisition startled investors, as the brewer said last summer that it was not looking to expand through a big buy in the near future. It has cash available, after getting A$846m from selling property business Lensworth, but it has been widely expected to return cash to shareholders.
"People will scratching their heads over this one. Fosters has done a back-flip", said Shawn Burns, a fund manger at Deutsche Asset Management. Southcorp's shares have risen in recent months on speculation that it could become a takeover target. It spent two years in the red, returning to profit in 2004. Consolidation in the wine industry is being driven by Constellation, the world's biggest winemaker. It seized the top spot when it bought Australian firm BRL Hardy for just over $1bn in 2003. Since then, it has paid $1bn for US wine maker Robert Mondavi, bought last month. Fosters' main wine business is Beringer Blass Wine Estate. Its best known brand is Fosters lager, though it makes a clutch of beer brands, and spirits. Analysts were divided on Thursday about whether Fosters was more likely to go for a takeover or merely wanted to take a big enough chunk of Southcorp to prevent it falling to a rival. "Currently, I think the strategic position is more sensible rather than an outright takeover," said one analyst quoted by the Agence France Presse news agency. However, Matt Williams, a fund manager at Perpetual Trustees said taking the stake "is definitely a precursor to a takeover".
| Australian brewer Fosters has bought a large stake in Australian winemaker Southcorp, sparking rumours of a possible takeover.Fosters bought 18.8% of Southcorp, the global winemaker behind the Penfolds, Lindemans and Rosemount brands, for 4.17 Australian dollars per share.Fosters bought the 18.8% stake from Reline Investments, the family investment firm for the Oatleys, who founded the Rosemount Estates label and sold it to Southcorp in 2001.Since then, it has paid $1bn for US wine maker Robert Mondavi, bought last month.Fosters has done a back-flip", said Shawn Burns, a fund manger at Deutsche Asset Management.Fosters said it was currently in discussions "which may lead to a major corporate announcement".Analysts were divided on Thursday about whether Fosters was more likely to go for a takeover or merely wanted to take a big enough chunk of Southcorp to prevent it falling to a rival.The prospect of Fosters launching a major acquisition startled investors, as the brewer said last summer that it was not looking to expand through a big buy in the near future.Fosters' main wine business is Beringer Blass Wine Estate.Southcorp's shares have risen in recent months on speculation that it could become a takeover target. |
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'Golden economic period' to end
Ten years of "golden" economic performance may come to an end in 2005 with growth slowing markedly, City consultancy Deloitte has warned.
The UK economy could suffer a backlash from the slowdown in the housing market, triggering a fall in consumer spending and a rise in unemployment. Deloitte is forecasting economic growth of 2% this year, below Chancellor Gordon Brown's forecast of 3% to 3.5%. It also believes that interest rates will fall to 4% by the end of the year.
In its quarterly economic review, Deloitte said the UK economy had enjoyed a "golden period" during the past decade with unemployment falling to a near 30 year low and inflation at its lowest since the 1960s.
But it warned that this growth had been achieved at the expense of creating major "imbalances" in the economy. Deloitte's chief economic advisor Roger Bootle said: "The biggest hit of all is set to come from the housing market which has already embarked on a major slowdown. "Whereas the main driver of the economy in recent years has been robust household spending growth, this is likely to suffer as the housing market slowdown gathers pace."
Economic growth is likely to be constrained during the next few years by increased pressure on household budgets and rising taxes, Deloitte believes. Gordon Brown will need to raise about $10bn a year in order to sustain the public finances in the short term, the firm claims. This will result in a marked slowdown in growth in 2005 and 2006 compared to last year, when the economy expanded by 3.25%. However, Deloitte stressed that the slowdown was unlikely to have any major impact on retail prices while it expected the Bank of England to respond quickly to signs of the economy faltering. It expects a series of "aggressive" interest rate cuts over the next two years, with the cost of borrowing falling from its current 4.75% mark to 3.5% by the end of 2006. "Although 2005 may not be the year when things go completely wrong, it will probably mark the start of a more difficult period for the UK economy," Mr Bootle.
| "Whereas the main driver of the economy in recent years has been robust household spending growth, this is likely to suffer as the housing market slowdown gathers pace."This will result in a marked slowdown in growth in 2005 and 2006 compared to last year, when the economy expanded by 3.25%.Ten years of "golden" economic performance may come to an end in 2005 with growth slowing markedly, City consultancy Deloitte has warned.Deloitte is forecasting economic growth of 2% this year, below Chancellor Gordon Brown's forecast of 3% to 3.5%.In its quarterly economic review, Deloitte said the UK economy had enjoyed a "golden period" during the past decade with unemployment falling to a near 30 year low and inflation at its lowest since the 1960s.Economic growth is likely to be constrained during the next few years by increased pressure on household budgets and rising taxes, Deloitte believes. |
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Ethiopia's crop production up 24%
Ethiopia produced 14.27 million tonnes of crops in 2004, 24% higher than in 2003 and 21% more than the average of the past five years, a report says.
In 2003, crop production totalled 11.49 million tonnes, the joint report from the Food and Agriculture Organisation and the World Food Programme said. Good rains, increased use of fertilizers and improved seeds contributed to the rise in production. Nevertheless, 2.2 million Ethiopians will still need emergency assistance.
The report calculated emergency food requirements for 2005 to be 387,500 tonnes. On top of that, 89,000 tonnes of fortified blended food and vegetable oil for "targeted supplementary food distributions for a survival programme for children under five and pregnant and lactating women" will be needed.
In eastern and southern Ethiopia, a prolonged drought has killed crops and drained wells. Last year, a total of 965,000 tonnes of food assistance was needed to help seven million Ethiopians. The Food and Agriculture Organisation (FAO) recommend that the food assistance is bought locally. "Local purchase of cereals for food assistance programmes is recommended as far as possible, so as to assist domestic markets and farmers," said Henri Josserand, chief of FAO's Global Information and Early Warning System. Agriculture is the main economic activity in Ethiopia, representing 45% of gross domestic product. About 80% of Ethiopians depend directly or indirectly on agriculture.
| In 2003, crop production totalled 11.49 million tonnes, the joint report from the Food and Agriculture Organisation and the World Food Programme said.The Food and Agriculture Organisation (FAO) recommend that the food assistance is bought locally.Last year, a total of 965,000 tonnes of food assistance was needed to help seven million Ethiopians.The report calculated emergency food requirements for 2005 to be 387,500 tonnes.On top of that, 89,000 tonnes of fortified blended food and vegetable oil for "targeted supplementary food distributions for a survival programme for children under five and pregnant and lactating women" will be needed. |
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Iranian MPs threaten mobile deal
Turkey's biggest private mobile firm could bail out of a $3bn ($1.6bn) deal to build a network in Iran after MPs there slashed its stake in the project.
Conservatives in parliament say Turkcell's stake in Irancell, the new network, should be cut from 70% to 49%. They have already given themselves a veto over all foreign investment deals, following allegations about Turkish firms' involvement in Israel. Turkcell now says it may give up on the deal altogether.
Iran currently has only one heavily congested mobile network, with long waiting lists for new subscribers. Turkcell signed a contract for the new network in September. The new operator planned to offer subscriptions for about $180, well below the existing firm's $500 price tag. But a parliamentary commission has now ruled that Turkcell's 70% controlling stake is too high. They say that Turkcell is a security risk because of alleged business ties with Israel. Parliament as a whole - dominated by religious conservatives - will vote on the ruling on Tuesday.
Turkcell said the ruling would "make more difficult... Turkcell's financial consolidation of Irancell" because its stake would be reduced to less than 50%. "If management control and financial consolidation of Irancell cannot be achieved... the realisation of the project will become risky," it warned in a statement. The firm has refused to comment on whether it has business dealings in Israel, although like almost all GSM operators worldwide it has an interconnection deal with Israeli networks so that its customers can use their phones there. The two countries strengthened ties in both defence and economic issues in 2004. Israeli industry minister Ehud Olmert was reported in June to have attended a meeting between Ruhi Dogusoy, Turkcell's chief operating officer, and executives from Israeli telecoms firms. Telecoms is one of two areas specifically targeted by the new veto law on foreign investments, passed earlier in September. The other is airports, a source of controversy after the army closed Tehran's new Imam Khomeini International Airport on its opening day in May 2004. Again, the allegation was that the part-Turkish TAV consortium which built and ran it had links with Israel.
| Conservatives in parliament say Turkcell's stake in Irancell, the new network, should be cut from 70% to 49%.Turkcell signed a contract for the new network in September.Iran currently has only one heavily congested mobile network, with long waiting lists for new subscribers.They say that Turkcell is a security risk because of alleged business ties with Israel.Turkcell said the ruling would "make more difficult... Turkcell's financial consolidation of Irancell" because its stake would be reduced to less than 50%.The firm has refused to comment on whether it has business dealings in Israel, although like almost all GSM operators worldwide it has an interconnection deal with Israeli networks so that its customers can use their phones there.Turkcell now says it may give up on the deal altogether.Telecoms is one of two areas specifically targeted by the new veto law on foreign investments, passed earlier in September. |
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Manufacturing recovery 'slowing'
UK manufacturing grew at its slowest pace in one-and-a-half years in January, according to a survey.
The Chartered Institute of Purchasing and Supply (CIPS) said its purchasing manager index (PMI) fell to 51.8 from a revised 53.3 in December. But, despite missing forecasts of 53.7, the PMI number remained above 50 - indicating expansion in the sector. The CIPS said that the strong pound had dented exports while rising oil and metals prices had kept costs high.
The survey added that rising input prices and cooling demand had deterred factory managers from hiring new workers in an effort to cut costs. That triggered the second successive monthly fall in the CIPS employment index to 48.3 - its lowest level since June 2003. The survey is more upbeat than official figures - which suggest that manufacturing is in recession - but analysts said the survey did suggest that the manufacturing recovery was running out of steam. "It appears that the UK is in a two-tier economy again," said Prebon Yamane economist Lena Komileva. "You have weakness in manufacturing, which I think would concern policymakers at the Bank of England."
| The survey is more upbeat than official figures - which suggest that manufacturing is in recession - but analysts said the survey did suggest that the manufacturing recovery was running out of steam.The Chartered Institute of Purchasing and Supply (CIPS) said its purchasing manager index (PMI) fell to 51.8 from a revised 53.3 in December.UK manufacturing grew at its slowest pace in one-and-a-half years in January, according to a survey.The CIPS said that the strong pound had dented exports while rising oil and metals prices had kept costs high. |
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Gold falls on IMF sale concerns
The price of gold has fallen after the International Monetary Fund (IMF) said it will look at ways of using its gold reserves to provide debt relief.
By revaluing its holdings, the IMF may be able to sell billions of dollars of gold and use the cash to cancel debts owed by the world's poorest nations. The plan was put forward by G7 finance ministers over the weekend. The price of gold fell to $413.50 an ounce in Asia, before rebounding slightly in early European trading.
IMF boss Rodrigo Rato was asked by G7 ministers to carry out a study into the feasibility of revaluing and selling gold reserves.
He is expected to present his conclusions at an IMF meeting in Washington during April. "Whatever happens the market is going to be disconcerted and on the back foot until the April IMF meetings," said John Reade, an analyst at UBS. The IMF values its gold reserves at between $40 and $50 an ounce, a price that was fixed in the 1970s and is about a tenth of the metal's current market value. The IMF has 3,217 tonnes of gold, or about 113.5m ounces. Bringing the book price of the gold in line with market value would boost the IMF's balance sheet, giving it more money to distribute.
This idea has been put forward before, but there now seems to be a more committed political drive to address the issue of global poverty. "This is the first time there has been a mention of the use of gold in a G7 communiqué for achieving debt relief," said UK Chancellor of the Exchequer Gordon Brown. At their meeting in London, G7 finance ministers backed plans to write off up to 100% of the debts owed by some of the world's poorest countries. Mr Brown said the meeting would be remembered as "the 100% debt relief summit". While debt relief seems to have jumped to the top of the global agenda, not everyone is convinced that selling IMF gold is the best way forward. The US, which can veto any plan to sell IMF gold should it so choose, said it is looking at other ways of solving the problem. "The US is not convinced that's the necessary way to do it," said Treasury Under Secretary John Taylor. Canada, a key gold producer, also expressed reservations.
| The price of gold has fallen after the International Monetary Fund (IMF) said it will look at ways of using its gold reserves to provide debt relief.While debt relief seems to have jumped to the top of the global agenda, not everyone is convinced that selling IMF gold is the best way forward.The US, which can veto any plan to sell IMF gold should it so choose, said it is looking at other ways of solving the problem.The IMF has 3,217 tonnes of gold, or about 113.5m ounces.The IMF values its gold reserves at between $40 and $50 an ounce, a price that was fixed in the 1970s and is about a tenth of the metal's current market value.IMF boss Rodrigo Rato was asked by G7 ministers to carry out a study into the feasibility of revaluing and selling gold reserves.By revaluing its holdings, the IMF may be able to sell billions of dollars of gold and use the cash to cancel debts owed by the world's poorest nations. |
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Chinese wine tempts Italy's Illva
Italy's Illva Saronno has agreed to buy 33% of Changyu, the largest wine maker in China.
Changyu said in a statement to the Shenzhen stock exchange that Illva will pay 481.42m yuan ($58.16m; £30.7m), once the government approves the deal. The Italian liqueur maker will acquire the shares from the Yantai State Asset Management Bureau. Chinese wine sales are growing, the US Agriculture Department said, with wine sales in 2003 up 25% at 61.1bn yuan.
China is encouraging state-owned companies to sell shares to foreign investors. Anheuser-Busch, Heineken and Scottish & Newcastle have all invested in the Chinese beer industry in the last two years and now Illva Saronno is betting on the Chinese wine market. Yantai State Asset Management Bureau - a government agency in the north-eastern city of Yantai - owns 55% of Changyu. The state agency will also sell 10% of its stake in Changyu to another overseas company, although it didn't say who. The remaining 12% will be retained by the Yantai city government. The consumption of wine in China is still low, at just 0.22 litres per capita, said the US Agriculture Department. This compares with 59 litres in France, 12 litres in the US and three litres in Japan.
| Yantai State Asset Management Bureau - a government agency in the north-eastern city of Yantai - owns 55% of Changyu.The consumption of wine in China is still low, at just 0.22 litres per capita, said the US Agriculture Department.Italy's Illva Saronno has agreed to buy 33% of Changyu, the largest wine maker in China.Chinese wine sales are growing, the US Agriculture Department said, with wine sales in 2003 up 25% at 61.1bn yuan.The Italian liqueur maker will acquire the shares from the Yantai State Asset Management Bureau. |
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Khodorkovsky ally denies charges
A close associate of former Yukos boss Mikhail Khodorkovsky has told a court that fraud charges levelled against him are "false".
Platon Lebedev has been on trial alongside Mr Khodorkovsky since June in a case centring around the privatisation of a fertiliser firm. The pair claim they are being punished by the authorities for the political ambitions of Mr Khodorkovsky. Mr Lebedev said there were "absurd contradictions" in the case. Opening his defence, he said he could not see the legal basis of the charges he faced, which also include allegations of tax evasion. "To my embarrassment, I could not understand the file of complaints against me," he told a Moscow court. Mr Lebedev headed the Menatep group, the parent company of Yukos.
Mr Lebedev and Mr Khodorkovsky, who each face a possible 10 year jail sentence if convicted, will be questioned by a judge over the next few days. Mr Khodorkovsky began his testimony last week, telling the court that he objected to the way that the "running of a normal business has been presented as a work of criminal fiction". The charges are seen by supporters as politically motivated and part of a drive by Russian President Vladimir Putin to rein in the country's super-rich business leaders, the so-called oligarchs. Yukos has been presented with a $27.5bn (£13bn) tax demand by the Russian authorities and its key Yugansk division was auctioned off to part settle the bill. The company's effort to gain bankruptcy protection in the US - in a bid to win damages for the sale - were dismissed by a court in Texas.
| Mr Khodorkovsky began his testimony last week, telling the court that he objected to the way that the "running of a normal business has been presented as a work of criminal fiction".Platon Lebedev has been on trial alongside Mr Khodorkovsky since June in a case centring around the privatisation of a fertiliser firm.Mr Lebedev and Mr Khodorkovsky, who each face a possible 10 year jail sentence if convicted, will be questioned by a judge over the next few days.A close associate of former Yukos boss Mikhail Khodorkovsky has told a court that fraud charges levelled against him are "false".Mr Lebedev said there were "absurd contradictions" in the case. |
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US manufacturing expands
US industrial production increased in December, according to the latest survey from the Institute for Supply Management (ISM).
Its index of national manufacturing activity rose to 58.6 last month from 57.8 in November. A reading above 50 indicates a level of growth. The result for December was slightly better than analysts' expectations and the 19th consecutive expansion. The ISM said the growth was driven by a "significant" rise in the new orders. "This completes a strong year for manufacturing based on the ISM data," said chairman of the ISM's survey committee. "While there is continuing upward pressure on prices, the rate of increase is slowing and definitely trending in the right direction."
The ISM's index of national manufacturing activity is compiled from monthly responses of purchasing executives at more than 400 industrial companies, ranging from textiles to chemicals to paper, and has now been above 50 since June 2003. Analysts expected December's figure to come in at 58.1. The ISM manufacturing index's main sister survey - the employment index - eased to 52.7 in December from 57.6 in November, while its "prices paid" index, measuring the cost to businesses of their inputs, also eased to 72.0 from 74.0. The ISM's "new orders" index rose to 67.4 from 61.5.
| The ISM manufacturing index's main sister survey - the employment index - eased to 52.7 in December from 57.6 in November, while its "prices paid" index, measuring the cost to businesses of their inputs, also eased to 72.0 from 74.0.The ISM's "new orders" index rose to 67.4 from 61.5.The ISM said the growth was driven by a "significant" rise in the new orders.Its index of national manufacturing activity rose to 58.6 last month from 57.8 in November."This completes a strong year for manufacturing based on the ISM data," said chairman of the ISM's survey committee. |
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WMC says Xstrata bid is too low
Australian mining firm WMC Resources has said it is worth up to 30% more than a hostile 7.4bn Australian dollar ($5.8bn; £3bn) bid by rival Xstrata.
There is now pressure on Swiss-based Xstrata to increase its takeover offer. A report from investment firm Grant Samuel in WMC defence documents values WMC shares at A$7.17 to A$8.24, against Xstrata's bid of A$6.35 a share. Analysts said the defence documents provided more details on WMC, and may trigger a possible rival bid. "If a bid is going to emerge it is probably likely in the next one to two weeks," said Daiwa Securities analyst Mark Pervan. He said the valuation would put increased pressure on Xstrata to look at "sweetening" its offer. Marc Gonsalves, an executive at Xstrata, said: "We will review the information contained in the target's statement over the next week or so." He added: "While we will review the assumptions made by Grant Samuel in detail, we are extremely sceptical of their conclusion, and suggest that WMC shareholders take extreme care in presuming that these optimistic assumptions are capable of being realised."
Last month Australia's competition watchdog said it would not oppose the purchase of WMC by Zurich and London-based Xstrata. On Tuesday, WMC chairman Tommie Bergman said in a statement the directors believed it was in shareholders' best interest to reject the offer. He said WMC would pursue "value-creating options" provided by a portfolio of "world class assets". And WMC chief executive Andrew Michelmore claimed the Xstrata offer was aimed at creating value for Xstrata's shareholders, and was not being made for the benefit of WMC's shareholders. Grant Samuel said its valuation of WMC was based on lower average prices for nickel, copper and uranium than current market levels. "Any longer term commodity price improvements would only improve our outlook," Mr Michelmore said.
In 2003 Xstrata acquired Australia's largest copper miner - MIM Holdings. WMC Resources is the world's third-largest producer of concentrated nickel, and also a miner of copper and uranium. It owns the Olympic Dam mine in South Australia, which contains about one-third of the world's known uranium resources and is also the world's fourth largest copper mine. Xstrata is a global mining giant with operations in Australia, South Africa, Spain, Germany, Argentina and the UK. Its core products are copper, coking coal, thermal coal, ferrochrome, vanadium and zinc. It also has growing businesses in gold, lead and silver.
| Grant Samuel said its valuation of WMC was based on lower average prices for nickel, copper and uranium than current market levels.Last month Australia's competition watchdog said it would not oppose the purchase of WMC by Zurich and London-based Xstrata.He said the valuation would put increased pressure on Xstrata to look at "sweetening" its offer.WMC Resources is the world's third-largest producer of concentrated nickel, and also a miner of copper and uranium.Australian mining firm WMC Resources has said it is worth up to 30% more than a hostile 7.4bn Australian dollar ($5.8bn; £3bn) bid by rival Xstrata.Analysts said the defence documents provided more details on WMC, and may trigger a possible rival bid.On Tuesday, WMC chairman Tommie Bergman said in a statement the directors believed it was in shareholders' best interest to reject the offer.He said WMC would pursue "value-creating options" provided by a portfolio of "world class assets". |
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Burren awarded Egyptian contracts
British energy firm Burren Energy has been awarded two potentially lucrative oil exploration contracts in Egypt.
The company successfully bid for the two contracts, granted by government owned oil firms, covering onshore and offshore areas in the Gulf of Suez. Burren Energy already has a presence in Egypt, having been awarded an exploration contract last year. The firm, which floated in 2003, recently announced a deal to buy 26% of Indian firm Hindustan Oil Exploration. The £13.8m deal gives Burren Energy access to the Indian oil and gas industry. This latest contract expands Burren Energy's global exploration and production portfolio - it also holds contracts in Turkmenistan and the Republic of Congo. "These assets significantly increase our exploration portfolio in Egypt and we continue to investigate further opportunities in this region," said chief executive Finian O'Sullivan.
| British energy firm Burren Energy has been awarded two potentially lucrative oil exploration contracts in Egypt.Burren Energy already has a presence in Egypt, having been awarded an exploration contract last year.The £13.8m deal gives Burren Energy access to the Indian oil and gas industry. |
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China bans new tobacco factories
The world's biggest tobacco consumer, China, has said it will not allow any new tobacco factories to be built.
China already has more than enough cigarette-making capacity, according to a spokesman for the tobacco industry regulator quoted in China Daily. The ban threatens to reignite tensions between the regulator and British American Tobacco, which plans to become China's first foreign cigarette maker. A spokeswoman for Bat declined to comment on the report.
"China won't allow any new tobacco factories to be built, including joint ventures", said Xing Wangli, a spokesman for the State Tobacco Administration Monopoly quoted in China Daily. He also said that the state would retain its monopoly on cigarette distribution. China has 350 million smokers who consumer 1.7 trillion cigarettes a year. Smoking is fashionable in China, where it is seen as an essential - and manly - sociable touch for some jobs, such as salesmen. More young, urban woman are taking up smoking too. In July 2004, Bat announced it had won approval for to build a $1.5bn (£800m) joint venture factory in China which would make it the first foreign cigarette maker to manufacture there.
The State Tobacco Monopoly Administration said a week later that it had not approved the deal, leading to an embarrassing public row. Bat told the BBC at that time that it had not negotiated with the STMC, and secured approval from "the highest levels of government". Since then, the row has flared occasionally, most recently at a forum in November. Bat consistently declines to comment. "Xing's statement comes as especially bad news for British American Tobacco", the China Daily newspaper said of the latest development. The Bat spokeswoman said: "There is nothing for us to add...since our announcement in July last year. The central government of China is the authority that approved our strategic investment." The decision to ban further tobacco factories does not apply to deals made before 2005, according to the French news agency AFP. The joint venture factory was expected to take till 2006 to build. The Bat spokeswoman would not comment on its progress. However, if the STMA continues to take a tough stance, expansion opportunities could be limited.
China's tobacco market is increasingly valuable as anti-smoking campaigners target public smoking in the West. China Daily said the market was currently enjoying steady growth, making more than 210bn yuan ($25.4bn) in pre-tax profits last year, almost double the figure in 2000. The paper made no mention of health concerns. The STMA is trying to restructure the domestic tobacco industry, closing some factories, though such moves can be unpopular with local governments.
| "China won't allow any new tobacco factories to be built, including joint ventures", said Xing Wangli, a spokesman for the State Tobacco Administration Monopoly quoted in China Daily.The world's biggest tobacco consumer, China, has said it will not allow any new tobacco factories to be built.In July 2004, Bat announced it had won approval for to build a $1.5bn (£800m) joint venture factory in China which would make it the first foreign cigarette maker to manufacture there.China already has more than enough cigarette-making capacity, according to a spokesman for the tobacco industry regulator quoted in China Daily."Xing's statement comes as especially bad news for British American Tobacco", the China Daily newspaper said of the latest development.The State Tobacco Monopoly Administration said a week later that it had not approved the deal, leading to an embarrassing public row.The Bat spokeswoman would not comment on its progress.China has 350 million smokers who consumer 1.7 trillion cigarettes a year.The Bat spokeswoman said: "There is nothing for us to add...since our announcement in July last year.The decision to ban further tobacco factories does not apply to deals made before 2005, according to the French news agency AFP. |
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Iraq and Afghanistan in WTO talks
The World Trade Organisation (WTO) is to hold membership talks with both Iraq and Afghanistan.
But Iran's bid to join the trade body has been refused after the US blocked its application for the 21st time. The countries stand to reap huge benefits from membership of the group, whose purpose is to promote free trade. Joining, however, is a lengthy process. China's admission in 2001 took 15 years and talks with Russia and Saudi Arabia have been taking place for 10 years. Membership of the Geneva-based WTO helps guarantee a country's goods receives equal treatment in the markets of other member states - a policy which has seen it become closely associated with globalisation.
Iraq's Trade Minister Mohammed Mustafa al-Jibouri welcomed the move, describing it as significant as November's decision by the Paris Club of creditor nations to write off 80% of the country's debts. Assad Omar, Afghanistan's envoy to the United Nations in Geneva, said accession would contribute to "regional prosperity and global security". There are now 27 countries seeking membership of the WTO. Prospective members need to enter into negotiations with potential trading countries and change domestic laws to bring them in line with WTO regulations. Before the process gets under way, all 148 WTO members must give their backing to applicant countries. The US said it could not approve Iran's application because it is currently reviewing relations. But several nations criticised the approach, and European Union ambassador to the WTO, Carlo Trojan, said Iran's application "must be treated independently of political issues".
| There are now 27 countries seeking membership of the WTO.The World Trade Organisation (WTO) is to hold membership talks with both Iraq and Afghanistan.But several nations criticised the approach, and European Union ambassador to the WTO, Carlo Trojan, said Iran's application "must be treated independently of political issues".Before the process gets under way, all 148 WTO members must give their backing to applicant countries.Membership of the Geneva-based WTO helps guarantee a country's goods receives equal treatment in the markets of other member states - a policy which has seen it become closely associated with globalisation.But Iran's bid to join the trade body has been refused after the US blocked its application for the 21st time. |
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Turkey turns on the economic charm
Three years after a gruelling economic crisis, Turkey has dressed its economy to impress.
As part of a charm offensive - ahead of 17 December, when the European Union will decide whether to start entry talks - Turkey's economic leaders have been banging the drum to draw attention to recent achievements. The economy is growing fast, they insist. Education levels among its young and large population are rising. Unemployment levels, in percentage terms, are heading fast towards single digits. Inflation is under control. A new law to govern its turbulent banking system is on the cards. The tourism industry is booming and revenues from visitors should more than double to $21bn (£10.8bn) in three years.
Moreover, government spending is set to be frozen and a burdensome social security deficit is being tackled. Income and corporate taxes will be cut next year in order to attract $15bn of foreign investment over the next three years. A loan restructuring deal with the International Monetary Fund (IMF) is pretty much in the can. And following recent macroeconomic restructuring efforts, its currency is floating freely and its central bank is independent.
The point of all this has been to convince Europe's decision makers that rather than being a phenomenally costly exercise for the EU, allowing Turkey in would in fact bring masses of economic benefits.
"The cake will be bigger for everybody," said Deputy Prime Minister Abdullatif Sener earlier this month. "Turkey will not be a burden for the EU budget." If admitted into the EU, Turkey would contribute almost 6bn euros ($8bn; £6bn) to its budget by 2014, according to a recent impact study by the country's State Planning Organisation. As Turkey's gross domestic output (GDP) is set to grow by 6% per year on average, its contribution would rise from less than 5bn euros in 2014 to almost 9bn euros by 2020. Turkey could also help alleviate a labour shortage in "Old Europe" once its population comes of age. By 2014, one in four Turks - or about 18 million people - will be aged 14 or less. "A literate and qualified Turkish population," insisted Mr Sener, "will make a positive impact on the EU."
This runs contrary to the popular view that Turkey is getting ready to dig deep into EU taxpayers' wallets. However, Turkey's assertions are confirmed by Brussels' own impact studies, which indeed say that Turkish membership would be good news for the EU economy. But only over time. Costs are projected to be vast during the early years of Turkey's membership, with subsidies alone estimated to exceed 16.5bn euros and, according to some predictions, balloon to 33.5bn euros. This would include vast agricultural subsidies and regional aid, though such payments should decline as the country's farm sector, which currently employs one in three Turks, would employ just one in five by 2020.
Such high initial expenses would be coupled with risks that the benefits flagged up by Turkey's government would never be delivered, say those who feel the Turkish project should be shunned.
Some fear that rather than providing an educated, sophisticated labour force for Europe at large, the people who will leave Turkey to seek work abroad will be poor, uneducated - and plentiful. More recently, less palatable concerns - at least in liberal European circles - have been voiced, with senior EU or member state officials talking darkly of a "river of Islam", an "oriental" culture and a threat to Europe's "cultural richness". Of course, many opponents are politically motivated - their views ranging from xenophobic prejudices about the country's Muslim traditions to well-documented concerns about the government's human rights record. Yet their economic arguments should not be dismissed out of hand.
Critics insist that much of the optimism about Turkey's economic roadmap has been over-egged - an argument amplified by a 134% rise in the country's current account deficit to $10.7bn during the first 10 months of this year.
The country's massive debt - which includes $23bn owed to the IMF and billions borrowed via the international bond markets - also remains a major obstacle to its ambition of joining the EU. "In the new member states of the European Union, gross public debt is typically about 40% of gross domestic product," says Reza Moghadam, assistant director of the IMF's European Department. "At about 80% of GDP, Turkey's gross debt is double that figure." Turkey's debts have largely arisen from its efforts to push through banking reform after a run on the banks in 2001 caused the country's devastating recession. "There is no question that although Turkey is doing much better than in the past, it remains quite vulnerable," says Michael Deppler, director of the IMF's European Department. "Its debt is far too high for an emerging economy." A key factor for EU decision makers should be whether or not Turkey has met its economic criteria. But economics is not a science. And although the state of Turkey's economy is important, as is its pace of reform, the final decision on 17 December will be taken by politicians who will, of course, be guided by their political instincts.
| If admitted into the EU, Turkey would contribute almost 6bn euros ($8bn; £6bn) to its budget by 2014, according to a recent impact study by the country's State Planning Organisation.Critics insist that much of the optimism about Turkey's economic roadmap has been over-egged - an argument amplified by a 134% rise in the country's current account deficit to $10.7bn during the first 10 months of this year.As Turkey's gross domestic output (GDP) is set to grow by 6% per year on average, its contribution would rise from less than 5bn euros in 2014 to almost 9bn euros by 2020.Three years after a gruelling economic crisis, Turkey has dressed its economy to impress.However, Turkey's assertions are confirmed by Brussels' own impact studies, which indeed say that Turkish membership would be good news for the EU economy.A key factor for EU decision makers should be whether or not Turkey has met its economic criteria.The point of all this has been to convince Europe's decision makers that rather than being a phenomenally costly exercise for the EU, allowing Turkey in would in fact bring masses of economic benefits."Turkey will not be a burden for the EU budget."The country's massive debt - which includes $23bn owed to the IMF and billions borrowed via the international bond markets - also remains a major obstacle to its ambition of joining the EU.Costs are projected to be vast during the early years of Turkey's membership, with subsidies alone estimated to exceed 16.5bn euros and, according to some predictions, balloon to 33.5bn euros."At about 80% of GDP, Turkey's gross debt is double that figure."Turkey's debts have largely arisen from its efforts to push through banking reform after a run on the banks in 2001 caused the country's devastating recession.The tourism industry is booming and revenues from visitors should more than double to $21bn (£10.8bn) in three years."In the new member states of the European Union, gross public debt is typically about 40% of gross domestic product," says Reza Moghadam, assistant director of the IMF's European Department.Such high initial expenses would be coupled with risks that the benefits flagged up by Turkey's government would never be delivered, say those who feel the Turkish project should be shunned.And although the state of Turkey's economy is important, as is its pace of reform, the final decision on 17 December will be taken by politicians who will, of course, be guided by their political instincts. |
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Weak data buffets French economy
A batch of downbeat government data has cast doubt over the French economy's future prospects.
Official figures showed on Friday that unemployment was unchanged at 9.9% last month, while consumer confidence fell unexpectedly in October. At the same time, finance minister Nicolas Sarkozy warned that high oil prices posed a threat to French growth. "[Oil prices] will weigh on consumer spending in the short term, and potentially on confidence," he said. World oil prices have risen by more than 60% since the start of the year as production struggles to keep pace with soaring demand.
Analysts said French companies, keen to protect their profit margins at a time of rising energy costs, were reluctant to take on extra staff. "[The unemployment figures] show the main problem of the French economy: we have growth but without an improvement in employment," said Marc Touati, an economist at Natexis Banques Populaires. "Politicians must have the will and guts to solve structural unemployment with thorough reforms, otherwise in five or ten years, it will be too late." Obligatory employer contributions to worker welfare programmes mean that it costs more to hire staff in France than in many other European economies. Many economists have urged the government to stimulate employment by reducing non-wage payroll costs, and by scrapping restrictions on working hours. The French statistics agency, INSEE, expects the economy to grow by about 2.4% this year, buoyed by strong consumer spending and business investment. That is above the projected eurozone average of just above 2%.
| "[The unemployment figures] show the main problem of the French economy: we have growth but without an improvement in employment," said Marc Touati, an economist at Natexis Banques Populaires."[Oil prices] will weigh on consumer spending in the short term, and potentially on confidence," he said.At the same time, finance minister Nicolas Sarkozy warned that high oil prices posed a threat to French growth.The French statistics agency, INSEE, expects the economy to grow by about 2.4% this year, buoyed by strong consumer spending and business investment.Analysts said French companies, keen to protect their profit margins at a time of rising energy costs, were reluctant to take on extra staff. |
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MCI shareholder sues to stop bid
A shareholder in US phone firm MCI has taken legal action to halt a $6.75bn (£3.6bn) buyout by telecoms giant Verizon, hoping to get a better deal.
The lawsuit was filed on Friday after Qwest Communications, which had an earlier offer for MCI rejected, said it would submit an improved bid. MCI's directors have backed Verizon, despite it tabling less money. They are accused of breaching their fiduciary duties by depriving MCI shareholders "of maximum value".
According the legal papers filed in a Delaware court, Verizon is set to pay an ""unconscionable, unfair and grossly inadequate" sum for MCI, which was formerly known as Worldcom. Qwest said on Wednesday that MCI had rejected a deal worth $8bn. A number of large MCI shareholders expressed unhappiness at the decision, saying that Verizon's offer, made up of cash, shares and dividends, undervalued the company. Friday's lawsuit argues that the Verizon offer makes no provision for future growth prospects and that consolidation in the US phone industry will put a premium on MCI's network, assets and clients. MCI's directors have argued that Verizon is bigger than Qwest, has fewer debts and has built a successful mobile division. Chief executive Michael Capellas spent last week meeting with shareholders in an effort to win their backing.
In 2002, investors in the then-named Worldcom lost millions when the company filed for bankruptcy following an accounting scandal. However, the firm - now renamed MCI - has put its operations in order and emerged from bankruptcy protection last April. It is a long-distance and corporate phone firm, and would provide the buyer with access to a global telecommunications network and a large number of business-based subscribers. MCI shares jumped on Friday, hitting their highest level since April 2004 amid speculation that it would be the focus of a bidding war. A takeover of MCI would be the fifth billion-dollar telecoms deal since October as companies look to cut costs and boost client bases. Earlier this month, SBC Communications agreed to buy its former parent and phone pioneer AT&T for about $16bn.
| A shareholder in US phone firm MCI has taken legal action to halt a $6.75bn (£3.6bn) buyout by telecoms giant Verizon, hoping to get a better deal.The lawsuit was filed on Friday after Qwest Communications, which had an earlier offer for MCI rejected, said it would submit an improved bid.Qwest said on Wednesday that MCI had rejected a deal worth $8bn.However, the firm - now renamed MCI - has put its operations in order and emerged from bankruptcy protection last April.A number of large MCI shareholders expressed unhappiness at the decision, saying that Verizon's offer, made up of cash, shares and dividends, undervalued the company.A takeover of MCI would be the fifth billion-dollar telecoms deal since October as companies look to cut costs and boost client bases.According the legal papers filed in a Delaware court, Verizon is set to pay an ""unconscionable, unfair and grossly inadequate" sum for MCI, which was formerly known as Worldcom. |
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Saab to build Cadillacs in Sweden
General Motors, the world's largest car maker, has confirmed that it will build a new medium-sized Cadillac BLS at its loss-making Saab factory in Sweden.
The car, unveiled at the Geneva motor show, is intended to compete in the medium-sized luxury car market. It will not be sold in the US, said GM Europe president Carl-Peter Forster. As part of its efforts to make the US marque appeal to European drivers, the car will be the first Cadillac with a diesel engine.
GM's announcement should go some way to allay fears of the Saab factory's closure. The factory in Trollhaettan has been at the centre of rumours about GM's planned severe cutbacks in its troubled European operations. But the group's new commitment to the Swedish factory may not be welcomed by the group's Opel workers in Ruesselsheim, Germany. They may now have to face a larger proportion of GM's cuts.
Neither will the announcement be seen as unalloyed good news in Sweden, since it reflects Saab's failure to make significant inroads into the lucrative European luxury car market. For years, Saab has consistently said it is competing head-on with BMW, Mercedes and Jaguar. The segment's leaders do not agree.
GM's plans to build the American marque in Sweden is part of its efforts to push it as an alternative luxury brand for European drivers. In the US, it has long been established as an upmarket brand - even the presidential limousine carries the badge. Yet it could prove tough for Cadillac to steal market share from the majors in Europe. Other luxury car makers, most notably the Toyota subsidiary Lexus, have enjoyed tremendous success in the US without managing to make significant inroads in Europe. There, German marques Mercedes Benz and BMW have retained their stranglehold on the luxury market.
Bringing Cadillac production to Sweden should help introduce desperately-needed scale to the Saab factory, which currently produces fewer than 130,000 cars per year. That is about half of what major car makers consider sufficient numbers for profitable operations, and Saab is losing money fast - albeit with losses halved in 2004 to $200m (£104m; 151m euros) from $500m the previous year. Beyond the 12,000 job cuts announced last year at its European operations, GM is reducing expenditure by building Saabs, Opels - badged as Vauxhalls in the UK - and now Cadillacs on the same framework, and by allowing the different brands to share parts. Another way to further reduce Saab's losses could be to shift some of the production of Saabs to the US, a market where drivers have adopted it as an upmarket European car. Doing so would remove the exposure to the weak US dollar, which is making Saabs more expensive to US consumers. But not everyone in the industry agree that it would be the best way forward. "We know that in five years the US dollar will be stronger than it is today," the chief executive of a leading European car maker told BBC News. The current trend towards US production was "stupid", he said.
In a separate announcement, GM unveiled a new scheme to allow European consumers the chance to test drive its Opel and Vauxhall models. It is to deploy a fleet of 35,000 test cars across 40 countries, inviting potential buyers to try out a vehicle for 24-hours. It follows a similar initiative by GM in the US. GM said it wanted to change "customers' perceptions" about Opel and Vauxhall cars, showing them that the quality had improved in recent years.
| Another way to further reduce Saab's losses could be to shift some of the production of Saabs to the US, a market where drivers have adopted it as an upmarket European car.As part of its efforts to make the US marque appeal to European drivers, the car will be the first Cadillac with a diesel engine.Neither will the announcement be seen as unalloyed good news in Sweden, since it reflects Saab's failure to make significant inroads into the lucrative European luxury car market."We know that in five years the US dollar will be stronger than it is today," the chief executive of a leading European car maker told BBC News.General Motors, the world's largest car maker, has confirmed that it will build a new medium-sized Cadillac BLS at its loss-making Saab factory in Sweden.The car, unveiled at the Geneva motor show, is intended to compete in the medium-sized luxury car market.Other luxury car makers, most notably the Toyota subsidiary Lexus, have enjoyed tremendous success in the US without managing to make significant inroads in Europe.It will not be sold in the US, said GM Europe president Carl-Peter Forster.Bringing Cadillac production to Sweden should help introduce desperately-needed scale to the Saab factory, which currently produces fewer than 130,000 cars per year.GM's plans to build the American marque in Sweden is part of its efforts to push it as an alternative luxury brand for European drivers.Doing so would remove the exposure to the weak US dollar, which is making Saabs more expensive to US consumers.It follows a similar initiative by GM in the US. |
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Quiksilver moves for Rossignol
Shares of Skis Rossignol, the world's largest ski-maker, have jumped as much as 15% on speculation that it will be bought by US surfwear firm Quiksilver.
The owners of Rossignol, the Boix-Vives family, are said to be considering an offer from Quiksilver. Analysts believe other sporting goods companies may now take a closer look at Rossignol, prompting an auction and pushing the sale price higher. Nike and K2 have previously been mentioned as possible suitors.
Rossignol shares touched 17.70 euros, before falling back to trade 7.8% higher at 16.60 euros. European sporting goods companies have seen foreign revenues squeezed by a slump in the value of the US dollar, making a takeover more attractive, analysts said. Companies such as Quiksilver would be able to cut costs by selling Rossignol skis through their shops, they added. The Boix-Vives family is thought to have spent the past couple of years sounding out possible suitors for Rossignol, which also makes golf equipment, snowboards and sports clothing.
| The owners of Rossignol, the Boix-Vives family, are said to be considering an offer from Quiksilver.The Boix-Vives family is thought to have spent the past couple of years sounding out possible suitors for Rossignol, which also makes golf equipment, snowboards and sports clothing.Analysts believe other sporting goods companies may now take a closer look at Rossignol, prompting an auction and pushing the sale price higher.Shares of Skis Rossignol, the world's largest ski-maker, have jumped as much as 15% on speculation that it will be bought by US surfwear firm Quiksilver. |
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Strong demand triggers oil rally
Crude oil prices surged back above the $47 a barrel mark on Thursday after an energy market watchdog raised its forecasts for global demand.
The International Energy Agency (IEA) warned demand for Opec's crude in the first quarter would outstrip supply. The IEA raised its estimate of 2005 oil demand growth by 80,000 barrels a day to 84 million barrels a day. US light crude rose $1.64 to $47.10, while Brent crude in London gained $1.32 to $44.45.
The Paris-based IEA watchdog, which advises industrialized nations on energy policy, said the upward revision was due to stronger demand from China and other Asian countries. The fresh rally in crude prices followed gains on Wednesday which were triggered by large falls in US crude supplies following a cold spell in North America in January. The US Department of Energy reported that crude stockpiles had fallen 1m barrels to 294.3m. On top of that, ongoing problems for beleaguered Russian oil giant Yukos have also prompted the IEA to revise its output estimates from Russia - a major non-Opec supplier. "I think that prices are now beginning to set a new range and it looks like the $40 to $50 level," said energy analyst Orin Middleton of Barclays Capital.
| Crude oil prices surged back above the $47 a barrel mark on Thursday after an energy market watchdog raised its forecasts for global demand.The US Department of Energy reported that crude stockpiles had fallen 1m barrels to 294.3m.The International Energy Agency (IEA) warned demand for Opec's crude in the first quarter would outstrip supply.The IEA raised its estimate of 2005 oil demand growth by 80,000 barrels a day to 84 million barrels a day. |
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High fuel costs hit US airlines
Two of the largest airlines in the US - American and Southwest - have blamed record fuel prices for their disappointing quarterly results.
American Airlines' parent AMR reported a loss of $387m (£206m) for the fourth quarter of 2004, against a $111m loss for the same period a year earlier. Meanwhile, Southwest Airlines saw its fourth-quarter 2004 profits fall 15% to $56m, against $66m a year earlier. Both said high fuel bills would continue to pressure revenues in 2005. American, the world's biggest airline by some measures, said it expected to report a loss for the first quarter of 2005. Southwest, which has the highest market value of any US carrier, said it would remain profitable despite high fuel prices.
AMR's shares were flat in Wednesday morning trading on the New York Stock Exchange, as the results were slightly better than analysts had anticipated. AMR's chief executive Gerard Arpey said the airline's difficulties reflected the situation within the industry. "AMR's results for the fourth quarter of 2004 reflect the economic woes that plagued the airline industry throughout 2004 - in particular, high fuel prices and a tough revenue environment," he said. For the full year, AMR posted a loss of $761m, lower than 2003's $1.2bn loss and an indication that the airline has successfully cut costs. AMR added that as part of its cost cutting measures, it is postponing the delivery of 54 Boeing jets. Shares in Southwest fell 65 cents to $14.35 as analysts voiced their disappointment. "The results came in below our already conservative estimate for the quarter," said Ray Neidl, an analyst at Calyon Securities. Both American and Southwest have been squeezed by cut-throat competition in the US airline industry, as a glut of available seats has led to fierce price reductions.
| "AMR's results for the fourth quarter of 2004 reflect the economic woes that plagued the airline industry throughout 2004 - in particular, high fuel prices and a tough revenue environment," he said.American, the world's biggest airline by some measures, said it expected to report a loss for the first quarter of 2005.American Airlines' parent AMR reported a loss of $387m (£206m) for the fourth quarter of 2004, against a $111m loss for the same period a year earlier.Southwest, which has the highest market value of any US carrier, said it would remain profitable despite high fuel prices.Two of the largest airlines in the US - American and Southwest - have blamed record fuel prices for their disappointing quarterly results.Both American and Southwest have been squeezed by cut-throat competition in the US airline industry, as a glut of available seats has led to fierce price reductions. |
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WorldCom director admits lying
The former chief financial officer at US telecoms firm WorldCom has admitted before a New York court that he used to lie to fellow board members.
Speaking at the trial of his former boss Bernard Ebbers, Scott Sullivan said he lied to the board to cover up the hole in WorldCom's finances. Mr Ebbers is on trial for fraud and conspiracy in relation to WorldCom's collapse in 2002. He pleads not guilty. The firm had been overstating its accounts by $11bn (£8.5bn). Mr Sullivan, 42, has already pleaded guilty to fraud and will be sentenced following Mr Ebbers' trial, where he is appearing as a prosecution witness. Mr Ebbers, 63, has always insisted that he was unaware of any hidden shortfalls in WorldCom's finances.
In the New York court on Wednesday, Mr Ebbers' lawyer Reid Weingarten asked Mr Sullivan: "If you believe something is in your interest, you are willing and able to lie to accomplish it, isn't that right?"
"On that date, yes. I was lying," replied Mr Sullivan. Mr Weingarten has suggested that Mr Sullivan is implicating Mr Ebbers only to win a lighter sentence, something Mr Sullivan denies. Mr Sullivan also rejects a suggestion that he had once told fellow WorldCom board member Bert Roberts that Mr Ebbers was unaware of the accounting fraud at WorldCom. The trial of Mr Ebbers is now into its third week.
Under 23 hours of questioning from a federal prosecutor, Mr Sullivan has previously told the court that he repeatedly warned Mr Ebbers that falsifying the books would be the only way to meet Wall Street revenue and earnings expectations. Mr Sullivan claims that Mr Ebbers refused to stop the fraud. Mr Ebbers could face a sentence of 85 years if convicted of all the charges he is facing. WorldCom's problems appear to have begun with the collapse of the dotcom boom which cut its business from internet companies. Prosecutors allege that the company's top executives responded by orchestrating massive fraud over a two-year period. WorldCom emerged from bankruptcy protection in 2004, and is now known as MCI.
| Mr Sullivan, 42, has already pleaded guilty to fraud and will be sentenced following Mr Ebbers' trial, where he is appearing as a prosecution witness.Mr Sullivan claims that Mr Ebbers refused to stop the fraud.Mr Weingarten has suggested that Mr Sullivan is implicating Mr Ebbers only to win a lighter sentence, something Mr Sullivan denies.Mr Sullivan also rejects a suggestion that he had once told fellow WorldCom board member Bert Roberts that Mr Ebbers was unaware of the accounting fraud at WorldCom.Mr Ebbers is on trial for fraud and conspiracy in relation to WorldCom's collapse in 2002.The trial of Mr Ebbers is now into its third week.In the New York court on Wednesday, Mr Ebbers' lawyer Reid Weingarten asked Mr Sullivan: "If you believe something is in your interest, you are willing and able to lie to accomplish it, isn't that right?"Mr Ebbers, 63, has always insisted that he was unaware of any hidden shortfalls in WorldCom's finances. |
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Qatar and Shell in $6bn gas deal
Shell has signed a $6bn (£3.12bn) deal with the Middle Eastern sheikhdom of Qatar to supply liquid natural gas (LNG) to North America and Europe.
The UK-Dutch group will own 30% of the project, with Qatar's state oil firm owning the rest. The agreement is the latest in a string of deals reached by Qatar, which is trying to make itself a regional leader in natural gas. US oil giant ExxonMobil signed up for a $12.8bn deal earlier on Sunday. France's Total is expected to join the ExxonMobil scheme, dubbed Qatargas-2, on Monday, taking 5 million tonnes of LNG a year. ExxonMobil will be taking some 15 million tonnes each year for 25 years from the end of 2007 under the deal. Shell's agreement, under the name Qatargas-4, foresees the building of new facilities to handle 1.4 billion cubic feet of gas, and 7.8 million tonnes of LNG each year from 2011 onwards.
| ExxonMobil will be taking some 15 million tonnes each year for 25 years from the end of 2007 under the deal.France's Total is expected to join the ExxonMobil scheme, dubbed Qatargas-2, on Monday, taking 5 million tonnes of LNG a year.US oil giant ExxonMobil signed up for a $12.8bn deal earlier on Sunday. |
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Could Yukos be a blessing in disguise?
Other things being equal, the notion of entrepreneurs languishing in jail while their companies are sold off for a song ought to be bad for business.
But in the looking-glass world of modern Russia, the opposite might just be true, a new report* has argued. The study, from the Centre for Economic Policy Research, does not praise the rough handling of oil company Yukos. But it argues that more rigorous tax policing has benefited all Russian firms, even targets of the tax police. "An increase in tax enforcement can increase the amount [of dividends and other income] outside shareholders will receive, even accounting for increased levels of taxation," the authors say.
The paper's reasoning is complex, and is based on a sophisticated model of the relationship between tax regimes and corporate governance - in particular, the propensity of management to steal from the company. The calculations demonstrated what many Russian analysts already knew: that increasing the tax rate increases the amount that managers steal, since undeclared income becomes relatively more valuable. In the West, meanwhile, higher tax rates translate far more smoothly into higher government revenues. On the other hand, increasing the rigour with which taxes are collected encourages companies to become more transparent, forcing them to be able to demonstrate their financial position far more accurately. The net result, the authors say, is that the extra amount companies pay in tax is more than compensated for by greater efficiency and financial soundness.
After Vladimir Putin became president in 2000, he did not raise taxes, but put a lot of effort - too much, critics argue - into enforcement.
Since then, the Russian stock market has more than trebled in value, a rise the authors attribute at least in part to the newly tough approach. The report highlights the case of Sibneft, a Russian oil company that came close to merging with Yukos last year. After Mr Putin came to power, the company's overall effective tax rate rose from 2.6% to 10.4%, and Sibneft was the target of a series of aggressive raids by fiscal police. But shareholders benefited hugely: Sibneft started to pay dividends - $53m in 2000 and almost $1bn in 2001 - and closed down the network of opaque subsidiaries it had previously used for siphoning off unofficial funds. According to the authors, although a variety of changes were sweeping through Russian industry at the time, the increase in tax enforcement is the only likely explanation for the change of fortunes at Sibneft and many of its peers.
Does this analysis make sense? In part, certainly. For all its faults, corporate Russia has become far more orderly and law-abiding since 2000. Companies have rushed to list their shares on international stock exchanges - something unthinkable in the wilder days of the 1990s - and most large firms now produce their accounts to international standards. Foreign direct investment, long negligible, is starting to flow in serious amounts - $7bn in 2003 - and stock market returns have been among the healthiest in Europe. But the authors' model does not quite cover all the complexities. For a start, the model assumes that the various parties have clearly-defined motivation: companies want to maximise profit, governments want to maximise tax revenue. In fact, the alarmingly close connections between big business and government in Russia - connections often greased by bribery - blur the apparently antagonistic relationship. Companies can, for example, persuade officials to overlook non-payment of taxes.
And the authors' definition of tax enforcement seems unrealistically Western. Genuine, disinterested tax collection might well work wonders in Russia; the problem with recent examples has been the erratic and unpredictable way laws are enforced. The case against Yukos, for example, has moved in fits and starts, with little clarity from the government about its intentions, and little faith from investors that the letter of the law would be followed. As far as most commentators are concerned, the state is pursuing Yukos out of a political vendetta, rather than simply to enforce fiscal rectitude. Since Yukos' founder, Mikhail Khodorkovsky, was arrested a year ago, the Russian market has dropped by 10% - an indication that few investors feel optimistic about the salutary effect on corporate performance.
| But it argues that more rigorous tax policing has benefited all Russian firms, even targets of the tax police.The calculations demonstrated what many Russian analysts already knew: that increasing the tax rate increases the amount that managers steal, since undeclared income becomes relatively more valuable.The net result, the authors say, is that the extra amount companies pay in tax is more than compensated for by greater efficiency and financial soundness.Since then, the Russian stock market has more than trebled in value, a rise the authors attribute at least in part to the newly tough approach.The report highlights the case of Sibneft, a Russian oil company that came close to merging with Yukos last year."An increase in tax enforcement can increase the amount [of dividends and other income] outside shareholders will receive, even accounting for increased levels of taxation," the authors say.According to the authors, although a variety of changes were sweeping through Russian industry at the time, the increase in tax enforcement is the only likely explanation for the change of fortunes at Sibneft and many of its peers.Genuine, disinterested tax collection might well work wonders in Russia; the problem with recent examples has been the erratic and unpredictable way laws are enforced.And the authors' definition of tax enforcement seems unrealistically Western.The paper's reasoning is complex, and is based on a sophisticated model of the relationship between tax regimes and corporate governance - in particular, the propensity of management to steal from the company.On the other hand, increasing the rigour with which taxes are collected encourages companies to become more transparent, forcing them to be able to demonstrate their financial position far more accurately.For all its faults, corporate Russia has become far more orderly and law-abiding since 2000. |
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Boeing secures giant Japan order
Boeing is to supply Japan Airlines with up to 50 of its forthcoming 7E7 planes in a deal that could be worth as much as $6bn (£3.1bn) for the US giant.
Japan Airlines has made a firm order for 30 of the aircraft, at $120m each, with the option to buy 20 more. Asia's biggest airline joins Japanese rival All Nippon as one of the first carriers to order the mid-size 7E7, which Boeing says is super-economical. Airbus this week announced the first pre-sale of its 7E7 rival - the A350. Boeing's great European competitor is to sell 10 of its forthcoming A350 to Spanish carrier Air Europe, which has the option to buy two more in a deal that could be worth more than $1.8bn. Both the 7E7 and the A350 are being designed to be as fuel-efficient as possible in the 200- to 300-seat sector, and each will be available in both short and long range versions.
Japan Airlines said it had looked at both aircraft before choosing the 7E7, also known as the Dreamliner. "We chose the 7E7 after carefully considering both it and Airbus' aircraft," said a Japan Airlines spokesman. "The 7E7 fits better for what we needed and it could be delivered when we hoped to get it." Boeing continues to enjoy a dominance over Airbus in Japan, and Japanese companies are taking key roles in building the 7E7. The first 7E7s will be delivered to Japan Airlines in April 2008. Boeing has set itself a target of getting 200 firm commitments for the 7E7 by the end of this year, and has orders for 56 so far. Airbus hopes to have 50 orders in place for the A350 by mid-2005.
| "We chose the 7E7 after carefully considering both it and Airbus' aircraft," said a Japan Airlines spokesman.Japan Airlines has made a firm order for 30 of the aircraft, at $120m each, with the option to buy 20 more.Boeing is to supply Japan Airlines with up to 50 of its forthcoming 7E7 planes in a deal that could be worth as much as $6bn (£3.1bn) for the US giant.Japan Airlines said it had looked at both aircraft before choosing the 7E7, also known as the Dreamliner.Boeing continues to enjoy a dominance over Airbus in Japan, and Japanese companies are taking key roles in building the 7E7.Airbus this week announced the first pre-sale of its 7E7 rival - the A350. |
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Making your office work for you
Our mission to brighten up your working lives continues - and this time, we're taking a long hard look at your offices.
Over the next few months, our panel of experts will be listening to your gripes about where you work, and suggesting ways to make your workspace more efficient, more congenial or simply prettier. This week, we're hearing from Marianne Petersen, who is planning to convert a barn in Sweden into a base for her freelance writing work. Click on the link under her photograph to read her story, and then scroll down to see what the panel have to say. And if you want to take part in the series, go to the bottom of the story to find out how to get in touch.
Working from home presents a multitude of challenges. Understanding your work personality allows you to work in terms of your own style. Do you feel confident about your work output without conferring with others? Are you able to retain discipline and self motivate to get the job done? Do you build on the ideas of others - or are you a more introspective problem solver?. In order for a virtual office to succeed, keeping the boundary between work and home life is essential. It may be useful to be quite rigid about who is allowed to visit, and to keep strict office hours. Referring to the space as work will give those around you a clear message that this is professional space. It is imperative to consider how to bring the outside world into yours, keeping up to date with developments and maintaining a network. Isolated work environments mean this has to be carefully thought out, and a strategy has to be developed that suits both your personality and your industry. Joining professional groups or forming a loose association of like-minded people may assist. It is useful to structure these meetings in advance as often they get relegated to less important status when times are busy - with the danger that when the workload eases, they have to be resurrected.
Prior to any interior work being undertaken it is essential to ensure that the roof and walls are made water-and-weather-tight, and the structure is checked for stability. It appears that the roof trusses may need repairs and additional bracing.
Ideally, the roof should be replaced with an outer material in keeping with the character and location of the barn. This would also allow for a well-insulated inner skin to be provided which should be light coloured. It is likely that the most efficient way of heating the building is with electricity. In order to provide this the owner will need to have an electrical engineer calculate the potential heating, power and lighting load to make sure the mains supply and distribution capacity are adequate. Ideally, it would be good to have a mains water supply and some means of drainage for toilet and washing facilities. The walls should be dry lined with a single skin of plasterboard laid over rockwool slab which will allow good wall insulation and the power and lighting circuits to be concealed, and the walls should be painted in a light colour. The owner mentions she might lay a new floor over the existing planks; this will improve the insulation and offer a level surface. I would suggest laying new oak veneer planks which can work in with the character of the barn. As for lighting, consider a combination of floor mounted uplights, wall lights (wall washers) and selected downlights. Use a combination of mains voltage fluorescent fittings and dimmable units which can vary the light levels and the feel of the interior.
Please click on the link to the right here to see my ideas for Marianne's barn.
The layout of this office reflects the need to have a working area and a more relaxed meeting space. Large desk space and extensive storage would combine with tub chairs to maximise the space available. The finishes chosen for the furniture will need to reflect the unusual setting, while the lighting and temperature control mechanisms used will further influence the workplace.
Regarding accessing the internet via the connection in the main house, your plan of going wireless is sensible. A wireless router/access point in the house with a wireless LAN card in the PC in the renovated area may be sufficient. However, important points to consider are the distance between the two buildings and the nature of the materials through which the signals have to pass, which could result in a weak signal strength. You may require an additional wireless access point in the renovated area. Your local IT supplier will be able to advise on this. If you haven't already invested in robust firewall and anti-virus software, it is essential to do so, to protect your investment. To really take advantage of wireless technology, you might consider a laptop computer and a docking station with external mouse and monitor. Or you could use one of the new Tablet computers, which allow you to write directly on the screen and convert into text with built-in hand recognition software. And finally, you will save money and space by considering a multi-function product for print, scan, copy and fax.
| In order for a virtual office to succeed, keeping the boundary between work and home life is essential.I would suggest laying new oak veneer planks which can work in with the character of the barn.The layout of this office reflects the need to have a working area and a more relaxed meeting space.Referring to the space as work will give those around you a clear message that this is professional space.Prior to any interior work being undertaken it is essential to ensure that the roof and walls are made water-and-weather-tight, and the structure is checked for stability.Understanding your work personality allows you to work in terms of your own style.You may require an additional wireless access point in the renovated area.A wireless router/access point in the house with a wireless LAN card in the PC in the renovated area may be sufficient.As for lighting, consider a combination of floor mounted uplights, wall lights (wall washers) and selected downlights.Do you feel confident about your work output without conferring with others?The walls should be dry lined with a single skin of plasterboard laid over rockwool slab which will allow good wall insulation and the power and lighting circuits to be concealed, and the walls should be painted in a light colour.This week, we're hearing from Marianne Petersen, who is planning to convert a barn in Sweden into a base for her freelance writing work.It appears that the roof trusses may need repairs and additional bracing.Over the next few months, our panel of experts will be listening to your gripes about where you work, and suggesting ways to make your workspace more efficient, more congenial or simply prettier.In order to provide this the owner will need to have an electrical engineer calculate the potential heating, power and lighting load to make sure the mains supply and distribution capacity are adequate.Ideally, the roof should be replaced with an outer material in keeping with the character and location of the barn.Please click on the link to the right here to see my ideas for Marianne's barn. |
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Stock market eyes Japan recovery
Japanese shares have ended the year at their highest level since 13 July amidst hopes of an economic recovery during 2005.
The Nikkei index of leading shares gained 7.6% during the year to close at 11,488.76 points. In 2005 it "will rise toward 13,000", predicted Morgan Stanley equity strategist Naoki Kamiyama. The optimism in the financial markets contrast sharply with pessimism in the Japanese business community. Earlier this month, the quarterly Tankan survey of Japanese manufacturers found that business confidence had weakened for the first time since March 2003.
Slower economic growth, rising oil prices, a stronger yen and weaker exports were blamed for the fall in confidence. Despite this, traders expect strength in the global economy to benefit Japan, which has been close to sliding into recession in recent months. Structural reform within Japan and an anticipated end to the banking sector's bad debt problems should also help, they say.
| Japanese shares have ended the year at their highest level since 13 July amidst hopes of an economic recovery during 2005.Earlier this month, the quarterly Tankan survey of Japanese manufacturers found that business confidence had weakened for the first time since March 2003.The Nikkei index of leading shares gained 7.6% during the year to close at 11,488.76 points.The optimism in the financial markets contrast sharply with pessimism in the Japanese business community. |
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Disaster claims 'less than $10bn'
Insurers have sought to calm fears that they face huge losses after an earthquake and giant waves killed at least 38,000 people in southern Asia.
Munich Re and Swiss Re, the world's two biggest reinsurers, have said exposure will be less than for other disasters. Rebuilding costs are likely to be cheaper than in developed countries, and many of those affected will not have insurance, analysts said. Swiss Re has said total claims are likely to be less than $10bn (£5.17bn). Swiss Re believes that the cost would be substantial but that it is unlikely to be in double-digit billions, the Financial Times reported. Munich Re, the world's largest reinsurance company, said that its exposure is less than 100m euros (£70m; $136m).
At least 10 countries have been affected, with Sri Lanka, Indonesia, India and Thailand among the worst hit. The region's resorts and Western tourists are expected to be among the main claimants.
Lloyds of London told the Financial Times it expected its exposure to be limited to "holiday resorts, personal accident, travel insurance and marine risks". A spokeswoman for Hanover Re, Europe's fifth-largest reinsurance firm, estimated tsunami-related damage claims would be in the low double-digit millions of euros. The company has paid out about 300 million euros (£281m; $400m) to cover damage caused recently by four major hurricanes in the US.
But insurers have not had long to assess the economic impact of the damage and reports of more casualties and destruction are still coming through.
"So many things are unclear, it is just too early to tell," said Serge Troeber, deputy head of Swiss Re's natural disasters department. "You need very complicated processes to estimate damages. Unlike the hurricanes, you can't just run a model." He anticipated that his own company's total claims would be less then those from the hurricanes, which the company put at $640m. Allianz, a leading German insurer, said it did not know yet what its exposure would be. However, it said the tidal waves were unlikely to have a "significant" impact on its business. Zurich Financial said they could not yet assess the cost of the disaster.
The impact on US insurance companies is not expected to be heavy, analysts said.
Most US insurers have relatively little exposure to Asia and those that do, pass on a lot of the risk to reinsurance companies or special catastrophe funds. Insured damage could be a fraction of the "billions of dollars worth of destruction in Sri Lanka, India, Thailand, Indonesia, the Maldive Islands and Malaysia," said Prudential Equity Group insurance analyst Jay Gelb. "US insurers are likely to have only minimal to no exposure. It's more likely the Bermuda-based reinsurance [companies] might have some exposure," said Paul Newsome, an insurance analyst at AG Edwards & Co.
Many of the affected countries, such as Indonesia, Sri Lanka or the Maldives, do not usually buy insurance for these kinds of disasters, said a US-based insurance expert. Early estimates from the World Bank put the amount of aid needed for the worst affected countries including Sri Lanka, India, Indonesia and Thailand, at about $5bn (£2.6bn), similar to the cash offered to Central America after Hurricane Mitch.
Mitch killed about 10,000 people and caused damage of about $10bn in 1998. But the cost of the tsunamis on the individuals involved is incalculable. "We cannot fathom the cost of these poor societies and the nameless fishermen and fishing villages ... that have just been wiped out. Hundreds of thousands of livelihoods have gone," said Jan Egeland, head of the UN Office for the Coordination of Humanitarian Affairs. Tourists cutting short their holidays in affected areas may suffer a financial impact too. The Association of British insurers warned that travel insurance does not normally cover cutting short a holiday. It said loss of possessions will usually be covered, but the Association stressed the importance of checking the wording of travel policies.
| The impact on US insurance companies is not expected to be heavy, analysts said.Rebuilding costs are likely to be cheaper than in developed countries, and many of those affected will not have insurance, analysts said.Munich Re, the world's largest reinsurance company, said that its exposure is less than 100m euros (£70m; $136m).Swiss Re has said total claims are likely to be less than $10bn (£5.17bn).Many of the affected countries, such as Indonesia, Sri Lanka or the Maldives, do not usually buy insurance for these kinds of disasters, said a US-based insurance expert.Allianz, a leading German insurer, said it did not know yet what its exposure would be.It's more likely the Bermuda-based reinsurance [companies] might have some exposure," said Paul Newsome, an insurance analyst at AG Edwards & Co.Zurich Financial said they could not yet assess the cost of the disaster.Munich Re and Swiss Re, the world's two biggest reinsurers, have said exposure will be less than for other disasters.Insured damage could be a fraction of the "billions of dollars worth of destruction in Sri Lanka, India, Thailand, Indonesia, the Maldive Islands and Malaysia," said Prudential Equity Group insurance analyst Jay Gelb."US insurers are likely to have only minimal to no exposure.Early estimates from the World Bank put the amount of aid needed for the worst affected countries including Sri Lanka, India, Indonesia and Thailand, at about $5bn (£2.6bn), similar to the cash offered to Central America after Hurricane Mitch.However, it said the tidal waves were unlikely to have a "significant" impact on its business.Most US insurers have relatively little exposure to Asia and those that do, pass on a lot of the risk to reinsurance companies or special catastrophe funds. |
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EC calls truce in deficit battle
The European Commission (EC) has called a truce in its battle with France and Germany over breaching deficit limits.
The move came after France and Germany vowed to run their budget deficits below the EU cap in 2005 - for the first time in four years. But, the EC did warn the two were under close scrutiny and it would act if their fiscal situations deteriorated. Under EU rules, member countries must keep their deficits below 3%. France and Germany will breach that this year. It will be the third year in a row that the two countries have broken the European Union's Stability and Growth Pact rules.
The eurozone's two biggest economies left the pact in tatters in November 2003 when they persuaded fellow EU members to put the threat of penalties for deficit breaches on hold.
The commission then took the pair to the European Court of Human Justice - which ruled EU countries could not put the pact "in abeyance", and confirmed the EC's right to launch "excessive debt procedures". After announcing its decision to erase France and Germany from its list of deficit rule breakers, the EU said that the time lag created by the ruling meant that 2005 should be the target year for the pair to bring their budget's below 3%. "The commission concludes that the two countries appear to be on track to correct their excessive deficits by 2005," it said in a statement. The EU expects the German deficit to fall to fall to 2.9% of GDP next year from 3.9% this year, while France's is forecast to drop to 3% from an expected 3.7% this year. The forecasts are based on EC predictions of GDP growth of 1.5% in Germany next year and 2.2% in France.
Berlin welcomed the decision, with finance minister Hans Eichel saying it showed that the EC recognised Germany's fiscal policy was "on the right track even amid very difficult economic conditions". However Paris was more subdued, with finance minister Herve Gaymard telling parliament: "We must continue along this path of saving money." However, the move still had its critics, with the European People's Party (EPP) attacking the EC for backing down from punitive action. "The Commission is buckling under the pressure from Germany and France, " EPP spokesman Alexander Radwan said. "The scary fact is that budget sinners, despite having repeatedly exceeded the 3% deficit limit, do not have to fear any sanctions." Despite the commission delivering its decision on the two biggest eurozone economies, it refused to comment on similar action against Greece which has also broken the 3% deficit ceiling. Monetary Affairs Commissioner Joaquin Almunia said that it was a matter for next week.
| The European Commission (EC) has called a truce in its battle with France and Germany over breaching deficit limits.After announcing its decision to erase France and Germany from its list of deficit rule breakers, the EU said that the time lag created by the ruling meant that 2005 should be the target year for the pair to bring their budget's below 3%.The forecasts are based on EC predictions of GDP growth of 1.5% in Germany next year and 2.2% in France.France and Germany will breach that this year."The commission concludes that the two countries appear to be on track to correct their excessive deficits by 2005," it said in a statement.The move came after France and Germany vowed to run their budget deficits below the EU cap in 2005 - for the first time in four years.Under EU rules, member countries must keep their deficits below 3%.The EU expects the German deficit to fall to fall to 2.9% of GDP next year from 3.9% this year, while France's is forecast to drop to 3% from an expected 3.7% this year. |
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Newest EU members underpin growth
The European Union's newest members will bolster Europe's economic growth in 2005, according to a new report.
The eight central European states which joined the EU last year will see 4.6% growth, the United Nations Economic Commission for Europe (UNECE) said. In contrast, the 12 Euro zone countries will put in a "lacklustre" performance, generating growth of only 1.8%. The global economy will slow in 2005, the UNECE forecasts, due to widespread weakness in consumer demand.
It warned that growth could also be threatened by attempts to reduce the United States' huge current account deficit which, in turn, might lead to significant volatility in exchange rates.
UNECE is forecasting average economic growth of 2.2% across the European Union in 2005. However, total output across the Euro zone is forecast to fall in 2004 from 1.9% to 1.8%. This is due largely to the faltering German economy, which shrank 0.2% in the last quarter of 2004. On Monday, Germany's BdB private banks association said the German economy would struggle to meet its 1.4% growth target in 2005.
Separately, the Bundesbank warned that Germany's efforts to reduce its budget deficit below 3% of GDP presented "huge risks" given that headline economic growth was set to fall below 1% this year. Publishing its 2005 economic survey, the UNECE said central European countries such as the Czech Republic and Slovenia would provide the backbone of the continent's growth. Smaller nations such as Cyprus, Ireland and Malta would also be among the continent's best performing economies this year, it said. The UK economy, on the other hand, is expected to slow in 2005, with growth falling from 3.2% last year to 2.5%.
Consumer demand will remain fragile in many of Europe's largest countries and economies will be mostly driven by growth in exports. "In view of the fragility of factors of domestic growth and the dampening effects of the stronger euro on domestic economic activity and inflation, monetary policy in the euro area is likely to continue to 'wait and see', the organisation said in its report. Global economic growth is expected to fall from 5% in 2004 to 4.25% despite the continued strength of the Chinese and US economies. The UNECE warned that attempts to bring about a controlled reduction in the US current account deficit could cause difficulties. "The orderly reversal of the deficit is a major challenge for policy makers in both the United States and other economies," it noted.
| The eight central European states which joined the EU last year will see 4.6% growth, the United Nations Economic Commission for Europe (UNECE) said.UNECE is forecasting average economic growth of 2.2% across the European Union in 2005.Publishing its 2005 economic survey, the UNECE said central European countries such as the Czech Republic and Slovenia would provide the backbone of the continent's growth.The UK economy, on the other hand, is expected to slow in 2005, with growth falling from 3.2% last year to 2.5%.Global economic growth is expected to fall from 5% in 2004 to 4.25% despite the continued strength of the Chinese and US economies.Separately, the Bundesbank warned that Germany's efforts to reduce its budget deficit below 3% of GDP presented "huge risks" given that headline economic growth was set to fall below 1% this year.On Monday, Germany's BdB private banks association said the German economy would struggle to meet its 1.4% growth target in 2005.The European Union's newest members will bolster Europe's economic growth in 2005, according to a new report. |
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Air Jamaica back in state control
The Jamaican government is regaining control of Air Jamaica in an bid to help the ailing company out of its financial difficulties.
The firm has failed to make money since the state sold a majority stake to hotel tycoon Gordon Stewart in 1994. In common with many carriers, Air Jamaica, with debts of $560m (£291m), has been hit by high fuel costs and the impact of the 11 September attacks. The company will be restructured with the aim of finding a new buyer. "The administration is committed to a viable national airline that will serve as a major catalyst for our economy," said Finance Minister Omar Davies. The 35-year-old airline transports about 55% of all passengers to the island and its pilots are reportedly among the best paid in the industry, with senior members of staff earning in excess of $234,000 a year.
| The Jamaican government is regaining control of Air Jamaica in an bid to help the ailing company out of its financial difficulties.In common with many carriers, Air Jamaica, with debts of $560m (£291m), has been hit by high fuel costs and the impact of the 11 September attacks."The administration is committed to a viable national airline that will serve as a major catalyst for our economy," said Finance Minister Omar Davies. |
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Aviation firms eye booming India
India's defence minister has opened the country's Aero India 2005 air show with an invitation for global aerospace firms to outsource jobs to the nation.
Pranab Mukherjee said such companies could take advantage of India's highly skilled workers and low wages. More than 240 civil and military aerospace firms from 31 countries are attending the show. Analysts said India could spend up to $35bn (£18.8bn) in the aviation market over the next 20 years. Giants such Boeing and Airbus - on the civil aviation front - as well as Lockheed Martin and France's Snecma - on the military side - are some of the firms attending the show. "There is tremendous scope for outsourcing from India in areas where the companies are competitive," said Mr Mukerjee. "We are keen to welcome international collaborations that are in conformity with our national goals."
Lockheed said it had signed an agreement with state-owned Hindustan Aeronautics (HAL) to share information on the P-3 Orion maritime surveillance aircraft.
In fact, the Indian Armed Force is considering the buying of used P-3 Orion as well as F-16 fighter jets from Lockheed. The US military industry has show a strong interest to open a link with India, now that relations between the two countries have improved a lot. In fact, it is the first time the US Air Force will attend the air show since sanctions imposed in 1998 after India's nuclear tests were lifted. But the Indian Air Force is also considering proposals from other foreign firms such as France's Dassault Aviation, Sweden's Saab and Russia's Mikoyan-Gurevich. Meanwhile, France's Snecma has also said it plans a joint venture with HAL to make engine parts, with an initial investment of $6.5m.
On the civilian front, Boeing announced a deal with India's HCL Technologies to develop a platform for the flight test system of its 787 Dreamliner aircraft. The US company also said it had agreed with a new Indian budget airline the sale of 10 737-800 planes for $630m. The airline, SpiceJet, will also have the option to acquire 10 more aircraft. Airbus has also recently signed fresh deals with two Indian airlines - Air Deccan and Kingfisher. In addition, the European company has plans to open a training centre in India. Meanwhile, flag carrier Air India is considering to buy 50 new aircraft from either Boeing or Airbus. "No other market is going to see the growth that will be seen here in the coming years," said Dinesh Keskar, senior vice president Boeing.
| The US company also said it had agreed with a new Indian budget airline the sale of 10 737-800 planes for $630m.Giants such Boeing and Airbus - on the civil aviation front - as well as Lockheed Martin and France's Snecma - on the military side - are some of the firms attending the show.Airbus has also recently signed fresh deals with two Indian airlines - Air Deccan and Kingfisher.Meanwhile, flag carrier Air India is considering to buy 50 new aircraft from either Boeing or Airbus.India's defence minister has opened the country's Aero India 2005 air show with an invitation for global aerospace firms to outsource jobs to the nation.But the Indian Air Force is also considering proposals from other foreign firms such as France's Dassault Aviation, Sweden's Saab and Russia's Mikoyan-Gurevich.The US military industry has show a strong interest to open a link with India, now that relations between the two countries have improved a lot.Meanwhile, France's Snecma has also said it plans a joint venture with HAL to make engine parts, with an initial investment of $6.5m. |
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Algeria hit by further gas riots
Algeria suffered a weekend of violent protests against government plans to raise gas prices, local press reports.
Demonstrators in a number of regions blocked roads, attacked public buildings and overturned vehicles, newspapers including El Watan reported. The price of butane gas, a vital fuel for cooking, has risen to 200 dinars ($2.77) per canister from 170 dinars. Even before the hike, failing economic conditions had been fanning resentment in some of Algeria's poorest regions.
Demonstrators took to the streets last week when the cost change was first announced, but police seemed to have restored order. According to local press reports, trouble flared up again on Saturday and carried on into Sunday. El Watan said that a number of hot spots centred on the villages and towns close to Bouira, about 100 kilometres (60 miles) south of the capital Algiers. Among the other main areas affected were the western Tiaret region and Sidi Ammar in the east of the country, Agence France Presse (AFP) reported. Riots also flared up in the Maghnia region close to the border with Morocco in the west, AFP said. Butane gas and fuel oil are used as the main source of fuel to heat homes and cook food in Algeria's remote mountain areas.
| Butane gas and fuel oil are used as the main source of fuel to heat homes and cook food in Algeria's remote mountain areas.Demonstrators in a number of regions blocked roads, attacked public buildings and overturned vehicles, newspapers including El Watan reported.Riots also flared up in the Maghnia region close to the border with Morocco in the west, AFP said.Algeria suffered a weekend of violent protests against government plans to raise gas prices, local press reports. |
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Bank set to leave rates on hold
UK interest rates are set to remain on hold at 4.75% following the latest meeting of the Bank of England.
The Bank's rate-setting committee has put up rates five times in the past year but rates have been on hold since September amid signs of a slowdown. Economic growth slowed in the previous quarter, as manufacturing output fell, while consumer confidence has slipped. There is also growing evidence that the previously booming UK housing market is now cooling.
House prices fell 0.4% in October, according to the Nationwide, their biggest monthly fall since February 2001. Last month, Bank of England governor Mervyn King said that the economy had hit a "softer patch" after rapid economic growth in the first half of 2004. Richard Jeffrey, chief economist at Bridgewell Securities, said it was very unlikely that the Bank of England would put rates up again this time around. "There have been sufficient signs in the economy of a slowdown to stay the Bank of England's hand," he told BBC Radio 4's Today programme. However, Mr Jeffrey said he believed the slowdown in economic activity was temporary and it was dangerous to assume that rates had peaked. "I still think interest rates are going up," he said. "We are not out of the woods."
| Richard Jeffrey, chief economist at Bridgewell Securities, said it was very unlikely that the Bank of England would put rates up again this time around.UK interest rates are set to remain on hold at 4.75% following the latest meeting of the Bank of England.The Bank's rate-setting committee has put up rates five times in the past year but rates have been on hold since September amid signs of a slowdown.However, Mr Jeffrey said he believed the slowdown in economic activity was temporary and it was dangerous to assume that rates had peaked."I still think interest rates are going up," he said. |
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McDonald's to sponsor MTV show
McDonald's, the world's largest restaurant chain, is to sponsor a programme on music channel MTV as part of its latest youth market promotion.
The show Advance Warning highlights new talent and MTV reckons it will give McDonald's access to nearly 400 million homes in 162 countries. McDonald's golden arches, name and "I'm loving it" catchphrase will be used throughout the half-hour programme. The move comes amid growing concerns about obesity in Europe and the US.
The European Union has called on the food industry to reduce the number of adverts aimed at young children, warning that legislation would be introduced. unless voluntary steps were taken. In the US, food group Kraft is among firms that already have cut back on promoting sugar and fattening products to the young. McDonalds has also been taking steps to improve its junk food reputation, revamping its menu and providing clients with health-related products such as pedometers. As well as burgers like the Big Mac and Quarter Pounder with Cheese, the company now sells healthier options such as salads and fresh fruit. Chief executive Jim Skinner attributed an 8.3% increase in January worldwide sales to the "vitality of our menu", among other things.
Hooking up with MTV is expected to add extra momentum to McDonald's recent revival. MTV, which played a key role in the emergence of the music video, is to show Advance Warning on all 25 of its channels across the world. The programme can at present only been seen in the US, where it has featured artists like British stars Joss Stone and Franz Ferdinand. McDonald's has targeted the youth market in the past with its advertisements, signing up stars like jelly-legged dancer Justin Timberlake and all-woman singing group Destiny's Child.
| McDonalds has also been taking steps to improve its junk food reputation, revamping its menu and providing clients with health-related products such as pedometers.McDonald's, the world's largest restaurant chain, is to sponsor a programme on music channel MTV as part of its latest youth market promotion.McDonald's has targeted the youth market in the past with its advertisements, signing up stars like jelly-legged dancer Justin Timberlake and all-woman singing group Destiny's Child.The show Advance Warning highlights new talent and MTV reckons it will give McDonald's access to nearly 400 million homes in 162 countries.The programme can at present only been seen in the US, where it has featured artists like British stars Joss Stone and Franz Ferdinand.In the US, food group Kraft is among firms that already have cut back on promoting sugar and fattening products to the young. |
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AstraZeneca hit by drug failure
Shares in Anglo-Swedish drug have closed down 8% in UK trade after the failure of its Iressa drug in a major clinical trial.
The lung cancer drug did not significantly prolong survival in patients with the disease. This setback for the group follows the rejection by the US in October of its anti-coagulant pill Exanta. Meanwhile, another of its major money spinners - cholesterol drug Crestor - is facing mounting safety concerns. "This would be two of the three blockbuster drugs that were meant to power the company forward failing... and we've got risks on Crestor," said Nick Turner, analyst at brokers Jefferies.
AstraZeneca had hoped to pitch its Iressa drug against rival medicine Tarceva. But Iressa proved no better than a placebo in extending lives in the trial involving 1,692 patients. Tarceva - made by OSI Pharmaceuticals, Genentech and Roche - has already proved to be successful in helping prolong the life of lung cancer patients. AztraZeneca has now appointed a new executive director to the board. John Patterson will be in charge of drug development. The company said Mr Patterson would make "substantial changes to the clinical organisation and its processes". "I am determined to improve our development and regulatory performance, restore confidence in the company and value to shareholders," said chief executive Tom McKillop.
| Shares in Anglo-Swedish drug have closed down 8% in UK trade after the failure of its Iressa drug in a major clinical trial.John Patterson will be in charge of drug development.AstraZeneca had hoped to pitch its Iressa drug against rival medicine Tarceva.The lung cancer drug did not significantly prolong survival in patients with the disease."This would be two of the three blockbuster drugs that were meant to power the company forward failing... and we've got risks on Crestor," said Nick Turner, analyst at brokers Jefferies. |
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EU 'too slow' on economic reforms
Most EU countries have failed to put in place policies aimed at making Europe the world's most competitive economy by the end of the decade, a report says.
The study, undertaken by the European Commission, sought to assess how far the EU has moved towards meeting its economic targets. In 2000, EU leaders at a summit in Lisbon pledged the European economy would outstrip that of the US by 2010. Their economic targets became known as the Lisbon Agenda. But the Commission report says that, in most EU countries, the pace of economic reform has been too slow, and fulfilling the Lisbon ambitions will be difficult - if not impossible.
Only the UK, Finland, Belgium, Denmark, Ireland and the Netherlands have actually followed up policy recommendations. Among the biggest laggards, according to the report, are Greece and Italy. The Lisbon Agenda set out to increase the number of people employed in Europe by encouraging more older people and women to stay in the workforce. It also set out to raise the amount the private sector spends on research and development, while bringing about greater discipline over public spending and debt levels. Combined with high environmental standards and efforts to level the playing field for businesses throughout the EU, the plan was for Europe to become the world's most dynamic economy by 2010. Next week, the Commission will present revised proposals to meet the Lisbon goals. Many people expect the 2010 target to be quietly dropped.
| But the Commission report says that, in most EU countries, the pace of economic reform has been too slow, and fulfilling the Lisbon ambitions will be difficult - if not impossible.Their economic targets became known as the Lisbon Agenda.In 2000, EU leaders at a summit in Lisbon pledged the European economy would outstrip that of the US by 2010.Most EU countries have failed to put in place policies aimed at making Europe the world's most competitive economy by the end of the decade, a report says.The Lisbon Agenda set out to increase the number of people employed in Europe by encouraging more older people and women to stay in the workforce. |
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Indonesians face fuel price rise
Indonesia's government has confirmed it is considering raising fuel prices by as much as 30%.
Millions of Indonesians use kerosene for basic cooking, and prices have been heavily subsidised for years. President Susilo Bambang Yudhoyono's government has said it wants to curb fuel subsidies and direct the money into aid programmes for the poor. But critics argue cutting subsidies will hurt the poorer families that his government says it wants to help. Millions of people were left homeless in Indonesia Aceh's region following the earthquake and tsunami disaster in late December.
Indonesia pays subsidies to importers in order to stabilise domestic fuel prices, but higher oil prices have forced the government to spend more on holding prices down. It spent 59.2 trillion rupiah ($6.58bn; £3.5bn) on fuel subsidies in 2004, a sum far in excess of its original projection of 14.5 trillion rupiah. Since President Yudhoyono's government came to power in October, it has indicated its intention of raising domestic fuel prices by cutting subsidies. "The (January to March) quarter of this year is the best time for us to increase fuel prices," said Sri Mulyani Indrawati, State Minister for National Development Planning. "We are still considering if a 30% hike is suitable at the moment. The sooner the better for the state budget." The BBC's correspondent in Jakarta, Rachel Harvey, told World Business Report that there was likely to be a strong public reaction to any price rise. "The big question is whether they go for one big, short, sharp shock and raise prices between 20% and 30% or whether they try to stagger it," she said. Indonesia's previous government, led by President Megawati Sukarnoputri, also attempted to cut subsidies in 2003, but was forced to back down in the face of public protests.
| Indonesia's government has confirmed it is considering raising fuel prices by as much as 30%.Indonesia pays subsidies to importers in order to stabilise domestic fuel prices, but higher oil prices have forced the government to spend more on holding prices down.Since President Yudhoyono's government came to power in October, it has indicated its intention of raising domestic fuel prices by cutting subsidies.President Susilo Bambang Yudhoyono's government has said it wants to curb fuel subsidies and direct the money into aid programmes for the poor.Indonesia's previous government, led by President Megawati Sukarnoputri, also attempted to cut subsidies in 2003, but was forced to back down in the face of public protests.But critics argue cutting subsidies will hurt the poorer families that his government says it wants to help. |
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Lesotho textile workers lose jobs
Six foreign-owned textile factories have closed in Lesotho, leaving 6,650 garment workers jobless, union officers told the AP news agency.
Factory Workers Union secretary general Billy Macaefa blamed the closures on the end of worldwide textile quotas. The quotas for developing nations, ended on 1 January, gave them a set share of the rich countries' markets. They also limited the amount countries like China could export to the big markets of the United States and EU.
"We understand that some (owners)... were complaining that the South African rand was strong against the US dollar, and they were losing when exporting textiles and clothing to the United States," Mr Macaefa said at a news briefing in the capital, Maseru. Lesotho's currency, the maloti, is fixed to the rand. "But we suspect that they left the country unceremoniously because of the end of quotas introduced by the World Trade Organization." He said the six factories were Leisure Garments, Modern Garments, Precious Six Garments, TW Garments, Lesotho Hats and Vogue Landmark. The owners - two from Taiwan, two from China, one from Mauritius and one from Malaysia - left over the December holiday period without informing or paying their employees, he said.
Union leaders and trade campaigners have been warning that developing nations such as Lesotho, Sri Lanka, and Bangaldesh could lose thousands of jobs once the quotas were lifted. In the mountainous country surrounded by South Africa, it is feared as many as 50,000 textile workers could lose their jobs, and Mr Mafeca said he expected more companies to leave. The assistance of a US law had given Lesotho's textiles duty-free access to North American markets. The African Growth and Opportunity Act (AGOA), gave sub-Saharan countries preferential access to the US market for apparel and textile products as well as a wide range of other goods. A Lesotho government news briefing is expected on Wednesday.
| "We understand that some (owners)... were complaining that the South African rand was strong against the US dollar, and they were losing when exporting textiles and clothing to the United States," Mr Macaefa said at a news briefing in the capital, Maseru.In the mountainous country surrounded by South Africa, it is feared as many as 50,000 textile workers could lose their jobs, and Mr Mafeca said he expected more companies to leave.Six foreign-owned textile factories have closed in Lesotho, leaving 6,650 garment workers jobless, union officers told the AP news agency.The African Growth and Opportunity Act (AGOA), gave sub-Saharan countries preferential access to the US market for apparel and textile products as well as a wide range of other goods.Union leaders and trade campaigners have been warning that developing nations such as Lesotho, Sri Lanka, and Bangaldesh could lose thousands of jobs once the quotas were lifted.The assistance of a US law had given Lesotho's textiles duty-free access to North American markets. |
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SBC plans post-takeover job cuts
US phone company SBC Communications said it expects to cut around 12,800 jobs following its $16bn (£8.5bn) takeover of former parent AT&T.
SBC said 5,125 positions would go as a result of network efficiencies. Another 1,700 will go from its sales department, 3,400 from business operations and 2,600 across legal, advertising and public relations. SBC currently employs 163,000 people while AT&T employs 47,000. The takeover was announced on Monday. The deal will be financed with $15bn of shares as well as a $1bn special dividend paid to AT&T shareholders.
It effectively marks the end of AT&T, which was founded in 1875 by telephone pioneer Alexander Graham Bell and is one of the US's best-known companies. SBC and AT&T said estimated cost savings of at least $2bn from 2008 were a main driver for the merger. AT&T is a long-distance telecoms firm, while SBC is mainly focused on the local market in the western US. Both also have data network businesses. The takeover is subject to approval by AT&T's shareholders and regulators. The companies said they expected to complete the agreement during the first half of 2006.
| US phone company SBC Communications said it expects to cut around 12,800 jobs following its $16bn (£8.5bn) takeover of former parent AT&T.SBC and AT&T said estimated cost savings of at least $2bn from 2008 were a main driver for the merger.SBC said 5,125 positions would go as a result of network efficiencies.SBC currently employs 163,000 people while AT&T employs 47,000.AT&T is a long-distance telecoms firm, while SBC is mainly focused on the local market in the western US. |
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Unilever shake up as profit slips
Anglo-Dutch consumer goods giant Unilever is to merge its two management boards after reporting "unsatisfactory" earnings for 2004.
It blamed the poor results on sluggish decision making, a rise in discounted retailers and a wet European summer. The company also cited difficult trading conditions and a lack of demand for goods such as its Slimfast range. Unilever, which owns brands including Dove soap, said annual pre-tax profit fell 36% to 2.9bn euros (£1.99bn). Shares fell 1% to 510.75 pence in London, and dropped by 1.2% to 50.50 euros in Amsterdam.
Under the restructuring plans, Patrick Cescau, the UK-based co-chairman, will become group chief executive. Dutch co-chairman Antony Burgmans will take on the role of non-executive chairman.
"We have recognised the need for greater clarity of leadership and we are moving to a simpler leadership structure that will provide a sharper operational focus," Mr Burgmans said. "We are leaving behind one of the key features of Unilever's governance but this is a natural development following the changes introduced last year." The company, which has had dual headquarters in Rotterdam and London since 1930, will announce the location of its head office at a later date. Unilever is not alone in trying to simplify its business. Oil giant Shell last year dismantled its dual-ownership structure, after a series of problems relating to the size of its oil reserves that hammered its share price and led to the resignation of key board members. "The best part of the news this morning was that the company announced a structure simplification," said Arjan Sweere, an analyst at Petercam.
The company said the organizational changes would speed decision making, and it also may make further changes.
The company said its main focus will be on improving profits, and it is planning to accelerate and increase investment in its 400 main brands. "While it is certainly the case that markets have been tougher in the past eighteen months than we had expected, we have also lost some market share," said Mr Cescau. "We let a range of targets limit our ability flexibility and did not adjust our plans quickly enough to a more difficult business environment." "Our objective is to reverse the share loss that we experienced in some markets in 2004 and return to growth."
Unilever said European sales fell 2.8% last year, dragged down by below part sales at its beverage division, where revenues dipped by almost 4%.
Sales of ice cream and frozen food dipped by 3.4% In the US last year, revenue grew by 1.5% "despite disappointing sales in Slimfast", the company said. In Asia, leading products came under "attack" from rivals such as Procter & Gamble. Unilever took a 1.5bn euro one-time charge in the fourth quarter, including a 650m euro write-down on Slimfast diet foods. Sales of Slimfast products have been hit in recent years by the popularity of the Atkins diet. But looking ahead, Unilever said it was optimistic about prospects for its slimming products saying that demand is on the wane for rival low-carbohydrate diets. The company also said it planned to spend 500m euros this year buying back shares.
| The company also said it planned to spend 500m euros this year buying back shares.Sales of ice cream and frozen food dipped by 3.4% In the US last year, revenue grew by 1.5% "despite disappointing sales in Slimfast", the company said.Unilever said European sales fell 2.8% last year, dragged down by below part sales at its beverage division, where revenues dipped by almost 4%.The company said the organizational changes would speed decision making, and it also may make further changes.Unilever, which owns brands including Dove soap, said annual pre-tax profit fell 36% to 2.9bn euros (£1.99bn).But looking ahead, Unilever said it was optimistic about prospects for its slimming products saying that demand is on the wane for rival low-carbohydrate diets."While it is certainly the case that markets have been tougher in the past eighteen months than we had expected, we have also lost some market share," said Mr Cescau.The company also cited difficult trading conditions and a lack of demand for goods such as its Slimfast range."The best part of the news this morning was that the company announced a structure simplification," said Arjan Sweere, an analyst at Petercam.Unilever took a 1.5bn euro one-time charge in the fourth quarter, including a 650m euro write-down on Slimfast diet foods. |
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Enron bosses in $168m payout
Eighteen former Enron directors have agreed a $168m (£89m) settlement deal in a shareholder lawsuit over the collapse of the energy firm.
Leading plaintiff, the University of California, announced the news, adding that 10 of the former directors will pay $13m from their own pockets. The settlement will be put to the courts for approval next week. Enron went bankrupt in 2001 after it emerged it had hidden hundreds of millions of dollars in debt.
Before its collapse, the firm was the seventh biggest public US company by revenue. Its demise sent shockwaves through financial markets and dented investor confidence in corporate America.
"The settlement is very significant in holding these outside directors at least partially personally responsible," William Lerach, the lawyer leading the class action suit against Enron, said. "Hopefully, this will help send a message to corporate boardrooms of the importance of directors performing their legal duties," he added. Under the terms of the $168m settlement - $155m of which will be covered by insurance - none of the 18 former directors will admit any wrongdoing. The deal is the fourth major settlement negotiated by lawyers who filed a class action on behalf of Enron's shareholders almost three years ago. So far, including the latest deal, just under $500m (£378.8m) has been retrieved for investors.
However, the latest deal does not include former Enron chief executives Ken Lay and Jeff Skilling. Both men are facing criminal charges for their alleged misconduct in the run up to the firm's collapse. Neither does it cover Andrew Fastow, who has pleaded guilty to taking part in an illegal conspiracy while he was chief financial officer at the group. Enron's shareholders are still seeking damages from a long list of other big name defendants including the financial institutions JP Morgan Chase, Citigroup, Merrill Lynch and Credit Suisse First Boston. The University of California said the trial in the case is scheduled to begin in October 2006. It joined the lawsuit in December 2001alleging "massive insider trading" and fraud, claiming it had lost $145m on its investments in the company.
| Eighteen former Enron directors have agreed a $168m (£89m) settlement deal in a shareholder lawsuit over the collapse of the energy firm."The settlement is very significant in holding these outside directors at least partially personally responsible," William Lerach, the lawyer leading the class action suit against Enron, said.Under the terms of the $168m settlement - $155m of which will be covered by insurance - none of the 18 former directors will admit any wrongdoing.However, the latest deal does not include former Enron chief executives Ken Lay and Jeff Skilling.Leading plaintiff, the University of California, announced the news, adding that 10 of the former directors will pay $13m from their own pockets.The deal is the fourth major settlement negotiated by lawyers who filed a class action on behalf of Enron's shareholders almost three years ago.So far, including the latest deal, just under $500m (£378.8m) has been retrieved for investors. |
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Venezuela identifies 'idle' farms
Venezuelan authorities have identified more than 500 farms, including 56 large estates, as idle as it continues with its controversial land reform policy.
Under a 2001 land law, the government can tax or seize unused farm sites. A further 40,000 farms are yet to be inspected, the state's National Land Institute has told Associated Press. Vice president Jose Vicente Rangel has said farmers and ranchers with their titles in order and their lands productive have "nothing to fear." Critics of the land reform policy claim president Hugo Chavez is trying to enforce a communist-style economic programme that ignores property rights and will damage the country. Land owners claim the National Land Institute has made mistakes in classifying lands as public or private.
But the government - Venezuela's largest land owner - say they are proceeding cautiously to prevent conflicts. In a statement, Mr Rangel said the land reform is not against the constitution, which permits private property, while stressing the efforts are to "vindicate social and economically" years of inequality in the country.
One property in conflict with the government is the El Charcote cattle ranch, run by Agroflora, a subsidiary of the UK food group Vestey. Agriculture minister Arnoldo Marquez told Reuters news agency the site's documents "do not guarantee that this is a private land". Administrators of the ranch, however, have complained that pro-Chavez squatters have taken over 80% of the property in the last four years, and the UK government has asked Venezuelan authorities to resolve the conflict. "You should ask the company when they are going to put their papers in order and hand over the land that is not theirs," said Mr Marquez.
| Land owners claim the National Land Institute has made mistakes in classifying lands as public or private.Under a 2001 land law, the government can tax or seize unused farm sites.In a statement, Mr Rangel said the land reform is not against the constitution, which permits private property, while stressing the efforts are to "vindicate social and economically" years of inequality in the country.A further 40,000 farms are yet to be inspected, the state's National Land Institute has told Associated Press.Vice president Jose Vicente Rangel has said farmers and ranchers with their titles in order and their lands productive have "nothing to fear." |
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India and Russia in energy talks
India and Russia are to work together in a series of energy deals, part of a pact which could see India invest up to $20bn in oil and gas projects.
On the agenda are oil and gas extraction as well as transportation deals, to be led by Russian energy giant Gazprom and India's ONGC. The Indian firm is also expected to hold talks on Tuesday about buying a stake in assets once owned by Yukos. It is reported to be keen on buying a 15% stake in oil unit Yuganskneftegas. The former Yukos subsidiary was controversially sold off last year and eventually acquired by state-owned energy giant Rosneft.
Russian media reported that India and Russia signed a memorandum of understanding on energy co-operation on Tuesday during a meeting between Oil and Natural Gas Corporation chairman Subir Raha, Gazprom chairman Aleksey Miller and India's petroleum minister Mani Shankar Aiyar.
The agreement is likely to see the two companies develop refining facilities in Russia, India and elsewhere and organise delivery of oil, gas and petrochemicals from Russia to India and other countries across Asia. ONGC could invest in gas and oil fields in Sakhalin, in the far east of Russia, and may also take part in joint tender bids for projects in eastern Siberia and the Caspian Sea.
India is urgently searching for fresh energy supplies - particularly liquefied natural gas - as domestic demand is growing at more than 5% a year.
ONGC's Mr Raha said the two could work together on joint bids from next year. "At current oil and gas prices, our cash flow situation is good," he told Reuters. "What we are saying is - Gazprom has a huge amount of gas and we have the money. "The investment may go up to $20bn or more for a period of five years or so."
Russian news agencies reported that India's petroleum minister Mr Aiyar and Russian energy minister Viktor Khristenko would discuss the future of Yugansk at a meeting on Tuesday. ONGC's Mr Raha declined to be drawn on his firm's reported interest in the company. However, he stressed that ONGC was not interested in a 'loan-for-oil deal' in connection to Yugansk, similar to that concluded recently between Rosneft and China's National Petroleum Corporation. "China's problem is it has immediate demand and they needed the oil for their coastal refineries. We do not. We would like long-term security through equity participation." It is thought that any decision over Yugansk will be delayed until a US court has decided whether to grant Yukos bankruptcy protection. Yukos is suing a host of companies involved in the sale of Yugansk, auctioned off to pay a huge back-tax bill. It has also threatened legal action against any business which has future commercial dealings with its former subsidiary.
| Russian media reported that India and Russia signed a memorandum of understanding on energy co-operation on Tuesday during a meeting between Oil and Natural Gas Corporation chairman Subir Raha, Gazprom chairman Aleksey Miller and India's petroleum minister Mani Shankar Aiyar.India and Russia are to work together in a series of energy deals, part of a pact which could see India invest up to $20bn in oil and gas projects.On the agenda are oil and gas extraction as well as transportation deals, to be led by Russian energy giant Gazprom and India's ONGC.Russian news agencies reported that India's petroleum minister Mr Aiyar and Russian energy minister Viktor Khristenko would discuss the future of Yugansk at a meeting on Tuesday.ONGC could invest in gas and oil fields in Sakhalin, in the far east of Russia, and may also take part in joint tender bids for projects in eastern Siberia and the Caspian Sea.The agreement is likely to see the two companies develop refining facilities in Russia, India and elsewhere and organise delivery of oil, gas and petrochemicals from Russia to India and other countries across Asia.India is urgently searching for fresh energy supplies - particularly liquefied natural gas - as domestic demand is growing at more than 5% a year."What we are saying is - Gazprom has a huge amount of gas and we have the money.The former Yukos subsidiary was controversially sold off last year and eventually acquired by state-owned energy giant Rosneft. |
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GM in crunch talks on Fiat future
Fiat will meet car giant General Motors (GM) on Tuesday in an attempt to reach agreement over the future of the Italian firm's loss-making auto group.
Fiat claims that GM is legally obliged to buy the 90% of the car unit it does not already own; GM says the contract, signed in 2000, is no longer valid. Press reports have speculated that Fiat may be willing to accept a cash payment in return for dropping its claim. Both companies want to cut costs as the car industry adjusts to waning demand.
The meeting between Fiat boss Sergio Marchionne and GM's Rick Wagoner is due to take place at 1330 GMT in Zurich, according to the Reuters news agency.
Mr Marchionne is confident of his firm's legal position, saying in an interview with the Financial Times that GM's argument "has no legs". The agreement in question dates back to GM's decision to buy 20% of Fiat's auto division in 2000. At the time, it gave the Italian firm the right, via a 'put option', to sell the remaining stake to GM. In recent weeks, Fiat has reiterated its claims that this 'put' is still valid and legally binding. However, GM argues that a Fiat share sale made last year, which cut GM's holding to 10%, together with asset sales made by Fiat have terminated the agreement.
Selling the Fiat's car-making unit may not prove so simple, analysts say, especially as it is a company that is so closely linked to Italy's industrial heritage. Political and public pressure may well push the two firms to reach a compromise. "We are not expecting Fiat to exercise its put of the auto business against an unwilling GM at this point," brokerage Merrill Lynch said in a note to investors, adding that any legal battle would be protracted and damaging to the business. "As far as we are aware, the Agnelli family, which indirectly controls at least 30% of Fiat, has not given a firm public indication that it wants to sell the auto business. "Fiat may be willing to cancel the 'put' in exchange for money."
| Fiat claims that GM is legally obliged to buy the 90% of the car unit it does not already own; GM says the contract, signed in 2000, is no longer valid."Fiat may be willing to cancel the 'put' in exchange for money."Fiat will meet car giant General Motors (GM) on Tuesday in an attempt to reach agreement over the future of the Italian firm's loss-making auto group.However, GM argues that a Fiat share sale made last year, which cut GM's holding to 10%, together with asset sales made by Fiat have terminated the agreement."As far as we are aware, the Agnelli family, which indirectly controls at least 30% of Fiat, has not given a firm public indication that it wants to sell the auto business.In recent weeks, Fiat has reiterated its claims that this 'put' is still valid and legally binding. |
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WorldCom trial starts in New York
The trial of Bernie Ebbers, former chief executive of bankrupt US phone company WorldCom, has started in New York with the selection of the jury.
Mr Ebbers, 63, is accused of being the mastermind behind an $11bn (£6bn) accounting fraud that eventually saw the firm collapse in July 2002. His indictment includes charges of securities fraud, conspiracy and filing false reports with regulators. If found guilty, Mr Ebbers could face a substantial jail sentence. He has firmly declared his innocence.
Under Mr Ebbers' leadership, WorldCom emerged from Mississippi obscurity to become a $160bn telecoms giant and the darling of late 1990s investors. Yet as competition intensified and the telecoms boom petered out, WorldCom found itself under growing financial stress. When WorldCom finally collapsed, shareholders lost about $180bn and 20,000 workers lost their jobs. Mr Ebbers' trial, which is expected to last two months, is the latest in a series of attempts by US prosecutors to pursue senior executives for fraud. It will coincide with the retrial of former Tyco International chief Dennis Kozlowski and his top lieutenant, accused of looting the industrial conglomerate to the tune of $600m. Trail preparations are also preparing for former executives of shamed US energy firm Enron.
| The trial of Bernie Ebbers, former chief executive of bankrupt US phone company WorldCom, has started in New York with the selection of the jury.Mr Ebbers, 63, is accused of being the mastermind behind an $11bn (£6bn) accounting fraud that eventually saw the firm collapse in July 2002.Under Mr Ebbers' leadership, WorldCom emerged from Mississippi obscurity to become a $160bn telecoms giant and the darling of late 1990s investors.Mr Ebbers' trial, which is expected to last two months, is the latest in a series of attempts by US prosecutors to pursue senior executives for fraud.If found guilty, Mr Ebbers could face a substantial jail sentence. |
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US bank 'loses' customer details
The Bank of America has revealed it has lost computer tapes containing account details of more than one million customers who are US federal employees.
Several members of the US Senate are among those affected, who could now be vulnerable to identity theft. Senate sources say the missing tapes may have been stolen from a plane by baggage handlers. The bank gave no details of how the records disappeared, but said they had probably not been misused. Customers' accounts were being monitoring and account holders would be notified if any "unusual activity" was detected, bank officials said.
Bank of America said the tapes went missing in December while being shipped to a back-up data centre. "We, with federal law authorities, have done a very robust, thorough investigation on this and neither we nor they would make the statement lightly that we believe those tapes to be lost," Alexandra Tower, a spokeswoman for the North Carolina-based bank, told Time magazine. But although there was no evidence of criminal activity, the bank said, the Secret Service - a federal agency whose brief includes investigations of serious financial crime - is said to be looking into the loss. New York Senator Charles Schumer said he was told by the Senate Rules Committee that the tapes were probably stolen from a commercial plane. "Whether it is identity theft, terrorism, or other theft, in this new complicated world baggage handlers should have background checks and more care should be taken for who is hired for these increasingly sensitive positions," the Democrat senator said. Details of his Vermont colleague Pat Leahy's credit card account are among those missing, Senator Leahy's spokeswoman Tracy Schmaler said. About 900,000 military and civilian staff at the defence department are among the 1.2 million affected, according to a Pentagon spokesman.
| New York Senator Charles Schumer said he was told by the Senate Rules Committee that the tapes were probably stolen from a commercial plane.Bank of America said the tapes went missing in December while being shipped to a back-up data centre.But although there was no evidence of criminal activity, the bank said, the Secret Service - a federal agency whose brief includes investigations of serious financial crime - is said to be looking into the loss.Customers' accounts were being monitoring and account holders would be notified if any "unusual activity" was detected, bank officials said.The Bank of America has revealed it has lost computer tapes containing account details of more than one million customers who are US federal employees. |
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French consumer spending rising
French consumers increased their spending by 1.5% in January, a figure which bodes well for the country's economic growth, figures revealed.
The National Statistic Institute (INSEE) added that consumer spending in January rose 3.8% on a year-on-year basis. Rising sales of household equipment were behind the increase. The INSEE also said that French consumer prices fell 0.6% in January, but were up 1.6% on an annual basis.
Despite the general increase in spending in January, French households bought fewer cars in January. According to the INSEE, car sales fell 2.8% in January, following a fall of 0.6% in December. But on a year-on-year basis, the sector still saw a sales increase of 6.5%. Consumer spending fuelled France's economic growth in the last quarter of 2004 and analysts expect that it will continue to support the economy. "It's a growth that will remain fragile and vulnerable to risks like a strong rise in long-term interest rates, tension in the oil price," Emmanuel Ferry, from Exane BNP Paribas told Reuters news agency.
Meanwhile in Italy, consumer confidence rose to its highest level since October 2004. Economic research group ISAE has said that Italian consumer confidence rose to 104.4 from 103.3, despite a slight deterioration in short-term sentiment.
| The National Statistic Institute (INSEE) added that consumer spending in January rose 3.8% on a year-on-year basis.The INSEE also said that French consumer prices fell 0.6% in January, but were up 1.6% on an annual basis.Despite the general increase in spending in January, French households bought fewer cars in January.French consumers increased their spending by 1.5% in January, a figure which bodes well for the country's economic growth, figures revealed.According to the INSEE, car sales fell 2.8% in January, following a fall of 0.6% in December. |
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Japan turns to beer alternatives
Japanese brewers are increasingly making money from beer-flavoured drinks rather than beer itself
Beer and spirits are heavily taxed in Japan, driving breweries to search for alternatives. Japan's long economic downturn helped drive the trend, as drinkers looked for cheaper opportunities to drown their sorrows. Now, according to Asahi Breweries, the market for so-called "beer-like" drinks is set to grow 84% this year.
Asahi is predicting profits to rise 50% in 2005 as it launches a drink based on soybean peptides rather than malt. The chosen name, "Shinnama" or "new draft", disguises its non-beer nature. But despite a record profit in 2004 of 30.6bn yen ($291m; £154m), up 31.8% on the previous year, Asahi is coming late to the market. Key rival Sapporo is already well-established with the beer-flavoured "Draft One". Suntory, meanwhile, is doing well with "Super Blue", which combines happoshu - an existing low-cost beer alternative made with malt and seawater - and shochu, a distilled alcohol derived from sweet potatoes or barley. Happoshu has been a mainstay of brewery profits for years, taking over from beer thanks to its low tax and therefore low cost. Kirin, the fourth big name, is launching its own "third-type" drink in April.
| Asahi is predicting profits to rise 50% in 2005 as it launches a drink based on soybean peptides rather than malt.Japanese brewers are increasingly making money from beer-flavoured drinks rather than beer itself Beer and spirits are heavily taxed in Japan, driving breweries to search for alternatives.Now, according to Asahi Breweries, the market for so-called "beer-like" drinks is set to grow 84% this year.But despite a record profit in 2004 of 30.6bn yen ($291m; £154m), up 31.8% on the previous year, Asahi is coming late to the market. |
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Rover deal 'may cost 2,000 jobs'
Some 2,000 jobs at MG Rover's Midlands plant may be cut if investment in the firm by a Chinese car maker goes ahead, the Financial Times has reported.
Shanghai Automotive Industry Corp plans to shift production of the Rover 25 to China and export it to the UK, sources close to the negotiations tell the FT. But Rover told BBC News that reports of job cuts were "speculation". A tie-up, seen as Rover's last chance to save its Longbridge plant, has been pushed by UK Chancellor Gordon Brown. Rover confirmed the tie-up would take place "not very far away from this time".
Rover bosses have said they are "confident" the £1bn ($1.9bn) investment deal would be signed in March or early April.
Transport & General Worker's Union general secretary Tony Woodley repeated his view on Friday that all mergers led to some job cuts. He said investment in new models was needed to ensure the future of the Birmingham plant. "This is a very crucial and delicate time and our efforts are targeted to securing new models for the company which will mean jobs for our people," he said. SAIC says none of its money will be paid to the four owners of Rover, who have been accused by unions of awarding themselves exorbitant salaries, the FT reports. "SAIC is extremely concerned to ensure that its money is used to invest in the business rather than be distributed to the shareholders," the newspaper quotes a source close to the Chinese firm. Meanwhile, according to Chinese state press reports, small state-owned carmaker Nanjing Auto is in negotiations with Rover and SAIC to take a 20% stake in the joint venture. SAIC was unavailable for comment on the job cuts when contacted by BBC News. Rover and SAIC signed a technology-sharing agreement in August.
| But Rover told BBC News that reports of job cuts were "speculation".SAIC was unavailable for comment on the job cuts when contacted by BBC News.Rover and SAIC signed a technology-sharing agreement in August.Some 2,000 jobs at MG Rover's Midlands plant may be cut if investment in the firm by a Chinese car maker goes ahead, the Financial Times has reported.SAIC says none of its money will be paid to the four owners of Rover, who have been accused by unions of awarding themselves exorbitant salaries, the FT reports.Meanwhile, according to Chinese state press reports, small state-owned carmaker Nanjing Auto is in negotiations with Rover and SAIC to take a 20% stake in the joint venture. |
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US to probe airline travel chaos
The US government is to investigate two airlines- US Airways and Delta Air Lines' Comair subsidiary - after travel chaos over the Christmas weekend.
Staff calling in sick at US Airways and computer failures at Comair left 30,000 passengers stranded and 10,000 pieces of baggage undelivered. US Airways is in Chapter 11 bankruptcy protection for the second time in two years, and battling to cut costs. It is currently trying to negotiate pay cuts with flight and baggage staff.
Transportation Secretary Norman Mineta said he was "deeply concerned" at the disruption to passengers, and ordered a thorough investigation. Comair's computer breakdown plunged its flight-crew scheduling system into disarray. Altogether, some 1,100 flights were cancelled over the holiday long weekend. Mr Mineta said it was important to understand "what happened, why it happened and whether the carriers properly planned for the holiday travel period and responded appropriately to consumer needs in the aftermath".
Adding to the atmosphere of chaos were mountains of luggage left to pile up when a third of US Airways' baggage handling staff called in sick. There was also a shortage of US Airways flight attendants, with nearly a fifth saying they were too sick to work, leading to many flight cancellations. However, union officials denied there had been a deliberate "sickout". They said that many people have flu at this time of year and that the airline is chronically understaffed.
US Airways ended up cancelling over 100 flights on Christmas Day, stranding passengers in as many as 119 airports. Ground crews at US Airways, the seventh-largest US airline, which is now in Chapter 11 bankruptcy protection, face a court-imposed pay cut next month. The airline needs to negotiate other paycuts if it is to find a route out of bankruptcy. It is looking for paycuts totalling $800m.
"US Airways has a full-scale employee mutiny on its hands," commented Michael Boyd, an industry consultant. Disruptions to flight schedules could discourage customers from flying with US Airways, reducing revenues. US Airways had to cancel approximately 65 flights on Thursday, 180 on Friday, 140 on Saturday, 43 on Sunday and 15 on Monday, said industry officials. The airline said it was "embarrassed by the situation" and "deeply regrets any inconvenience caused to customers," The probe will focus on the industry's compliance with a 1999 agreement aimed at improving the quality of passenger service that has so far allowed airlines to avoid congressionally-mandated standards. Analysts said the Christmas chaos cast doubt on US Airway's ability to emerge from bankruptcy - and was likely to worsen the finances of troubled Delta, parent of Comair. Comair "deeply regrets the inconvenience to all of our customers caused by the severe winter storm in the Ohio River Valley during the busy holiday season, exacerbated by problems with the airline's crew scheduling system, causing additional flight delays and cancellations," the Delta subsidiary said in a statement.
| Ground crews at US Airways, the seventh-largest US airline, which is now in Chapter 11 bankruptcy protection, face a court-imposed pay cut next month.There was also a shortage of US Airways flight attendants, with nearly a fifth saying they were too sick to work, leading to many flight cancellations.The US government is to investigate two airlines- US Airways and Delta Air Lines' Comair subsidiary - after travel chaos over the Christmas weekend.US Airways ended up cancelling over 100 flights on Christmas Day, stranding passengers in as many as 119 airports.Analysts said the Christmas chaos cast doubt on US Airway's ability to emerge from bankruptcy - and was likely to worsen the finances of troubled Delta, parent of Comair.US Airways had to cancel approximately 65 flights on Thursday, 180 on Friday, 140 on Saturday, 43 on Sunday and 15 on Monday, said industry officials.Staff calling in sick at US Airways and computer failures at Comair left 30,000 passengers stranded and 10,000 pieces of baggage undelivered.US Airways is in Chapter 11 bankruptcy protection for the second time in two years, and battling to cut costs.Disruptions to flight schedules could discourage customers from flying with US Airways, reducing revenues. |
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Bush budget seeks deep cutbacks
President Bush has presented his 2006 budget, cutting domestic spending in a bid to lower a record deficit projected to peak at $427bn (£230bn) this year.
The $2.58 trillion (£1.38 trillion) budget submitted to Congress affects 150 domestic programmes from farming to the environment, education and health. But foreign aid is due to rise by 10%, with more money to treat HIV/Aids and reward economic and political reform. Military spending is also set to rise by 4.8%, to reach $419.3bn. The budget does not include the cost of running military operations in Iraq and Afghanistan, for which the administration is expected to seek an extra $80bn from Congress later this year.
Congress will spend several months debating George W Bush's proposal.
The state department's planned budget would rise to just under $23bn - a fraction of the defence department's request - including almost $6bn to assist US allies in the "war on terror". However, the administration is keen to highlight its global effort to tackle HIV/Aids, the BBC's Jonathan Beale reports, and planned spending would almost double to $3bn, with much of that money going to African nations. Mr Bush also wants to increase the amount given to poorer countries through his Millennium Challenge Corporation. The scheme has been set up to reward developing countries that embrace what the US considers to be good governance and sound policies. Yet Mr Bush's proposed spending of $3bn on that project is well below his initial promise of $5bn.
A key spending line missing from proposals is the cost of funding the administration's proposed radical overhaul of Social Security, the pensions programme on which many Americans rely for their retirement income.
Some experts believe this could require borrowing of up to $4.5 trillion over a 20-year period. Neither does the budget include any cash to purchase crude oil for the US emergency petroleum stockpile. Concern over the level of the reserve, created in 1970s, has led to rises in oil prices over the past year. The Bush administration will instead continue to fill the reserve by taking oil - rather than cash - from energy companies that drill under federal leases.
The outline proposes reductions in budgets at 12 out of 23 government agencies including cuts of 9.6% at Agriculture and 5.6% at the Environmental Protection Agency. The spending plan for the year beginning 1 October is banking on a healthy US economy to boost government income by 6.1% to $2.18 trillion. Spending is forecast to grow by 3.5% to $2.57 trillion. But the budget is still the tightest yet under Mr Bush's presidency. "In order to sustain our economic expansion, we must continue pro-growth policies and enforce even greater spending restraint across federal government," Mr Bush said in his budget message to Congress. Mr Bush has promised to halve the US's massive budget deficit within five years. The deficit, partly the result of massive tax cuts early in Mr Bush's presidency, has been a key factor in pushing the US dollar lower. The independent Congressional Budget Office estimates that the shortfall could shrink to little more than $200bn by 2009, returning to the surpluses seen in the late 1990s by 2012. But its estimates depend on the tax cuts not being made permanent, in line with the promise when they were passed that they would "sunset", or disappear, in 2010. Most Republicans, however, want them to stay in place. And the figures also rely on the "Social Security trust fund" - the money set aside to cover the swelling costs of retirement pensions - being offset against the main budget deficit.
| President Bush has presented his 2006 budget, cutting domestic spending in a bid to lower a record deficit projected to peak at $427bn (£230bn) this year.Yet Mr Bush's proposed spending of $3bn on that project is well below his initial promise of $5bn.Military spending is also set to rise by 4.8%, to reach $419.3bn.The budget does not include the cost of running military operations in Iraq and Afghanistan, for which the administration is expected to seek an extra $80bn from Congress later this year.The state department's planned budget would rise to just under $23bn - a fraction of the defence department's request - including almost $6bn to assist US allies in the "war on terror"."In order to sustain our economic expansion, we must continue pro-growth policies and enforce even greater spending restraint across federal government," Mr Bush said in his budget message to Congress.Mr Bush has promised to halve the US's massive budget deficit within five years.But the budget is still the tightest yet under Mr Bush's presidency.The deficit, partly the result of massive tax cuts early in Mr Bush's presidency, has been a key factor in pushing the US dollar lower.The spending plan for the year beginning 1 October is banking on a healthy US economy to boost government income by 6.1% to $2.18 trillion.The $2.58 trillion (£1.38 trillion) budget submitted to Congress affects 150 domestic programmes from farming to the environment, education and health. |
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Warning over US pensions deficit
Taxpayers may have to bail out the US agency that protects workers' pension funds, leading economists have warned.
With the Pension Benefit Guaranty Corporation (PBGC) some £23bn (£12m) in deficit, the Financial Economists Roundtable (FER) wants Congress to act. Instead of taxpayers having to pick up the bill, the FER wants Congressmen to change the PBGC's funding rules. The FER says firms should not have been allowed to reduce the insurance premiums they pay into the PBGC fund. The FER blames this on a 2004 law, in a statement signed by several members, who include Nobel economics laureate William Sharpe. It said it was "dismayed" at the situation and wants Congress to overturn the legislation.
Cash-strapped US companies, including those in the airline, car-making and steel industries, had argued in favour of the 2004 rule change, claiming that funding the insurance premiums adequately would force them to have to cut jobs. "With a little firmer hand on the pensions issues in the US, I think that Congress could avoid having to turn to the taxpayer and instead turn the obligations back onto the companies that deserve to pay them," said Professor Dennis Logue, dean of Price College of Business at the University of Oklahoma. The PBGC was founded in 1974 to protect workers' retirement rights. Its most recent action came last week when it took control of the pilots' pension scheme at United Airlines. With United battling bankruptcy, the carrier had wanted to use the money set aside for pensions to finance running costs. The company has an estimated $2.9bn hole in its pilots' pension scheme, which the PBGC will now guarantee.
| With the Pension Benefit Guaranty Corporation (PBGC) some £23bn (£12m) in deficit, the Financial Economists Roundtable (FER) wants Congress to act.The company has an estimated $2.9bn hole in its pilots' pension scheme, which the PBGC will now guarantee.The FER says firms should not have been allowed to reduce the insurance premiums they pay into the PBGC fund."With a little firmer hand on the pensions issues in the US, I think that Congress could avoid having to turn to the taxpayer and instead turn the obligations back onto the companies that deserve to pay them," said Professor Dennis Logue, dean of Price College of Business at the University of Oklahoma.Instead of taxpayers having to pick up the bill, the FER wants Congressmen to change the PBGC's funding rules. |
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Court rejects $280bn tobacco case
A US government claim accusing the country's biggest tobacco companies of covering up the effects of smoking has been thrown out by an appeal court.
The demand for $280bn (£155bn) - filed by the Clinton administration in 1999 - was rejected in a 2-1 decision. The court in Washington found that the case could not be brought under federal anti-racketeering laws. Among the accused were Altria Group, RJ Reynolds Tobacco, Lorillard Tobacco, Liggett Group and Brown and Williamson. In its case, the government claimed tobacco firms manipulated nicotine levels to increase addiction, targeted teenagers with multi-billion dollar advertising campaigns, lied about the dangers of smoking and ignored research to the contrary.
Prosecutors wanted the cigarette firms to surrender $280bn in profits accumulated over the past 50 years and impose tougher rules on marketing their products. But the Court of Appeals for the District of Columbia ruled that the US government could not sue the firms under legislation drawn up to counteract Mafia infiltration of business. The tobacco companies deny that they illegally conspired to promote smoking and defraud the public. They also say they have already met many of the government's demands in a landmark $206bn settlement reached with 46 states in 1998. Shares of tobacco companies closed higher after the ruling, with Altria rising 5% and Reynolds showing gains of 4.5%.
| A US government claim accusing the country's biggest tobacco companies of covering up the effects of smoking has been thrown out by an appeal court.The tobacco companies deny that they illegally conspired to promote smoking and defraud the public.In its case, the government claimed tobacco firms manipulated nicotine levels to increase addiction, targeted teenagers with multi-billion dollar advertising campaigns, lied about the dangers of smoking and ignored research to the contrary.Shares of tobacco companies closed higher after the ruling, with Altria rising 5% and Reynolds showing gains of 4.5%. |
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BBC poll indicates economic gloom
Citizens in a majority of nations surveyed in a BBC World Service poll believe the world economy is worsening.
Most respondents also said their national economy was getting worse. But when asked about their own family's financial outlook, a majority in 14 countries said they were positive about the future. Almost 23,000 people in 22 countries were questioned for the poll, which was mostly conducted before the Asian tsunami disaster. The poll found that a majority or plurality of people in 13 countries believed the economy was going downhill, compared with respondents in nine countries who believed it was improving. Those surveyed in three countries were split. In percentage terms, an average of 44% of respondents in each country said the world economy was getting worse, compared to 34% who said it was improving. Similarly, 48% were pessimistic about their national economy, while 41% were optimistic. And 47% saw their family's economic conditions improving, as against 36% who said they were getting worse.
The poll of 22,953 people was conducted by the international polling firm GlobeScan, together with the Program on International Policy Attitudes (Pipa) at the University of Maryland. "While the world economy has picked up from difficult times just a few years ago, people seem to not have fully absorbed this development, though they are personally experiencing its effects," said Pipa director Steven Kull. "People around the world are saying: 'I'm OK, but the world isn't'." There may be a perception that war, terrorism and religious and political divisions are making the world a worse place, even though that has not so far been reflected in global economic performance, says the BBC's Elizabeth Blunt.
The countries where people were most optimistic, both for the world and for their own families, were two fast-growing developing economies, China and India, followed by Indonesia. China has seen two decades of blistering economic growth, which has led to wealth creation on a huge scale, says the BBC's Louisa Lim in Beijing. But the results also may reflect the untrammelled confidence of people who are subject to endless government propaganda about their country's rosy economic future, our correspondent says. South Korea was the most pessimistic, while respondents in Italy and Mexico were also quite gloomy. The BBC's David Willey in Rome says one reason for that result is the changeover from the lira to the euro in 2001, which is widely viewed as the biggest reason why their wages and salaries are worth less than they used to be. The Philippines was among the most upbeat countries on prospects for respondents' families, but one of the most pessimistic about the world economy. Pipa conducted the poll from 15 November 2004 to 3 January 2005 across 22 countries in face-to-face or telephone interviews. The interviews took place between 15 November 2004 and 5 January 2005. The margin of error is between 2.5 and 4 points, depending on the country. In eight of the countries, the sample was limited to major metropolitan areas.
| In percentage terms, an average of 44% of respondents in each country said the world economy was getting worse, compared to 34% who said it was improving.The poll found that a majority or plurality of people in 13 countries believed the economy was going downhill, compared with respondents in nine countries who believed it was improving.The Philippines was among the most upbeat countries on prospects for respondents' families, but one of the most pessimistic about the world economy.Most respondents also said their national economy was getting worse.Almost 23,000 people in 22 countries were questioned for the poll, which was mostly conducted before the Asian tsunami disaster.The countries where people were most optimistic, both for the world and for their own families, were two fast-growing developing economies, China and India, followed by Indonesia.Citizens in a majority of nations surveyed in a BBC World Service poll believe the world economy is worsening.Pipa conducted the poll from 15 November 2004 to 3 January 2005 across 22 countries in face-to-face or telephone interviews."While the world economy has picked up from difficult times just a few years ago, people seem to not have fully absorbed this development, though they are personally experiencing its effects," said Pipa director Steven Kull.But when asked about their own family's financial outlook, a majority in 14 countries said they were positive about the future. |
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Barclays profits hit record level
Barclays, the UK's third-biggest bank, has seen annual pre-tax profits climb to record levels boosted by a sharp rise in business at its investment arm.
Profits for the year to 31 December rose 20% to £4.6bn ($8.6bn). Barclays' chief John Varley said the bank had "caught the winds" of a very strong world economy. Earnings at Barclays Capital investment bank rose 25% to £1.04bn, but investment in branch operations held back growth in its UK retail business.
The group is the first of Britain's five big banks to report 2004 results. According to analysts' forecasts, HSBC, the biggest UK bank by stock market valuation, will report profits of £9.4bn later this month.
Barclays results were in line with market expectations. Its Global Investors wing made £347m, an 82% jump on 2003 figures. Profits at Barclaycard rose by 5% to £801m but were said to have been affected by a series of interest rate rises and investment to grow its customer base. The bank also blamed margins pressure on its mortgage business and spending on its branches over the past year for a 1% fall in profits in its UK retail division to £1.13bn.
"The outlook for 2005 is good as a result of balance sheet growth and investments made in 2004," Mr Varley said. Barclays cautioned that growth this year may be slower than in 2004 on the back of softer US and Chinese economies and the impact of interest rate rises on household spending in the UK. It added its bid to acquire a controlling stake in South Africa's leading retail bank Absa, was being considered by regulatory authorities. Speaking on BBC Radio 4, Mr Varley declined to be drawn on reports that Barclays had held merger talks with US bank Wells Fargo. A tie-up between Barclays and California-based Wells Fargo would create the world's fourth biggest bank, valued at $180bn. At 1405 GMT, shares in Barclays were trading down 0.67% at 590 pence. "The headline numbers are in line, but the story is costs," said analyst Alex Potter at Lehman Brothers. "They are a bit more aggressive than we had expected. The cost overshoot is not in Barclays Capital but in the UK bank."
| Earnings at Barclays Capital investment bank rose 25% to £1.04bn, but investment in branch operations held back growth in its UK retail business.The cost overshoot is not in Barclays Capital but in the UK bank."Barclays' chief John Varley said the bank had "caught the winds" of a very strong world economy.A tie-up between Barclays and California-based Wells Fargo would create the world's fourth biggest bank, valued at $180bn.Speaking on BBC Radio 4, Mr Varley declined to be drawn on reports that Barclays had held merger talks with US bank Wells Fargo.The bank also blamed margins pressure on its mortgage business and spending on its branches over the past year for a 1% fall in profits in its UK retail division to £1.13bn.Barclays, the UK's third-biggest bank, has seen annual pre-tax profits climb to record levels boosted by a sharp rise in business at its investment arm.According to analysts' forecasts, HSBC, the biggest UK bank by stock market valuation, will report profits of £9.4bn later this month. |
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Brazil plays down Varig rescue
The Brazilian government has played down claims that it could step in to save the country's biggest airline.
Brazil's airport authority chief Carlos Wilson had claimed the government was on the brink of stepping in to save Varig, Brazil's flagship airline. However, the country's vice president Jose Alencar has said the government still is looking for a solution. Varig is struggling under a huge debt burden of an estimated debt of 6.5 billion reais ($2.3bn or £1.2bn). Asked whether a rescue was on the cards following a meeting of the country's Congress to discuss the airline's crisis, Mr Alencar replied: "No, I don't think so. We will see."
Earlier, Mr Wilson had said that president Luiz Inacio Lula da Silva has decided to step in and a decree of some kind of intervention could be signed this week. "In practice, it will be an intervention, although this is not the technical name used", he said. An intervention means that the government would take administrative control of the company and its finances. For that to happen Varig's main shareholder, the non-profit Ruben Berta Foundation which represents the airline's employees, would have to be removed, Mr Wilson said. However, no jobs would be lost and the airline would keep on flying, he added. Varig, which operates in 18 countries apart from Brazil, has been driven to the brink of collapse because of the country's economic downturn.
The depreciation of Brazil's currency has had a direct impact on the airline's dollar debt as well as some of its costs. Business has improved recently with demand for air travel increasing and a recovery in the Brazilian economy. The airline could also win a sizeable windfall from a compensation claim against the government. On Tuesday the courts awarded Varig 2bn reais ($725m), after ruling in favour of its compensation claim against the government for freezing tariffs from 1985 to 1992. But the government can appeal the decision.
| The Brazilian government has played down claims that it could step in to save the country's biggest airline.However, the country's vice president Jose Alencar has said the government still is looking for a solution.The airline could also win a sizeable windfall from a compensation claim against the government.Brazil's airport authority chief Carlos Wilson had claimed the government was on the brink of stepping in to save Varig, Brazil's flagship airline.On Tuesday the courts awarded Varig 2bn reais ($725m), after ruling in favour of its compensation claim against the government for freezing tariffs from 1985 to 1992.Earlier, Mr Wilson had said that president Luiz Inacio Lula da Silva has decided to step in and a decree of some kind of intervention could be signed this week.An intervention means that the government would take administrative control of the company and its finances. |
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Yukos unit fetches $9bn at auction
A little-known Russian company has bought the main production unit of oil giant Yukos at auction in Moscow.
Baikal Finance Group outbid favourite Gazprom, the state-controlled gas monopoly, to buy Yuganskneftegas. Baikal paid 260.75bn roubles ($9.37bn: £4.8bn) for Yugansk - nowhere near the $27bn Russia says Yukos owes in taxes. Yukos reacted immediately by repeating its view that the auction was illegal in international and Russian law, and said Baikal had bought itself trouble.
"The company considers that the victor of today's auction has bought itself a serious $9bn headache," said Yukos spokesman Alexander Shadrin. He said the company would continue to make "every lawful move" to protect tens of thousands of shareholders in Yukos from "this forcible and illegitimate removal of their property". Meanwhile, Tim Osborne, head of Yukos main shareholders' group Menatep, said that Yukos may have to declare itself bankrupt, and that legal action would be taken, outside Russia, against the auction winners. Reports from Russia say Baikal has paid a deposit of nearly $1.7bn from a Sberbank (Savings Bank) account to the Russian Federal Property Fund, for Yugansk.
The sale came despite a restraining order issued by a US court dealing with the firm's bankruptcy application for Chapter 11 protection. Yukos has always insisted the auction was state-sponsored theft but Russian authorities argued they were imposing the law, trying to recover billions in unpaid taxes. There were originally four registered bidders, and with its close ties to the Kremlin, state-backed gas monopoly Gazprom had been seen as favourite. But just two companies turned up for the auction, Gazprom and the unknown Baikal Finance Group, named after a large freshwater lake in Siberia. And, according to Tass news agency, Gazprom did not make a single bid, leaving the way open for Baikal, which paid above the auction start price of 246.75bn roubles.
Mystery firm Baikal Finance Group is officially registered in the central Russian region of Tver, but many analysts believe it may be linked to Gazprom. Kaha Kiknavelidze, analyst at Troika Dialog, said: "I think a decision that Yugansk should end up with Gazprom was taken a long time ago. So the main question was how to structure this transaction.
"I would not exclude that the structure of the deal has slightly changed and Gazprom now has a partner. "I would also not exclude that Baikal will decline to pay in 14 days, that are given by law, and Gazprom is then recognised as the winner. This would give Gazprom an extra 14 days to accumulate the needed funds. "Another surprise was that the winner paid a significant premium above the starting price." However, Gazprom has announced it is not linked to Baikal in any way. And Paul Collison, chief analyst at Brunswick UBS, said: "I see no plausible explanation for the theory that Baikal was representing competing interests. "Yugansk will most likely end up with Gazprom but could still end up with the government. There is still potential for surprises." Yugansk is at the heart of Yukos - pumping close to a million barrels of oil a day. The unit was seized by the government which claims the oil giant owes more than $27bn in taxes and fines. Yukos says those tax demands are exorbitant, and had sought refuge in US courts.
The US bankruptcy court's initial order on Thursday - to temporarily block the sale - in response to Yukos filing for Chapter 11 bankruptcy protection, was upheld in a second ruling on Saturday. The protection, if recognised by the Russian authorities, would have allowed Yukos' current management to retain control of the business and block the sale of any company assets. Yukos has said the sale amounts to expropriation - punishment for the political ambitions of its founder, Mikhail Khodorkovsky. Mr Khodorkovsky is now in jail, on separate fraud charges. But President Vladimir Putin has described the affair as a crackdown on corruption - and the BBC's Sarah Rainsford in Moscow says most Russians believe the destruction of Yukos is now inevitable. Hours before the auction lawyers for Menatep, a group through which Mr Khodorkovsky and his associates control Yukos, said they would take legal action in other countries. Menatep lawyers, who were excluded from observing the auction, said they would retaliate by seeking injunctions in foreign courts to impound Russian oil and gas exports.
| Yukos reacted immediately by repeating its view that the auction was illegal in international and Russian law, and said Baikal had bought itself trouble.A little-known Russian company has bought the main production unit of oil giant Yukos at auction in Moscow.Meanwhile, Tim Osborne, head of Yukos main shareholders' group Menatep, said that Yukos may have to declare itself bankrupt, and that legal action would be taken, outside Russia, against the auction winners.Hours before the auction lawyers for Menatep, a group through which Mr Khodorkovsky and his associates control Yukos, said they would take legal action in other countries."The company considers that the victor of today's auction has bought itself a serious $9bn headache," said Yukos spokesman Alexander Shadrin.However, Gazprom has announced it is not linked to Baikal in any way.Yukos has always insisted the auction was state-sponsored theft but Russian authorities argued they were imposing the law, trying to recover billions in unpaid taxes."I would not exclude that the structure of the deal has slightly changed and Gazprom now has a partner.Yukos has said the sale amounts to expropriation - punishment for the political ambitions of its founder, Mikhail Khodorkovsky.Baikal paid 260.75bn roubles ($9.37bn: £4.8bn) for Yugansk - nowhere near the $27bn Russia says Yukos owes in taxes.But just two companies turned up for the auction, Gazprom and the unknown Baikal Finance Group, named after a large freshwater lake in Siberia.Reports from Russia say Baikal has paid a deposit of nearly $1.7bn from a Sberbank (Savings Bank) account to the Russian Federal Property Fund, for Yugansk.And, according to Tass news agency, Gazprom did not make a single bid, leaving the way open for Baikal, which paid above the auction start price of 246.75bn roubles.The protection, if recognised by the Russian authorities, would have allowed Yukos' current management to retain control of the business and block the sale of any company assets. |
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Fiat mulls Ferrari market listing
Ferrari could be listed on the stock market as part of an overhaul of Fiat's carmaking operations, the Financial Times has reported.
It said Fiat was set to restructure its business after reaching a $2bn (1.53bn euros; £1.05bn) settlement with GM about Fiat's ownership. Steps being considered include listing Ferrari and bringing Maserati and Alfa Romeo closer together, it said. Despite strong sales of Alfa Romeo, Fiat's car business is making a loss.
Under the proposals - which the paper said could be announced within days - the iconic sportscar maker could be listed separately on the market. Fiat owns a 56% stake in Ferrari -best known for its dominant Formula One motor racing team - having first bought into the business in 1969. It considered floating Ferrari in 2002 but opted to sell a minority stake to Italian bank Mediobanca for 775m euros ($1bn). That sale valued Ferrari - which owns the Maserati brand - at 2.3bn euros. The price tag would change if Maserati was stripped out. The Financial Times said Fiat may transfer Maserati within its wholly- owned Alfa Romeo division in an effort to exploit commercial synergies. Such a move would help Alfa Romeo and Maserati to share marketing, distribution and research & development costs. Maserati and Ferrari sell about 10,000 cars between them and both companies broke even in 2003.
Fiat, Italy's largest private sector employer, did not comment on the reported changes. Fiat recently negotiated an end to its alliance with General Motors. The US firm agreed to pay $2bn to exit an agreement under which it could have been liable to buy Fiat outright. Analysts said the reported restructuring was evidence of the greater flexibility which Fiat now had to develop the business.
| It said Fiat was set to restructure its business after reaching a $2bn (1.53bn euros; £1.05bn) settlement with GM about Fiat's ownership.That sale valued Ferrari - which owns the Maserati brand - at 2.3bn euros.Steps being considered include listing Ferrari and bringing Maserati and Alfa Romeo closer together, it said.The Financial Times said Fiat may transfer Maserati within its wholly- owned Alfa Romeo division in an effort to exploit commercial synergies.Analysts said the reported restructuring was evidence of the greater flexibility which Fiat now had to develop the business.Maserati and Ferrari sell about 10,000 cars between them and both companies broke even in 2003.Fiat owns a 56% stake in Ferrari -best known for its dominant Formula One motor racing team - having first bought into the business in 1969. |
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DaimlerChrysler's 2004 sales rise
US-German carmaker DaimlerChrysler has sold 2.1% more cars in 2004 than in the previous year, as solid Chrysler sales offset a weak showing for Mercedes.
Sales totalled 3.9 million units worldwide during 2004, the company said at the Detroit Motor Show. A switch to new models hit luxury marque Mercedes-Benz, with sales down 3.1% at 1.06 million. Chrysler avoided the fate of US rivals Ford and General Motors, both of whom lost ground to Japanese firms. Its sales rose 3.5% to 2.7 million units.
Similarly on the up was the Smart brand of compact cars, with the division's sales jumping by 21.1% during 2004 to 136,000. The future of the brand - which is controlled by the Mercedes group within DaimlerChrysler - remains in question, however. Smart has consistently lost money since it started trading in 1998, and new model launches are now "on hold", said Mercedes chief executive Eckhard Cordes. In Europe, the Smart will now go on sale through regular Mercedes dealerships as well as its own dealer network, Mr Cordes said.
| In Europe, the Smart will now go on sale through regular Mercedes dealerships as well as its own dealer network, Mr Cordes said.Its sales rose 3.5% to 2.7 million units.A switch to new models hit luxury marque Mercedes-Benz, with sales down 3.1% at 1.06 million.Smart has consistently lost money since it started trading in 1998, and new model launches are now "on hold", said Mercedes chief executive Eckhard Cordes. |
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US in EU tariff chaos trade row
The US has asked the World Trade Organisation to investigate European Union customs tariffs, which it says are inconsistent and hamper trade.
The EU's own institutions have noted the uneven way EU customs rules are applied but failed to act, the US Trade Representative's Office said. Small and mid-sized US firms were worst-hit, it added. The EU expanded from 15 to 25 member states in May. The US said it filed the complaint after talks failed to find a solution.
The move came in the same week that the US and EU stepped back from confrontation in a tense dispute over aircraft subsidies to European manufacturer Airbus and US firm Boeing. New EU trade commissioner Peter Mandelson said on Tuesday that the two sides had agreed to reopen talks in the aircraft subsidies row, which led to tit-for-tat WTO filings in last autumn.
Explaining why it has asked the WTO to set up a dispute settlement panel on customs barriers, the US Trade Representative's Office said that it wants to tackle the issue "early in the EU's process of dealing with the problems of enlargement". Ten countries, mostly in Eastern Europe, joined the EU in May. The US said its trade with the 25 EU member countries was worth $155.2bn (£82.8bn) in 2003. "Although the EU is a customs union, there is no single EU customs administration," a statement issued on behalf of Robert Zoellick, US Trade Representative, said. Lack of uniformity, coupled with lack of procedures for prompt EU-wide review can hinder US exports, especially for small to mid-sized businesses", An EU spokesman in Washington dismissed the US complaint. "We think the US case is very weak. They haven't come up with any evidence that US companies are being harmed," said Anthony Gooch. It could take several months for the WTO's dispute settlement panel to report its findings.
| "Although the EU is a customs union, there is no single EU customs administration," a statement issued on behalf of Robert Zoellick, US Trade Representative, said.The EU's own institutions have noted the uneven way EU customs rules are applied but failed to act, the US Trade Representative's Office said.The US said its trade with the 25 EU member countries was worth $155.2bn (£82.8bn) in 2003.The move came in the same week that the US and EU stepped back from confrontation in a tense dispute over aircraft subsidies to European manufacturer Airbus and US firm Boeing.Explaining why it has asked the WTO to set up a dispute settlement panel on customs barriers, the US Trade Representative's Office said that it wants to tackle the issue "early in the EU's process of dealing with the problems of enlargement".Lack of uniformity, coupled with lack of procedures for prompt EU-wide review can hinder US exports, especially for small to mid-sized businesses", An EU spokesman in Washington dismissed the US complaint. |
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UK house prices dip in November
UK house prices dipped slightly in November, the Office of the Deputy Prime Minister (ODPM) has said.
The average house price fell marginally to £180,226, from £180,444 in October. Recent evidence has suggested that the UK housing market is slowing after interest rate increases, and economists forecast a drop in prices during 2005. But while the monthly figures may hint at a cooling of the market, annual house price inflation is still strong, up 13.8% in the year to November. Economists, however, forecast that ODPM figures are likely to show a weakening in annual house price growth in coming months. "Overall, the housing market activity is slowing down and that is backed up by the mortgage lending and the mortgage approvals data," said Mark Miller, at HBOS Treasury Services. "The ODPM data is a fairly lagging indicator."
The figures come after the Bank of England said the number of mortgages approved in the UK has fallen to the lowest level for nearly a decade. The Halifax, meanwhile, said last week that house prices increased by 1.1% in December - the first monthly rise since September.
The UK's biggest mortgage lender said prices rose 15.1% over the whole of 2004, but by only 2.8% in the second half of the year. It is predicting a 2% fall in overall prices in 2005 as the market stabilises after large gains in recent years. The ODPM attributed the monthly fall of prices in November to a drop in the value of detached houses and flats. It said annual inflation rose between October and November because prices had fallen by 1.1% in the same period in 2003.
The ODPM data showed the average house price was £192,713 in England; £139,544 in Wales; £116,542 in Scotland, and £111,314 in Northern Ireland.
All areas saw a rise in annual house price inflation in November except for Northern Ireland and the West Midlands, where the rate was unchanged, the ODPM said. The North East showed the highest rate of inflation at 26.2%, followed by Yorkshire and the Humber on 21.7%, and the North West on 21.1%. The East Midlands, the West Midlands and the South West all had an annual inflation rate of more than 15%. In London, the area with the highest average house price at £262,825, annual inflation rose only slightly in November to 7.1% from 7% the previous month.
| All areas saw a rise in annual house price inflation in November except for Northern Ireland and the West Midlands, where the rate was unchanged, the ODPM said.It said annual inflation rose between October and November because prices had fallen by 1.1% in the same period in 2003.In London, the area with the highest average house price at £262,825, annual inflation rose only slightly in November to 7.1% from 7% the previous month.UK house prices dipped slightly in November, the Office of the Deputy Prime Minister (ODPM) has said.But while the monthly figures may hint at a cooling of the market, annual house price inflation is still strong, up 13.8% in the year to November.The ODPM attributed the monthly fall of prices in November to a drop in the value of detached houses and flats.The ODPM data showed the average house price was £192,713 in England; £139,544 in Wales; £116,542 in Scotland, and £111,314 in Northern Ireland.The average house price fell marginally to £180,226, from £180,444 in October. |
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Asia shares defy post-quake gloom
Indonesian, Indian and Hong Kong stock markets reached record highs.
Investors seemed to feel that some of the worst-affected areas were so under-developed that the tragedy would have little impact on Asia's listed firms. "Obviously with a lot of loss of life, a lot of time is needed to clean up the mess, bury the people and find the missing," said ABN Amro's Eddie Wong. "[But] it's not necessarily a really big thing in the economic sense."
India's Bombay Stock Exchange inched slightly above its previous record close on Wednesday. Expectations of strong corporate earnings in 2005 drove the Indonesian stock exchange in Jakarta to a record high on Wednesday. In Hong Kong, the Hang Seng index may be benefiting in part from the potential for its listed property companies to gain from rebuilding contracts in the tsunami-affected regions of South East Asia. In Sri Lanka, some economists have said that as much as 1% of annual growth may be lost. Sri Lanka's stock market has fallen about 5% since the weekend, but it is still 40% higher than at the start of 2004.
Thailand may lose 30bn baht (£398m; $768m) in earnings from tourism over the next three months, according to tourism minister Sontaya Kunplome.
In the affected provinces, he expects the loss of tourism revenue to be offset by government reconstruction spending. Thailand intends to spend a similar sum - around 30bn baht - on the rebuilding work. "It will take until the fourth quarter of next year before tourist visitors in Phuket and five other provinces return to their normal level," said Naris Chaiyasoot, director general at the ministry's fiscal policy office. In the Maldives the cost of reconstruction could wipe out economic growth, according to a government spokesman. "Our nation is in peril here," said Ahmed Shaheed, the chief government spokesman. He estimated the economic cost of the disaster at hundreds of millions of dollars. The Maldives has gross domestic product of $660m. "It won't be surprising if the cost exceeds our GDP," he said. "In the last few years, we made great progress in our standard of living - the United Nations recognised this. Now we see this can disappear in a few days, a few minutes." Shaheed noted that investment in a single tourist resort - the economic mainstay - could run to $40m. Between 10 and 12 of the 80-odd resorts have been severely damaged, and a similar number have suffered significant damage.
However, many experts, including the World Bank, have pointed out that it is still difficult to assess the magnitude of the disaster and its likely economic impact. In part, this is because of its scale, and because delivering aid and recovering the dead remain priorities. "Calculators will have to wait," said an IMF official in a briefing on Wednesday. "The financial and world community will be turning toward reconstruction efforts and at that point people will begin to have a sense of the financial impact."
| In the Maldives the cost of reconstruction could wipe out economic growth, according to a government spokesman."Our nation is in peril here," said Ahmed Shaheed, the chief government spokesman.Expectations of strong corporate earnings in 2005 drove the Indonesian stock exchange in Jakarta to a record high on Wednesday.In Sri Lanka, some economists have said that as much as 1% of annual growth may be lost.Indonesian, Indian and Hong Kong stock markets reached record highs."It won't be surprising if the cost exceeds our GDP," he said.Shaheed noted that investment in a single tourist resort - the economic mainstay - could run to $40m.He estimated the economic cost of the disaster at hundreds of millions of dollars.Thailand may lose 30bn baht (£398m; $768m) in earnings from tourism over the next three months, according to tourism minister Sontaya Kunplome."Calculators will have to wait," said an IMF official in a briefing on Wednesday.However, many experts, including the World Bank, have pointed out that it is still difficult to assess the magnitude of the disaster and its likely economic impact. |
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Card fraudsters 'targeting web'
New safeguards on credit and debit card payments in shops has led fraudsters to focus on internet and phone payments, an anti-fraud agency has said.
Anti-fraud consultancy Retail Decisions says 'card-not-present' fraud, where goods are paid for online or by phone, has risen since the start of 2005. The introduction of 'chip and pin' cards has tightened security for transactions on the High Street. But the clampdown has caused fraudsters to change tack, Retail Decisions said.
The introduction of chip and pin cards aimed to cut down on credit card fraud in stores by asking shoppers to verify their identity with a confidential personal pin number, instead of a signature. Retail Decisions chief executive Carl Clump told the BBC that there was "no doubt" that chip and pin would "reduce card fraud in the card-present environment". "However, it is important to monitor what happens in the card-not-present environment as fraudsters will turn their attention to the internet, mail order, telephone order and interactive TV," he said. "We have seen a 22% uplift in card-not-present fraud here in the UK... since the start of the year. "Fraud doesn't just disappear, it mutates to the next weakest link in the chain," he said.
Retail Decisions' survey on the implementation of chip and pin found that shoppers had adapted easily to the new system, but that banks' performance in distributing the new cards had been patchy, at best. "The main issue is that not everyone has the pins they need," said Mr Clump. Nearly two thirds - 65% - of the 1,000 people interviewed said they had used chip and pin to make payments. Of these, 83% were happy with the experience, though nearly a quarter said they struggled to remember their pin number. However, only 34% said they had received replacement cards with the necessary 'chip' technology from all their card providers. Furthermore, 16% said that none of their cards had been replaced, while 30% said only some had. UK shoppers spent £5.3bn on plastic cards in 2003, the last full year for which figures are available from the Association of Payment Clearing Services (Apacs). Altogether, card scams on UK-issued cards totalled £402.4m in 2003. Card-not-present fraud rose an annual 6% to £116.4m, making it the biggest category even then. Within this, internet fraud totalled £43m, Apacs' figures show.
| The introduction of chip and pin cards aimed to cut down on credit card fraud in stores by asking shoppers to verify their identity with a confidential personal pin number, instead of a signature.However, only 34% said they had received replacement cards with the necessary 'chip' technology from all their card providers.Furthermore, 16% said that none of their cards had been replaced, while 30% said only some had.New safeguards on credit and debit card payments in shops has led fraudsters to focus on internet and phone payments, an anti-fraud agency has said.Retail Decisions chief executive Carl Clump told the BBC that there was "no doubt" that chip and pin would "reduce card fraud in the card-present environment".The introduction of 'chip and pin' cards has tightened security for transactions on the High Street."The main issue is that not everyone has the pins they need," said Mr Clump.But the clampdown has caused fraudsters to change tack, Retail Decisions said. |
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Ore costs hit global steel firms
Shares in steel firms have dropped worldwide amid concerns that higher iron ore costs will hit profit growth.
Shares in Germany's ThyssenKrupp, the UK's Corus and France's Arcleor fell while Japan's Nippon Steel slid after it agreed to pay 72% more for iron ore. China's Baoshan Iron and Steel Co. said it was delaying a share sale because of weak market conditions, adding it would raise steel prices to offset ore costs. The threat of higher raw material costs also hit industries such as carmakers. France's Peugeot warned that its profits may decline this year as a result of the higher steel, plastic and commodity prices.
Steelmakers have been enjoying record profits as demand for steel has risen, driven by the booming economies of countries such as China and India. Steel prices rose by 8% globally in January alone and by 24% in China.
The boom times are far from over, but analysts say that earnings growth may slow. The share price fall was initially triggered by news that two of the world's biggest iron ore suppliers had negotiated contracts at much-higher prices. Miners Rio Tinto and Cia. Vale Do Rio Dolce (CVRD) this week managed to boost by 72% the price of their iron ore, a key component of steel. Analysts had expected Japan's Nippon to agree to a price rise of between 40% and 50%. Steel analyst Peter Fish, director of Sheffield-based consulting group MEPS, said the extent of CVRD's price rise was "uncharted territory", adding that the steel industry "hasn't seen an increase of this magnitude probably in 50 years". Analysts now expect other iron ore producers, such as Australia's BHP Billiton, to seek annual price rises of up to 70%.
The news triggered the share price weakness. "It sparked worries that steel makers might not be able to increase product prices further [ to cover rising ore costs]" explained Kazuhiro Takahashi of Daiwa Securities SMBC. In Europe, Arcelor shed 2.1% to 17.58 euros in Paris, with ThyssenKrupp dropping 1.7% to 16.87 euros. In London, Corus fell 2.2% to 55.57 pence. Japan's biggest steel company Nippon Steel lost 2.5% to 270 yen, with closest rival JFE Holdings down 3.4%. China's Baoshan, the country's largest steel producer, said that the uncertainty surrounding the industry has prompted it to pull its planned share sale. The firm had been expected to offer 22.5bn yuan ($2.7bn) worth of shares to investors. No date has been given for when the 5 billion shares will come to the market. Baoshan stock climbed on news of the delay and its decision to increase the price of its steel by 10%.
| Shares in Germany's ThyssenKrupp, the UK's Corus and France's Arcleor fell while Japan's Nippon Steel slid after it agreed to pay 72% more for iron ore. China's Baoshan Iron and Steel Co. said it was delaying a share sale because of weak market conditions, adding it would raise steel prices to offset ore costs.Vale Do Rio Dolce (CVRD) this week managed to boost by 72% the price of their iron ore, a key component of steel.Shares in steel firms have dropped worldwide amid concerns that higher iron ore costs will hit profit growth.Baoshan stock climbed on news of the delay and its decision to increase the price of its steel by 10%.Steel analyst Peter Fish, director of Sheffield-based consulting group MEPS, said the extent of CVRD's price rise was "uncharted territory", adding that the steel industry "hasn't seen an increase of this magnitude probably in 50 years".Steel prices rose by 8% globally in January alone and by 24% in China.The share price fall was initially triggered by news that two of the world's biggest iron ore suppliers had negotiated contracts at much-higher prices.The news triggered the share price weakness.Japan's biggest steel company Nippon Steel lost 2.5% to 270 yen, with closest rival JFE Holdings down 3.4%. |
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Giant waves damage S Asia economy
Governments, aid agencies, insurers and travel firms are among those counting the cost of the massive earthquake and waves that hammered southern Asia.
The worst-hit areas are Sri Lanka, India, Indonesia and Thailand, with at least 23,000 people killed. Early estimates from the World Bank put the amount of aid needed at about $5bn (£2.6bn), similar to the cash offered Central America after Hurricane Mitch. Mitch killed about 10,000 people and caused damage of about $10bn in 1998. World Bank spokesman Damien Milverton told the Wall Street Journal that he expected an aid package of financing and debt relief.
Tourism is a vital part of the economies of the stricken countries, providing jobs for 19 million people in the south east Asian region, according to the World Travel and Tourism Council (WTTC). In the Maldives islands, in the Indian ocean, two-thirds of all jobs depend on tourism.
But the damage covers fishing, farming and businesses too, with hundreds of thousands of buildings and small boats destroyed by the waves. International agencies have pledged their support; most say it is impossible to gauge the extent of the damage yet. The International Monetary Fund (IMF) has promised rapid action to help the governments of the stricken countries cope.
"The IMF stands ready to do its part to assist these nations with appropriate support in their time of need," said managing director Rodrigo Rato. Only Sri Lanka and Bangladesh currently receive IMF support, while Indonesia, the quake's epicentre, has recently graduated from IMF assistance. It is up to governments to decide if they want IMF help. Other agencies, such as the Asian Development Bank, have said that it is too early to comment on the amount of aid needed. There is no underestimating the size of the problem, however. The United Nations' emergency relief coordinator, Jan Egeland, said that "this may be the worst national disaster in recent history because it is affecting so many heavily populated coastal areas... so many vulnerable communities. "Many people will have [had] their livelihoods, their whole future destroyed in a few seconds." He warned that "the longer term effects many be as devastating as the tidal wave or the tsunami itself" because of the risks of epidemics from polluted drinking water.
Insurers are also struggling to assess the cost of the damage, but several big players believe the final bill is likely to be less than the $27bn cost of the hurricanes that battered the US earlier this year.
"The region that's affected is very big so we have to check country-by-country what the situation is", said Serge Troeber, deputy head of the natural disasters department at Swiss Re, the world's second biggest reinsurance firm. "I should assume, however, that the overall dimension of insured damages is below the storm damages of the US," he said. Munich Re, the world's biggest reinsurer, said: "This is primarily a human tragedy. It is too early for us to state what our financial burden will be." Allianz has said it sees no significant impact on its profitability. However, a low insurance bill may simply reflect the general poverty of much of the region, rather than the level of economic devastation for those who live there.
The International Federation of the Red Cross and Red Crescent Societies told the Reuters news agency that it was seeking $6.5m for emergency aid.
"The biggest health challenges we face is the spread of waterborne diseases, particularly malaria and diarrhoea," the aid agency was quoted as saying. The European Union has said it will deliver 3m euros (£2.1m; $4.1m) of aid, according to the Wall Street Journal. The EU's Humanitarian Aid Commissioner, Louis Michel, was quoted as saying that it was key to bring aid "in those vital hours and days immediately after the disaster". Other countries also are reported to have pledged cash, while the US State Department said it was examining what aid was needed in the region. Getting companies and business up and running also may play a vital role in helping communities recover from the weekend's events.
Many of the worst-hit areas, such as Sri Lanka, Thailand's Phuket island and the Maldives, are popular tourist resorts that are key to local economies.
December and January are two of the busiest months for the travel in southern Asia and the damage will be even more keenly felt as the industry was only just beginning to emerge from a post 9/11 slump. Growth has been rapid in southeast Asia, with the World Tourism Organisation figures showing a 45% increase in tourist revenues in the region during the first 10 months of 2004. In southern Asia that expansion is 23%. "India continues to post excellent results thanks to increased promotion and product development, but also to the upsurge in business travel driven by the rapid economic development of the country," the WTO said. "Arrivals to other destinations such as... Maldives and Sri Lanka also thrived." In Thailand, tourism accounts for about 6% of the country's annual gross domestic product, or about $8bn. In Singapore the figure is close to 5%. Tourism also brings in much needed foreign currency. In the short-term, however, travel companies are cancelling flights and trips. That has hit shares across Asia and Europe, with investors saying that earnings and economic growth are likely to slow.
| Other countries also are reported to have pledged cash, while the US State Department said it was examining what aid was needed in the region.Other agencies, such as the Asian Development Bank, have said that it is too early to comment on the amount of aid needed.Growth has been rapid in southeast Asia, with the World Tourism Organisation figures showing a 45% increase in tourist revenues in the region during the first 10 months of 2004."I should assume, however, that the overall dimension of insured damages is below the storm damages of the US," he said.The European Union has said it will deliver 3m euros (£2.1m; $4.1m) of aid, according to the Wall Street Journal.Early estimates from the World Bank put the amount of aid needed at about $5bn (£2.6bn), similar to the cash offered Central America after Hurricane Mitch.Tourism is a vital part of the economies of the stricken countries, providing jobs for 19 million people in the south east Asian region, according to the World Travel and Tourism Council (WTTC)."India continues to post excellent results thanks to increased promotion and product development, but also to the upsurge in business travel driven by the rapid economic development of the country," the WTO said.The EU's Humanitarian Aid Commissioner, Louis Michel, was quoted as saying that it was key to bring aid "in those vital hours and days immediately after the disaster".Governments, aid agencies, insurers and travel firms are among those counting the cost of the massive earthquake and waves that hammered southern Asia.Mitch killed about 10,000 people and caused damage of about $10bn in 1998.December and January are two of the busiest months for the travel in southern Asia and the damage will be even more keenly felt as the industry was only just beginning to emerge from a post 9/11 slump.Only Sri Lanka and Bangladesh currently receive IMF support, while Indonesia, the quake's epicentre, has recently graduated from IMF assistance.The International Monetary Fund (IMF) has promised rapid action to help the governments of the stricken countries cope.Tourism also brings in much needed foreign currency."Arrivals to other destinations such as... Maldives and Sri Lanka also thrived."Allianz has said it sees no significant impact on its profitability. |
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Ban on forced retirement under 65
Employers will no longer be able to force workers to retire before 65, unless they can justify it.
The government has announced that firms will be barred from 2006 from imposing arbitrary retirement ages. Under new European age discrimination rules, a default retirement age of 65 will be introduced. Workers will be permitted to request staying on beyond this compulsory retirement age, although employers will have the right to refuse. Trade and Industry Secretary Patricia Hewitt said people would not be forced to work longer than they wanted, saying the default age was not a statutory, compulsory retirement age. She said employers would be free to continue employing people for as long as they were competent.
Under age discrimination proposals from the Department of Trade and Industry last year workers were to be allowed to work on till 70 if they wished.
Business leaders had opposed the plan as they said it would be too costly and cumbersome. The British Chambers of Commerce welcomed the latest proposal. "This move today is the best of both worlds," it said. "Employers have the ability to define the end point of the employer-employee relationship and employees have flexibility with a right to request to work past the age of 65." But Age Concern said imposing a retirement age of 65 was "cowardly" and a "complete u-turn". "This makes a mockery of the Government's so-called commitment to outlawing ageism, leaving the incoming age discrimination law to unravel," said Gordon Lishman, director general of Age Concern England . "It is now inevitable that older people will mount legal challenges to the decision using European law." The decision will have no impact on the age at which workers can collect their state pension, the government has said.
| Trade and Industry Secretary Patricia Hewitt said people would not be forced to work longer than they wanted, saying the default age was not a statutory, compulsory retirement age.But Age Concern said imposing a retirement age of 65 was "cowardly" and a "complete u-turn".Under new European age discrimination rules, a default retirement age of 65 will be introduced.The decision will have no impact on the age at which workers can collect their state pension, the government has said."This makes a mockery of the Government's so-called commitment to outlawing ageism, leaving the incoming age discrimination law to unravel," said Gordon Lishman, director general of Age Concern England .Under age discrimination proposals from the Department of Trade and Industry last year workers were to be allowed to work on till 70 if they wished. |
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Nigeria to boost cocoa production
The government of Nigeria is hoping to triple cocoa production over the next three years with the launch of an ambitious development programme.
Agriculture Minister Adamu Bello said the scheme aimed to boost production from an expected 180,000 tonnes this year to 600,000 tonnes by 2008. The government will pump 154m naira ($1.1m; £591,000) into subsidies for farming chemicals and seedlings. Nigeria is currently the world's fourth-largest cocoa producer.
Cocoa was the main export product in Nigeria during the 1960s. But with the coming of oil, the government began to pay less attention to the cocoa sector and production began to fall from a peak of about 400,000 tonnes a year in 1970. At the launch of the programme in the south-western city of Ibadan, Mr Bello explained that an additional aim of the project is to encourage the processing of cocoa in the country and lift local consumption. He also announced that 91m naira of the funding available had been earmarked for establishing cocoa plant nurseries. The country could be looking to emulate rival Ghana, which produced a bumper crop last year. However, some farmers are sceptical about the proposals. "People who are not farming will hijack the subsidy," said Joshua Osagie, a cocoa farmer from Edo state told Reuters. "The farmers in the village never see any assistance," he added.
At the same time as Nigeria announced its new initiative, Ghana - the world's second largest cocoa exporter - announced revenues from the industry had broken new records. The country saw more than $1.2bn-worth of the beans exported during 2003-04. Analysts said high tech-production techniques and crop spraying introduced by the government led to the huge crop, pushing production closer to levels seen in the 1960s when the country was the world's leading cocoa grower.
| The government of Nigeria is hoping to triple cocoa production over the next three years with the launch of an ambitious development programme.Analysts said high tech-production techniques and crop spraying introduced by the government led to the huge crop, pushing production closer to levels seen in the 1960s when the country was the world's leading cocoa grower."People who are not farming will hijack the subsidy," said Joshua Osagie, a cocoa farmer from Edo state told Reuters.Nigeria is currently the world's fourth-largest cocoa producer.Cocoa was the main export product in Nigeria during the 1960s.But with the coming of oil, the government began to pay less attention to the cocoa sector and production began to fall from a peak of about 400,000 tonnes a year in 1970. |
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World leaders gather to face uncertainty
More than 2,000 business and political leaders from around the globe are arriving in the Swiss mountain resort Davos for the annual World Economic Forum (WEF). For five days, they will discuss issues ranging from China's economic power to Iraq's future after this Sunday's elections. UK Prime Minister Tony Blair and South African President Thabo Mbeki are among the more than 20 government leaders and heads of state leaders attending the meeting. Unlike previous years, protests against the WEF are expected to be muted. Anti-globalisation campaigners have called off a demonstration planned for the weekend.
The Brazilian city of Porto Alegre will host the rival World Social Forum, timed to run in parallel with the WEF's ritzier event in Davos.
The organisers of the Brazilian gathering, which brings together thousands of campaigners against globalisation, for fair trade, and many other causes, have promised to set an alternative agenda to that of the Swiss summit. However, many of the issues discussed in Porto Alegre are Davos talking points as well. "Global warming" features particularly high. WEF participants are being asked to offset the carbon emissions they cause by travelling to the event. Davos itself is in deep frost. The snow is piled high across the mountain village, and at night the wind chill takes temperatures down to minus 20C and less.
Ultimately, the forum will be dominated by business issues - from outsourcing to corporate leadership - with bosses of more than a fifth of the world's 500 largest companies scheduled to attend.
But much of the media focus will be on the political leaders coming to Davos, not least because the agenda of this year's forum seems to lack an overarching theme. "Taking responsibility for tough choices" is this year's official talking point, hinting at a welter of knotty problems. One thing seems sure, though: transatlantic disagreements over how to deal with Iran, Iraq and China are set to dominate discussions. Pointedly, only one senior official from President Bush's new administration is scheduled to attend. The US government may still make a conciliatory gesture, just as happened a year ago when Vice President Dick Cheney made a surprise appearance in Davos.
Ukraine's new president, Viktor Yushchenko, is to speak, just days after his inauguration, an event that crowned the civil protests against the rigged first election that had tried to keep him from power.
The European Union's top leaders, among them German Chancellor Gerhard Schroeder and European Commission President Manuel Barosso, will be here too. Mr Blair will formally open the proceedings, although his speech will be pre-empted by French President Jacques Chirac, who announced his attendance at the last minute and secured a slot for a "special message" two hours before Mr Blair speaks. The organisers also hope that the new Palestinian leader, Mahmoud Abbas, will use the opportunity for talks with at least one of the three Israeli deputy prime ministers coming to the event, a list that includes Shimon Peres. Davos fans still hark back to 1994, when talks between Yassir Arafat and Mr Peres came close to a peace deal. Mr Blair's appearance will be keenly watched too, as political observers in the UK claim it is a calculated snub against political rival Chancellor Gordon Brown, who was supposed to lead the UK government delegation.
Microsoft founder Bill Gates, the world's richest man and a regular at Davos, will focus on campaigning for good causes, though business interests will not be wholly absent either. Having already donated billions of dollars to the fight against Aids and Malaria, Mr Gates will call on world leaders to support a global vaccination campaign to protect children in developing countries from easily preventable diseases. On Tuesday, Mr Gates pledged $750m (£400m) of his own money to support the cause. Mr Gates' company, software giant Microsoft, also hopes to use Davos to shore up its defences against open source software like Linux, which threaten Microsoft's near monopoly on computer desktops. Mr Gates is said to be trying to arrange a meeting with Brazil's President Lula da Silva. The Brazilian government has plans to switch all government computers from Microsoft to Linux. At Davos, global problem solving and networking are never far apart.
| More than 2,000 business and political leaders from around the globe are arriving in the Swiss mountain resort Davos for the annual World Economic Forum (WEF).But much of the media focus will be on the political leaders coming to Davos, not least because the agenda of this year's forum seems to lack an overarching theme.The Brazilian city of Porto Alegre will host the rival World Social Forum, timed to run in parallel with the WEF's ritzier event in Davos.Mr Gates' company, software giant Microsoft, also hopes to use Davos to shore up its defences against open source software like Linux, which threaten Microsoft's near monopoly on computer desktops.However, many of the issues discussed in Porto Alegre are Davos talking points as well.UK Prime Minister Tony Blair and South African President Thabo Mbeki are among the more than 20 government leaders and heads of state leaders attending the meeting.Davos fans still hark back to 1994, when talks between Yassir Arafat and Mr Peres came close to a peace deal.Microsoft founder Bill Gates, the world's richest man and a regular at Davos, will focus on campaigning for good causes, though business interests will not be wholly absent either.The US government may still make a conciliatory gesture, just as happened a year ago when Vice President Dick Cheney made a surprise appearance in Davos.Davos itself is in deep frost.Mr Gates is said to be trying to arrange a meeting with Brazil's President Lula da Silva.Having already donated billions of dollars to the fight against Aids and Malaria, Mr Gates will call on world leaders to support a global vaccination campaign to protect children in developing countries from easily preventable diseases.At Davos, global problem solving and networking are never far apart. |
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Retail sales show festive fervour
UK retail sales were better than expected in November as Christmas shoppers began their seasonal flock to the High Street, figures show.
The Office for National Statistics (ONS) said retail sales rose 0.6% on the month and 6.1% on the year. But the figures, along with this week's inflation report, could trigger another interest rate rise in the New Year. However, recent data from the British Retail Consortium showed a 0.2% slip in High Street sales during November.
The ONS data confounded analyst expectations. Many had expected sales to fall slightly in November as shoppers put off buying Christmas presents until December. However, retailers' attempts to draw in the crowds may be behind November's unexpected rise in sales, they say. Aggressive tactics, such as one-day discount sales adopted by stores such as Marks & Spencer, appear to have paid off. "Price discounting has certainly accounted for much of this because the value of retail sales hasn't grown as much as volumes," said Investec economist David Page. The figures sparked a rally for sterling as the data supported the view that it is too early to assume that base rates have peaked.
| However, recent data from the British Retail Consortium showed a 0.2% slip in High Street sales during November.UK retail sales were better than expected in November as Christmas shoppers began their seasonal flock to the High Street, figures show.The Office for National Statistics (ONS) said retail sales rose 0.6% on the month and 6.1% on the year.Many had expected sales to fall slightly in November as shoppers put off buying Christmas presents until December. |
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Police detain Chinese milk bosses
Chinese police have detained three top executives at milk firm Yili, with reports suggesting that they are being investigated for embezzlement.
Yili - full name Inner Mongolia Yili Industrial - confirmed its chairman, chief financial officer and securities representative were all in custody. The company, China's third-largest milk producer, is to hold an emergency meeting to debate the issue. A Yili spokesman said it may now move to oust chairman Zheng Junhuai. The spokesman did not say why the three had been detained by the police. The official Xinhua News Agency said the arrest was linked to alleged embezzlement.
Yili has recently been the subject of intense media speculation over its financial operations. Executives are suspected of wrongly using 417m yuan ($50.4m; £26m) of company funds to support a management buyout back in July 2003. Yili's shares were suspended on Tuesday, having fallen by 10% on Monday. The company and its two main rivals - market leader Mengniu Dairy and second place Bright Dairy - dominate a Chinese milk market that has grown by almost 30% over the past five years. Analysts wondered if the scandal at Yili - the latest to befall Chinese companies this year - could be followed by further revelations of corporate wrongdoing. "Investors wonder if Yili's scandal, one of a slew to be uncovered this year, isn't just the tip of the iceberg," said Chen Huiqin, an analyst at Huatai Securities.
| Chinese police have detained three top executives at milk firm Yili, with reports suggesting that they are being investigated for embezzlement.Analysts wondered if the scandal at Yili - the latest to befall Chinese companies this year - could be followed by further revelations of corporate wrongdoing.A Yili spokesman said it may now move to oust chairman Zheng Junhuai.Yili - full name Inner Mongolia Yili Industrial - confirmed its chairman, chief financial officer and securities representative were all in custody.Yili has recently been the subject of intense media speculation over its financial operations. |
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China continues rapid growth
China's economy has expanded by a breakneck 9.5% during 2004, faster than predicted and well above 2003's 9.1%.
The news may mean more limits on investment and lending as Beijing tries to take the economy off the boil. China has sucked in raw materials and energy to feed its expansion, which could have knock-on effects on the rest of the world if it overheats. But officials pointed out that industrial growth had slowed, with services providing much of the impetus. Growth in industrial output - the main target of government efforts to impose curbs on credit and investments - was 11.5% in 2004, down from 17% the previous year.
Still, consumer prices - at 2.4% - rose faster than in 2004, adding to concern that a sharp rise in producer prices of 7.1% could stoke inflation. And overall investment in fixed assets was still high, up 21.3% from the previous year - although some way off the peak of 43% seen in the first quarter of 2004. The result could be higher interest rates. China raised rates by 0.27 percentage points to 5.8% - its first hike in nine years - in October 2004.
Despite the apparent rebalancing of the economy the overall growth picture remains strong, economists said. "There is no sign of a slowdown in 2005," said Tim Congdon, economist at ING Barings.
China's economy is not only gathering speed thanks to domestic demand, but also from soaring sales overseas. Figures released earlier this year showed exports at a six-year high in 2004, up 35%. Part of the impetus comes from the relative cheapness of the yuan, China's currency. The government keeps it pegged close to a rate of 8.28 to the US dollar, - much to the chagrin of many US lawmakers who blame China for lost jobs and competitiveness. Despite urging to ease the peg, officials insist they are a long way from ready to make a shift to a more market-set rate. "We need a good and feasible plan and formulating such a plan also needs time," National Bureau of Statistics chief Li Deshui told Reuters. "Those who hope to make a fortune by speculating on a renminbi revaluation will not succeed in making a profit."
| And overall investment in fixed assets was still high, up 21.3% from the previous year - although some way off the peak of 43% seen in the first quarter of 2004.Despite the apparent rebalancing of the economy the overall growth picture remains strong, economists said.Growth in industrial output - the main target of government efforts to impose curbs on credit and investments - was 11.5% in 2004, down from 17% the previous year.China's economy has expanded by a breakneck 9.5% during 2004, faster than predicted and well above 2003's 9.1%.China raised rates by 0.27 percentage points to 5.8% - its first hike in nine years - in October 2004.China's economy is not only gathering speed thanks to domestic demand, but also from soaring sales overseas.But officials pointed out that industrial growth had slowed, with services providing much of the impetus.Despite urging to ease the peg, officials insist they are a long way from ready to make a shift to a more market-set rate. |
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Macy's owner buys rival for $11bn
US retail giant Federated Department Stores is to buy rival May Department Stores for $11bn (£5.7bn).
The deal will bring together famous stores like Macy's, Bloomingdale's and Marshall Field's, creating the largest department store chain in the US. The combined firm will operate about 1,000 stores across the US, with combined annual sales of $30bn. The two companies, facing competition from the likes of Wal-Mart, tried to merge two years ago but talks failed. Sources familiar with the deal said that negotiations between the two companies sped up after May's chairman and chief executive Gene Kahn resigned in January. As part of the deal, Federated - owner of Macy's and Bloomingdale's - will assume $6bn of May's debt, bringing the deal's total value to $17bn. Directors at both companies have approved the deal and it is expected to conclude by the third quarter of this year.
May has struggled to compete against larger department store groups such as Federated and other retailers such as Wal-Mart. Federated expects the merger to boost earnings from 2007 but the deal will cost it $1bn in one-off charges.
"We have taken the first step toward combining two of the best department store companies in America, creating a new retail company with truly national scope and presence," said Terry Lundgren, Federated's chairman. Some analysts see the merger as a rescue deal for May. "Without this deal May would have been, to put it bluntly, washed up," said Kurt Barnard, president of Barnard's Retail Consulting Group. Federated has annual sales of $15.6bn, while May's yearly sales are $14.4bn.
| US retail giant Federated Department Stores is to buy rival May Department Stores for $11bn (£5.7bn).As part of the deal, Federated - owner of Macy's and Bloomingdale's - will assume $6bn of May's debt, bringing the deal's total value to $17bn.Federated has annual sales of $15.6bn, while May's yearly sales are $14.4bn.Federated expects the merger to boost earnings from 2007 but the deal will cost it $1bn in one-off charges.May has struggled to compete against larger department store groups such as Federated and other retailers such as Wal-Mart.The deal will bring together famous stores like Macy's, Bloomingdale's and Marshall Field's, creating the largest department store chain in the US. |
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Argentina, Venezuela in oil deal
Argentina and Venezuela have extended a food-for-oil deal, which helped the former to overcome a severe energy crisis last year.
Argentine President Nestor Kirchner and Venezuelan President Hugo Chavez signed the deal in Buenos Aires on Tuesday. Last April, Argentina signed a $240m agreement to import Venezuelan fuel in exchange for agricultural goods and this deal has now been extended. Venezuela will now import cattle, medicines and medical equipment. Last year, Argentina's severe energy crisis forced President Kirchner to suspend gas exports to Chile. Argentina fears that rising demand could spark another crisis and wants to prevent it by signing this deal. The two countries also formalised a co-operation deal between Venezuelan energy firm PDVSA and Argentina's Enarsa. Under this deal, the Argentine market will be opened to Venezuelan investment. President Chavez added that Brazil's Petrobras could join soon the co-operation deal. President Chavez is an ardent promoter of the concept of a South American oil company, which could include the state-owned companies of Venezuela, Argentina, Brazil and Bolivia. The two presidents also agreed to create 'Television Sur', a Latin American network of state-owned television channels.
| Argentine President Nestor Kirchner and Venezuelan President Hugo Chavez signed the deal in Buenos Aires on Tuesday.Argentina and Venezuela have extended a food-for-oil deal, which helped the former to overcome a severe energy crisis last year.Last April, Argentina signed a $240m agreement to import Venezuelan fuel in exchange for agricultural goods and this deal has now been extended.President Chavez added that Brazil's Petrobras could join soon the co-operation deal.The two countries also formalised a co-operation deal between Venezuelan energy firm PDVSA and Argentina's Enarsa. |
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Mild winter drives US oil down 6%
US oil prices have fallen by 6%, driven down by forecasts of a mild winter in the densely populated northeast.
Light crude oil futures fell $2.86 to $41.32 a barrel on the New York Mercantile Exchange (Nymex), and have now lost $4 in five days. Nonetheless, US crude is still 30% more expensive than at the beginning of 2004, boosted by growing demand and bottlenecks at refineries. Traders ignored the possible effects of Asia's tidal waves on global supplies.
Instead, the focus is now on US consumption, which is heavily influenced in the short term by the weather. "With the revised milder temperatures... I'm more inclined to think we'll push lower and test the $40-40.25 range," said John Brady of ABN AMRO. "The market definitely feels to be on the defensive." Statistics released last week showed that stockpiles of oil products in the US had risen, an indication that severe supply disruptions may not arise this winter, barring any serious incident. Oil prices have broken records in 2004, topping $50 a barrel at one point, driven up by a welter of worries about unrest in Iraq and Saudi Arabia, rising demand and supply bottlenecks. London's International Petroleum Exchange remained closed for the Christmas holiday.
| US oil prices have fallen by 6%, driven down by forecasts of a mild winter in the densely populated northeast.Statistics released last week showed that stockpiles of oil products in the US had risen, an indication that severe supply disruptions may not arise this winter, barring any serious incident.Oil prices have broken records in 2004, topping $50 a barrel at one point, driven up by a welter of worries about unrest in Iraq and Saudi Arabia, rising demand and supply bottlenecks.Light crude oil futures fell $2.86 to $41.32 a barrel on the New York Mercantile Exchange (Nymex), and have now lost $4 in five days.Nonetheless, US crude is still 30% more expensive than at the beginning of 2004, boosted by growing demand and bottlenecks at refineries. |
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Germany calls for EU reform
German Chancellor Gerhard Schroeder has called for radical reform of the EU's stability pact to grant countries more flexibility over their budget deficits.
Mr Schroeder said existing fiscal rules should be loosened to allow countries to run deficits above the current 3% limit if they met certain criteria. Writing in the Financial Times, Mr Schroeder also said heads of government should have a greater say in reforms. Changes to the pact are due to be agreed at an economic summit in March.
The current EU rules limit the size of a eurozone country's deficit to 3% of GDP. Countries which exceed the threshold are liable to heavy fines by the European Commission, although several countries, including Germany, have breached the rules consistently since 2002 without facing punishment. The European Commission acknowledged last month that it would not impose sanctions on countries who break the rules.
Mr Schroeder - a staunch supporter of the pact when it was set up in the 1990s - said exemptions were now needed to take into account the cost of domestic reform programmes and changing economic conditions. "The stability pact will work better if intervention by European institutions in the budgetary sovereignty of national parliaments is only permitted under very limited conditions," he wrote. "Only if their competences are respected will the member states be willing to align their policies more consistently with the economic goals of the EU."
Deficits should be allowed to rise above 3%, Mr Schroeder argued, if countries meet several "mandatory criteria". These include governments which are adopting costly structural reforms, countries which are suffering economic stagnation and nations which are shouldering "special economic burdens". The proposed changes would make it harder for the European Commission to launch infringement action against any state which breaches the pact's rules. Mr Schroeder's intervention comes ahead of a meeting of the 12 Eurozone finance ministers on Monday to discuss the pact. The issue will also be discussed at Tuesday's Ecofin meeting of the finance ministers of all 25 EU members. Mr Schroeder also called for heads of government to play a larger role in shaping reforms to the pact. A number of EU finance ministers are believed to favour only limited changes to the eurozone's rules.
| Mr Schroeder also called for heads of government to play a larger role in shaping reforms to the pact.Mr Schroeder said existing fiscal rules should be loosened to allow countries to run deficits above the current 3% limit if they met certain criteria.Mr Schroeder - a staunch supporter of the pact when it was set up in the 1990s - said exemptions were now needed to take into account the cost of domestic reform programmes and changing economic conditions.Mr Schroeder's intervention comes ahead of a meeting of the 12 Eurozone finance ministers on Monday to discuss the pact.Writing in the Financial Times, Mr Schroeder also said heads of government should have a greater say in reforms.Deficits should be allowed to rise above 3%, Mr Schroeder argued, if countries meet several "mandatory criteria".German Chancellor Gerhard Schroeder has called for radical reform of the EU's stability pact to grant countries more flexibility over their budget deficits. |
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Gaming firm to sell UK dog tracks
Six UK greyhound tracks have been put up for sale by gaming group Wembley as part of a move which will lead to the break-up of the group.
Wembley announced the planned sale as it revealed it was to offload its US gaming division to BLB Investors. US gaming consortium BLB will pay $339m (£182.5m) for the US unit, although the deal is subject to certain conditions. BLB holds a 22% stake in Wembley and last year came close to buying the whole firm in a £308m takeover deal. Shares in Wembley were up 56 pence, or 7.6%, at 797p by mid-morning.
The sale of the US gaming unit will leave Wembley with its UK business. This includes greyhound tracks at Wimbledon in London, Belle Vue in Manchester, Perry Barr and Hall Green in Birmingham, Oxford and Portsmouth. Analysts have valued the six tracks at between £40m-£50m. The US business accounts for about 90% of Wembley's operating profit and consists of operations in Rhode Island and Colorado. BLB's purchase of the US unit is subject to the agreement of a revenue-sharing deal being struck with Rhode Island authorities. Wembley said that, once the deal was completed, it anticipated returning surplus cash to shareholders. "Whilst the completion of the sale of the US Gaming Division remains subject to a number of conditions, we believe this development is a positive step towards the maximisation of value for shareholders," said Wembley chairman Claes Hultman. Wembley sold the English national football stadium in 1999 to concentrate on its gaming operations.
| The sale of the US gaming unit will leave Wembley with its UK business.Wembley announced the planned sale as it revealed it was to offload its US gaming division to BLB Investors.US gaming consortium BLB will pay $339m (£182.5m) for the US unit, although the deal is subject to certain conditions.Six UK greyhound tracks have been put up for sale by gaming group Wembley as part of a move which will lead to the break-up of the group."Whilst the completion of the sale of the US Gaming Division remains subject to a number of conditions, we believe this development is a positive step towards the maximisation of value for shareholders," said Wembley chairman Claes Hultman.BLB's purchase of the US unit is subject to the agreement of a revenue-sharing deal being struck with Rhode Island authorities. |
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Irish duo could block Man Utd bid
Irishmen JP McManus and John Magnier, who own a 29% stake in Manchester United, will reportedly reject any formal £800m offer for the club.
The Sunday Times and The Sunday Telegraph say they will oppose any formal £800m takeover bid from US tycoon Malcom Glazer. Mr Glazer got permission to look at the club's accounts last week. Irish billionaires Mr McManus and Mr Magnier are said to believe that an £800m bid undervalues club prospects.
Mr Magnier and Mr McManus, who hold their stake through their Cubic Expression investment vehicle have the power to block a bid. Mr Glazer's financial backers, including JP Morgan, the US investment bank have said they won't back a bid unless it receives backing from the owners of at least 75% of the club's shares. However, there has been much speculation that the Irish duo simply do not think the price offered - 300p a share - is high enough. Mr Glazer has been stalking the premier league football club since 2003.
Mr Magnier and Mr McManus issued a statement late on Friday saying that they remained "long-term investors" in Man Utd. The Sunday Telegraph says the board of Manchester United also considered a management buyout at just over 300p but did not go ahead with it.
| Irish billionaires Mr McManus and Mr Magnier are said to believe that an £800m bid undervalues club prospects.Mr Magnier and Mr McManus, who hold their stake through their Cubic Expression investment vehicle have the power to block a bid.Mr Magnier and Mr McManus issued a statement late on Friday saying that they remained "long-term investors" in Man Utd.Mr Glazer has been stalking the premier league football club since 2003. |
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House prices suffer festive fall
UK house prices fell 0.7% in December, according to figures from the Office of the Deputy Prime Minister.
Nationally, house prices rose at an annual rate of 10.7% in December, less than the 13.7% rise the previous month. The average UK house price fell from £180,126 in November to £178,906, reflecting recent Land Registry figures confirming a slowdown in late 2004. All major UK regions, apart from Northern Ireland, experienced a fall in annual growth during December.
December is traditionally a quiet month for the housing market because of Christmas celebrations. However, recent figures from the Land Registry - showing a big drop in sales between the last quarter of 2004 and the previous year - suggested the slowdown could be more than a seasonal blip. The volume of sales between October and December dropped by nearly a quarter from the same period in 2003, the Land Registry said. Although both the Office of the Deputy Prime Minister (ODPM) and the Land Registry figures point to a slowdown in the market, the most recent surveys from Nationwide and Halifax have indicated the market may be undergoing a revival. After registering falls at the back-end of 2004, Halifax said house prices rose by 0.8% in January and Nationwide reported a rise of 0.4% in the first month of the year.
| UK house prices fell 0.7% in December, according to figures from the Office of the Deputy Prime Minister.The average UK house price fell from £180,126 in November to £178,906, reflecting recent Land Registry figures confirming a slowdown in late 2004.Nationally, house prices rose at an annual rate of 10.7% in December, less than the 13.7% rise the previous month.Although both the Office of the Deputy Prime Minister (ODPM) and the Land Registry figures point to a slowdown in the market, the most recent surveys from Nationwide and Halifax have indicated the market may be undergoing a revival. |
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Oil prices reach three-month low
Oil prices have fallen heavily for a second day, closing at three-month lows after news that US crude stocks have improved ahead of winter.
London Brent crude closed at $40.15 on Thursday - a drop of 5.1% - having dived below $40 a barrel for the first time since mid-September. US light crude traded in New York lost more than $2 to $43.25, its lowest close since 10 September. The price of both benchmark crudes has dropped 12% in two days. The falls were triggered when the Energy Information Administration (EIA) said on Wednesday that US crude stocks were 3.5% higher than a year ago. The news calmed worries about winter shortages. Weak US fuel and heating oil stocks have been a persistent factor in pushing up oil prices. "It's amazing how quickly sentiment changed," said Rick Mueller, an analyst at Energy Security Analysis. Analysts also attributed the fall to mild early-winter weather, which has tempered demand for heating oil.
The stronger fuel inventories helped boost US stock markets to nine-month highs on Wednesday, though only the Nasdaq index had hung onto those gains by the end of Thursday.
In London, the FTSE 100 index closed 15 points higher at 4,751. The long-awaited drop in oil prices helped to ease persistent investor jitters over the impact of energy costs on company profits and economic growth. However, traders warned that the fall could be short-lived if there is a cold snap in North America this winter or any major supply problems in other parts of the world.
The price of crude is still up about 30% on the start of 2004, but has fallen from the record of $55.67 set in late October. Opec nations have increased production to 25-year highs to meet global demand and this has helped rebuild US stocks hit by supply disruptions after Hurricane Ivan in September. Traders were also encouraged by comments on Wednesday from the energy minister of Opec member Algeria. Chakib Khelil said the cartel was likely to keep output unchanged when it meets next week. However, some analysts believe the sharp fall in crude prices may harden Opec's attitude to over-production, leading to a scaling back of oil output.
Fears still remain over the level of US heating oil stocks, which are rising but remain down on 2004 levels. A cold spell in north America would start to deplete supplies and could spark further price rises. Analysts, however, say prices will fall further if inventories continue to rise. "Mother Nature is going to be huge in the next several weeks," said Kyle Cooper, at Citigroup Global Markets. "Long term I think we're headed to $30-35 but I don't think we're doing that yet. We have a lot of winter left." John Person, president of National Futures Advisory Services, said the EIA data indicated there should be adequate supplies for the next three months in the US. .
| Oil prices have fallen heavily for a second day, closing at three-month lows after news that US crude stocks have improved ahead of winter.The falls were triggered when the Energy Information Administration (EIA) said on Wednesday that US crude stocks were 3.5% higher than a year ago.However, some analysts believe the sharp fall in crude prices may harden Opec's attitude to over-production, leading to a scaling back of oil output.Weak US fuel and heating oil stocks have been a persistent factor in pushing up oil prices.Opec nations have increased production to 25-year highs to meet global demand and this has helped rebuild US stocks hit by supply disruptions after Hurricane Ivan in September.The price of crude is still up about 30% on the start of 2004, but has fallen from the record of $55.67 set in late October.The price of both benchmark crudes has dropped 12% in two days.Analysts also attributed the fall to mild early-winter weather, which has tempered demand for heating oil.The long-awaited drop in oil prices helped to ease persistent investor jitters over the impact of energy costs on company profits and economic growth.Analysts, however, say prices will fall further if inventories continue to rise.However, traders warned that the fall could be short-lived if there is a cold snap in North America this winter or any major supply problems in other parts of the world. |
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Why few targets are better than many
The economic targets set out at the Lisbon summit of European Union leaders in 2000 were meant to help Europe leapfrog its way past the United States to become the world's leading economy by 2010.
But the Lisbon targets are about much more than just economic prestige. For many economists and analysts they are about ensuring Europe doesn't become a global economic laggard. They are also about ensuring Europe can continue to compete as an equal with the growing economic giants of Asia, India and China, as well as with the economic might of the United States. That's why there was a tone of urgency in the report, out on Wednesday, by the former Dutch prime minister Wim Kok. Mr Kok was commissioned by the European Commission in March this year to assess how far the EU has come towards meeting the Lisbon targets, five years on from their inception. His conclusion was simple: too many of the targets will be seriously missed.
Lisbon risks becoming a "synonym for missed objectives and failed promises", his report said. "The status quo is not an option."
At risk in the medium to long run is nothing less than the sustainability of the society Europe has built, it said. The report comes at a time when Europe's competitive position is waning. The EU's economic growth rate is projected to be 2% this year and 2.4% next. While there has been growth in overall employment rates in Europe, productivity lags behind that of the US. But meeting the Lisbon targets requires a political commitment that no EU member state has volunteered so far. That has in part been due to the state of the global economy in the past few years.
As Mr Kok's report noted: "The ink had scarcely dried on the [Lisbon] agreement before the worldwide stock market bubble imploded." "The US suffered two years of economic slowdown and recession and the European economy followed suit."
The circumstances weren't conducive to creating the 20 million new jobs promised by EU leaders in Lisbon in 2000. Neither were they conducive to getting governments to spend more on research and development, money needed if the EU was to meet its target of becoming a so-called "knowledge-based economy". "The [Lisbon] vision is a compelling one, but in order to do it society has to change," said Paul Hofheinz of the Lisbon Council, a Brussels-based citizen action group. "What you find is that a lot of people have been fighting change. You find trade unions fighting change. But also the employers' associations. "Even though they tell you they're in favour of change, many are actually pushing for less competition, more subsidy and less free market activity."
But part of the problem was also linked to the original targets set out in Lisbon five years ago. Targets have a habit of coming back to haunt you and in the Lisbon case, they covered too much, according to the Wim report. Economic growth and job creation were linked to issues ranging from environmental protection to social inclusion, and even safety at sea. The agenda was just too broad and as a result nothing was prioritised.
"Lisbon is about everything and thus about nothing," the Kok report said. "Everybody is responsible and thus no one." That's why the Kok report recommends that the Lisbon targets be narrowed down to 14 key indicators, with an emphasis on creating jobs and economic growth. It also recommends that the European Commission draw up a league table which ranks countries according to the steps they're taking towards meeting the targets, effectively "naming, shaming and faming". "Rhetoric and delivery don't necessarily go hand in hand," Mr Kok said in a press conference alongside the publication of his report. "We don't have the luxury anymore just to exchange politeness with one another."
On one point Mr Kok was very clear: The European Union should not try to emulate the US economy. The European economic and social model needs to change, but not so much so that social and environmental issues take a backseat to economic growth. In that sense, the Lisbon agenda is sailing into unchartered waters. The Kok report tries to do away with a belief that jobs need to be sacrificed at the altar of economic growth. "It's very ambitious," said John Palmer, political director at the European Policy Centre, a Brussels-based think-tank. "This is something that no advanced economy in the world has tried to do. It's going to require quite new and innovative policies." But some analysts believe that the Kok report doesn't come up with the sort of innovative policies and thinking needed to make the Lisbon targets a reality. For example, it recommends putting in place policies which encourage women and older people to remain in the workforce. But it doesn't say how companies should be convinced to do this. It will be up to the incoming president of the European Commission, Jose Manuel Barroso, to adopt Mr Kok's recommendations and press them on EU governments. Mr Barroso has said that the EU's competitiveness will be his top priority. He expects his five-year term in office to be judged on Europe's success in meeting the Lisbon agenda.
| That's why the Kok report recommends that the Lisbon targets be narrowed down to 14 key indicators, with an emphasis on creating jobs and economic growth."Lisbon is about everything and thus about nothing," the Kok report said.Mr Kok was commissioned by the European Commission in March this year to assess how far the EU has come towards meeting the Lisbon targets, five years on from their inception.But the Lisbon targets are about much more than just economic prestige.But some analysts believe that the Kok report doesn't come up with the sort of innovative policies and thinking needed to make the Lisbon targets a reality.The economic targets set out at the Lisbon summit of European Union leaders in 2000 were meant to help Europe leapfrog its way past the United States to become the world's leading economy by 2010."The [Lisbon] vision is a compelling one, but in order to do it society has to change," said Paul Hofheinz of the Lisbon Council, a Brussels-based citizen action group.On one point Mr Kok was very clear: The European Union should not try to emulate the US economy.But part of the problem was also linked to the original targets set out in Lisbon five years ago.But meeting the Lisbon targets requires a political commitment that no EU member state has volunteered so far.The Kok report tries to do away with a belief that jobs need to be sacrificed at the altar of economic growth.The European economic and social model needs to change, but not so much so that social and environmental issues take a backseat to economic growth.Lisbon risks becoming a "synonym for missed objectives and failed promises", his report said.Targets have a habit of coming back to haunt you and in the Lisbon case, they covered too much, according to the Wim report."The US suffered two years of economic slowdown and recession and the European economy followed suit."As Mr Kok's report noted: "The ink had scarcely dried on the [Lisbon] agreement before the worldwide stock market bubble imploded."The circumstances weren't conducive to creating the 20 million new jobs promised by EU leaders in Lisbon in 2000.The EU's economic growth rate is projected to be 2% this year and 2.4% next.For many economists and analysts they are about ensuring Europe doesn't become a global economic laggard. |
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French boss to leave EADS
The French co-head of European defence and aerospace group EADS Philippe Camus is to leave his post.
Mr Camus said in a statement that he has accepted the invitation to return full-time to the Lagardere group, which owns 30% of EADS. "I will give up my role as soon as the board of directors asks me to do so," he said. Airbus head Noel Forgeard is now set to replace Mr Camus, bringing the company's power struggle to an end. Fighting between Mr Camus and Mr Forgeard has hit the headlines in France and analysts feared that this fighting could destabilise the defence and aerospace group. French finance minister Herve Gaymard is on record as saying that he "deplored" the infighting at the company. The company should now be able put this dispute behind it, with the departure of Mr Camus and with the clear support given to Mr Forgeard by the Lagardere group, the main French shareholder of EADS. The other main shareholders of EADS are the French government (15%) , who also support Mr Forgeard, and Germany's DaimlerChrysler (30%). Rainer Hertrich, the German co-head of EADS will also step down when his contract expires next year.
Mr Camus recently came under pressure as it became clear that the A380 superjumbo was running over budget. EADS - Airbus' majority owner - admitted earlier this week that the project was running 1.45bn euros (£1bn; $1.9bn) over budget. But Mr Forgeard has denied this, telling French media that there is no current overrun in the budget. "But for the sake of transparency, we told our shareholders last week that if we look at the forecast for total costs of the project up to 2010, there is a risk that we will go over by around 10%, which is about 1bn euros (£686m; $1.32bn)," he told France's LCI Television. Due to enter service in 2006, the A380 will replace the Boeing 747 jumbo as the world's biggest passenger aircraft.
| The company should now be able put this dispute behind it, with the departure of Mr Camus and with the clear support given to Mr Forgeard by the Lagardere group, the main French shareholder of EADS.The other main shareholders of EADS are the French government (15%) , who also support Mr Forgeard, and Germany's DaimlerChrysler (30%).Mr Camus said in a statement that he has accepted the invitation to return full-time to the Lagardere group, which owns 30% of EADS.Fighting between Mr Camus and Mr Forgeard has hit the headlines in France and analysts feared that this fighting could destabilise the defence and aerospace group.But Mr Forgeard has denied this, telling French media that there is no current overrun in the budget.The French co-head of European defence and aerospace group EADS Philippe Camus is to leave his post. |
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Businesses fail to plan for HIV
Companies fail to draw up plans to cope with HIV/Aids until it affects 20% of people in a country, new research says.
The finding comes in a report published on Thursday by the World Economic Forum, Harvard and the UN aids agency. "Too few companies are responding proactively to the social and business threats," said Dr Kate Taylor, head of the WEF's global Health Initiative. Nearly 9,000 business leaders in 104 countries were surveyed for Business and HIV/AIDS: Commitment and Action?
Dr Taylor described the level of action taken by businesses as revealed by the report as "too little, too late". The issue will be highlighted to business and world leaders at the World Economic Forum, which meets in Davos, Switzerland, next week. The WEF report shows that despite the fact that 14,000 people contract HIV/Aids every day, concern among businesses has dropped by 23% in the last 12 months. Most (71%) have no policies in place to address the disease. Nor could over 65% of the business leaders surveyed say or estimate the prevalence of HIV among their staff. The UN programme tackling Aids, UNAIDS, pointed out that having a clear strategy for dealing with HIV/Aids was a good investment as well as being socially responsible.
One company that does have a plan is Anglo-American, the international mining company, which estimates an HIV prevalence of 24% among its 130,000-strong Southern African workforce.
Over the last two years the company has implemented extensive voluntary counselling and testing for HIV infection, coupled with anti-retroviral therapy for employees progressing to Aids. Over 90% of the 2,200 employees who have accessed and remained on treatment are well and have returned to normal work. "Effective action on HIV/Aids is synonymous with good business management and leads to more profitable and sustainable operations," said Brian Brink, senior vice-president, health, at Anglo-American.
"Companies should encourage all workers to know their HIV status, making it as routine as monitoring blood pressure or cholesterol," he said. "Providing access to treatment is a critical part of this." Across sub-Saharan Africa, even in countries with an HIV prevalence of 10-19%, only around 7% of companies have formal HIV/Aids policies in place, according to the report. The gap is even wider in China, Ethiopia, India, Nigeria and Russia, the so-called "next wave" countries, which are predicted to experience the highest numbers of new HIV/Aids cases worldwide by 2010. The report adds "an important building block to our understanding of how the business community is experiencing the HIV/Aids epidemic and to whether and how it is reacting," said David Bloom, professor of economics and demography at the Harvard School of Public Health.
The WEF report concludes that businesses need to understand their exposure to HIV/Aids risks and come up with good local practices to manage them. A key priority, in both high and low-prevalence settings, said the WEF is to establish a policy based on non-discrimination and confidentiality.
| Nearly 9,000 business leaders in 104 countries were surveyed for Business and HIV/AIDS: Commitment and Action?Across sub-Saharan Africa, even in countries with an HIV prevalence of 10-19%, only around 7% of companies have formal HIV/Aids policies in place, according to the report.The WEF report concludes that businesses need to understand their exposure to HIV/Aids risks and come up with good local practices to manage them.The WEF report shows that despite the fact that 14,000 people contract HIV/Aids every day, concern among businesses has dropped by 23% in the last 12 months."Effective action on HIV/Aids is synonymous with good business management and leads to more profitable and sustainable operations," said Brian Brink, senior vice-president, health, at Anglo-American.Nor could over 65% of the business leaders surveyed say or estimate the prevalence of HIV among their staff.The report adds "an important building block to our understanding of how the business community is experiencing the HIV/Aids epidemic and to whether and how it is reacting," said David Bloom, professor of economics and demography at the Harvard School of Public Health."Too few companies are responding proactively to the social and business threats," said Dr Kate Taylor, head of the WEF's global Health Initiative.Dr Taylor described the level of action taken by businesses as revealed by the report as "too little, too late". |
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Venezuela and China sign oil deal
Venezuelan president Hugo Chavez has offered China wide-ranging access to the country's oil reserves.
The offer, made as part of a trade deal between the two countries, will allow China to operate oil fields in Venezuela and invest in new refineries. Venezuela has also offered to supply 120,000 barrels of fuel oil a month to China. Venezuela - the world's fifth largest oil exporter - sells about 60% of its output to the United States. Mr Chavez's administration, which has a strained relationship with the US, is trying to diversify sales to reduce its dependence on its largest export market.
China's quick-growing economy's need for oil has contributed to record-high oil prices this year, along with political unrest in the Middle East and supply bottlenecks. Oil prices are finishing the year roughly 30% higher than they were in January 2004.
In 2004, according to forecasts from the Ministry of Commerce, China's oil imports will be 110m tons, up 21% on the previous year. China has been a net importer of oil since the mid 1990's with more than a third of the oil and gas it consumes coming from abroad. A lack of sufficient domestic production and the need to lessen its dependence on imports from the Middle East has meant that China is looking to invest in other potential markets such as Latin America. Mr Chavez, who is visiting China, said his country would put its many of its oil facilities at the disposal of China. Chinese firms would be allowed to operate 15 mature oil fields in the east of Venezuela, which could produce more than one billion barrels, he confirmed. The two countries will also continue a joint venture agreement to produce stocks of the boiler fuel orimulsion. Mr Chavez has also invited Chinese firms to bid for gas exploration contracts which his government will offer next year in the western Gulf of Venezuela. The two countries also signed a number of other agreements covering other industries including mining.
| Venezuela has also offered to supply 120,000 barrels of fuel oil a month to China.China has been a net importer of oil since the mid 1990's with more than a third of the oil and gas it consumes coming from abroad.China's quick-growing economy's need for oil has contributed to record-high oil prices this year, along with political unrest in the Middle East and supply bottlenecks.Mr Chavez, who is visiting China, said his country would put its many of its oil facilities at the disposal of China.Venezuelan president Hugo Chavez has offered China wide-ranging access to the country's oil reserves.The offer, made as part of a trade deal between the two countries, will allow China to operate oil fields in Venezuela and invest in new refineries. |
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Economy 'strong' in election year
UK businesses are set to prosper during the next few months - but this could trigger more interest rate rises, according to a report.
Optimism is at its highest since 1997 and business will reap the benefits of a continuing rise in public spending, say researchers at BDO Stoy Hayward. The Bank of England is expected to keep rates on hold this week - but they could go up later in the year. Rates are likely to rise after the anticipated general election in May. The BDO optimism index - a leading indicator of GDP growth two quarters ahead edged up in January to 102.5, from 102.2 in October. The rise is due, in part, to an increase in public spending and increased merger and acquisition activity.
The only thing blighting business optimism this year will be uncertainties associated with the general election, BDO said. Its BDO's output index - which predicts GDP movements a quarter in advance - remained at 100.8 for January, implying GDP growth at 2.9% in the second quarter of 2005. However, the output index is being held back by recent interest rate rises, sterling's strength against the dollar and high oil prices, the group noted. Its inflation index, which has risen continuously over the last 8 months, climbed to 110.0 in January from 108.0 in October last year. "The UK is looking strong going into the general election, but businesses need to prepare themselves for a jolt ahead as the Bank of England reacts to growth and inflationary pressures," said Peter Hemington, partner at BDO Stoy Hayward. "Growth will probably slow by the end of 2005 and it is likely that we will see higher interest rates or a sharp drop in demand for products and services."
| The BDO optimism index - a leading indicator of GDP growth two quarters ahead edged up in January to 102.5, from 102.2 in October.The only thing blighting business optimism this year will be uncertainties associated with the general election, BDO said."The UK is looking strong going into the general election, but businesses need to prepare themselves for a jolt ahead as the Bank of England reacts to growth and inflationary pressures," said Peter Hemington, partner at BDO Stoy Hayward.Optimism is at its highest since 1997 and business will reap the benefits of a continuing rise in public spending, say researchers at BDO Stoy Hayward.UK businesses are set to prosper during the next few months - but this could trigger more interest rate rises, according to a report. |
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US Airways staff agree to pay cut
A union representing 5,200 flight attendants at bankrupt US Airways have agreed to a new contract that cuts pay by nearly 10%.
The deal will help the carrier, trying to survive by cutting costs by nearly $1bn (£530m) a year, save about $94m. More than two thirds of its 28,000 staff have now accepted wage cuts. But talks are still continuing with a union representing mechanics, baggage handlers and cleaners, which has so far failed to negotiate a new contract. The seventh largest carrier in the US sought bankruptcy protection for a second time in two years last September. It had been one of the quickest to deal with difficulties faced by the aviation industry after the 9/11 attacks in 2001. But it emerged from Chapter 11 bankruptcy in March 2003 to face competition from low-cost carriers and higher fuel costs. US Airways management has said it may need to start liquidating assets if it does not receive concessions from all staff by the middle of this month.
| The seventh largest carrier in the US sought bankruptcy protection for a second time in two years last September.A union representing 5,200 flight attendants at bankrupt US Airways have agreed to a new contract that cuts pay by nearly 10%.The deal will help the carrier, trying to survive by cutting costs by nearly $1bn (£530m) a year, save about $94m.US Airways management has said it may need to start liquidating assets if it does not receive concessions from all staff by the middle of this month. |
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Jobs go at Oracle after takeover
Oracle has announced it is cutting about 5,000 jobs following the completion of its $10.3bn takeover of its smaller rival Peoplesoft last week.
The company said it would retain more than 90% of Peoplesoft product development and product support staff. The cuts will affect about 9% of the 55,000 staff of the combined companies. Oracle's 18-month fight to acquire Peoplesoft was one of the most drawn-out and hard-fought US takeover battles of recent times. The merged companies are set to be a major force in the enterprise software market, second only in size to Germany's SAP.
In a statement, Oracle said it began notifying staff of redundancies on Friday and the process would continue over the next 10 days. "By retaining the vast majority of Peoplesoft technical staff, Oracle will have the resources to deliver on the development and support commitments we have made to Peoplesoft customers over the last 18 months," Oracle's chief executive Larry Ellison said in a statement.
Correspondents say 6,000 job losses had been expected - and some suggest more cuts may be announced in future. They say Mr Ellison may be trying to placate Peoplesoft customers riled by Oracle's determined takeover strategy. Hours before Friday's announcement, there was a funereal air at Peoplesoft's headquarters, reported AP news agency. A Peoplesoft sign had been turned into shrine to the company, with flowers, candles and company memorabilia. "We're mourning the passing of a great company," the agency quoted Peoplesoft worker David Ogden as saying. Other employees said they would rather be sacked than work for Oracle. "The new company is going to be totally different," said Anil Aggarwal, Peoplesoft's director of database markets. "Peoplesoft had an easygoing, relaxed atmosphere. Oracle has an edgy, aggressive atmosphere that's not conducive to innovative production." On the news, Oracle shares rose 15 cents - 1.1% - on Nasdaq. In after-hours trading the shares did not move.
| "By retaining the vast majority of Peoplesoft technical staff, Oracle will have the resources to deliver on the development and support commitments we have made to Peoplesoft customers over the last 18 months," Oracle's chief executive Larry Ellison said in a statement.The company said it would retain more than 90% of Peoplesoft product development and product support staff.Oracle has announced it is cutting about 5,000 jobs following the completion of its $10.3bn takeover of its smaller rival Peoplesoft last week.A Peoplesoft sign had been turned into shrine to the company, with flowers, candles and company memorabilia.In a statement, Oracle said it began notifying staff of redundancies on Friday and the process would continue over the next 10 days."We're mourning the passing of a great company," the agency quoted Peoplesoft worker David Ogden as saying.They say Mr Ellison may be trying to placate Peoplesoft customers riled by Oracle's determined takeover strategy."Peoplesoft had an easygoing, relaxed atmosphere. |
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Ford gains from finance not cars
Ford, the US car company, reported higher fourth quarter and full-year profits on Thursday boosted by a buoyant period for its car loans unit.
Net income for 2004 was $3.5bn (£1.87bn) - up nearly $3bn from 2003 - while turnover rose $7.2bn to $170.8bn. In the fourth quarter alone Ford reported net income of $104m, compared with a loss of $793m a year ago. But its auto unit made a loss. Fourth quarter turnover was $44.7bn, compared to $45.9bn a year ago.
Though car and truck loan profits saved the day, Ford's auto unit made a pre-tax loss of $470m in the fourth quarter (compared to a profit of £13m in the year-ago period) and its US sales dipped 3.8%.
Yesterday General Motor's results also showed its finance unit was a strong contributor to profits. However, Ford is working hard to revitalise its product portfolio, unveiling the Fusion and Zephyr models at the International Motor Show in Detroit. It also brought out a number of new models in the second half of 2004. "In 2004, our company gained momentum, delivering...more new products, and more innovative breakthroughs, such as the Escape Hybrid, the industry's first full-hybrid sport utility vehicle," said chairman and chief executive officer Bill Ford."
"We also confronted operating challenges with our Jaguar brand and high industry marketing costs," he added. But Ford declined to provide guidance for first quarter 2005. It will do so at a presentation in New York on 26 January. In addition, the company said 2004 net income was affected by a fourth-quarter pre-tax charge taken to reduce the value of a receivable owed to Ford by Visteon, a former subsidiary. Recent new models introduced by Ford include the Ford Five Hundred and Mercury Montego sedans, the Ford Freestyle crossover, the Ford Mustang, the Land Rover LR3/Discovery, and Volvo S40 and V50 in North America and Europe. Total company vehicle unit sales in 2004 were 6,798,000, an increase of 62,000 units from 2003. Fourth-quarter vehicle unit sales totalled 1,751,000, a decline of 133,000 units. For the full year, Ford's worldwide automotive division earned a pre-tax profit of $850m, a $697m improvement from $153m a year ago.
| In the fourth quarter alone Ford reported net income of $104m, compared with a loss of $793m a year ago.Ford, the US car company, reported higher fourth quarter and full-year profits on Thursday boosted by a buoyant period for its car loans unit.Though car and truck loan profits saved the day, Ford's auto unit made a pre-tax loss of $470m in the fourth quarter (compared to a profit of £13m in the year-ago period) and its US sales dipped 3.8%.Fourth quarter turnover was $44.7bn, compared to $45.9bn a year ago.Total company vehicle unit sales in 2004 were 6,798,000, an increase of 62,000 units from 2003.Recent new models introduced by Ford include the Ford Five Hundred and Mercury Montego sedans, the Ford Freestyle crossover, the Ford Mustang, the Land Rover LR3/Discovery, and Volvo S40 and V50 in North America and Europe.In addition, the company said 2004 net income was affected by a fourth-quarter pre-tax charge taken to reduce the value of a receivable owed to Ford by Visteon, a former subsidiary.But Ford declined to provide guidance for first quarter 2005. |
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Yukos loses US bankruptcy battle
A judge has dismissed an attempt by Russian oil giant Yukos to gain bankruptcy protection in the US.
Yukos filed for Chapter 11 protection in Houston in an unsuccessful attempt to halt the auction of its Yugansk division by the Russian authorities. The court ruling is a blow to efforts to get damages for the sale of Yugansk, which Yukos claims was illegally sold. Separately, former Yukos boss Mikhail Khodorkovsky began testimony on Friday in his trial for fraud and tax evasion.
Mr Khodorkovsky - who has been in jail for more than a year - pleaded not guilty to the charges brought against him and denied involvement in any criminal activities. "I pride myself on heading for 15 years a number of successful companies and helping other enterprises rise from their knees," he told a Russian court.
Yugansk was auctioned to help pay off $27.5bn (£14.5bn) in unpaid taxes. It was bought for $9.4bn by a previously-unknown group, which was in turn bought up almost immediately by state-controlled oil company Rosneft.
Texas Judge Letitia Clark said Yukos did not have enough of a US presence to establish US jurisdiction. "The vast majority of the business and financial activities of Yukos continue to occur in Russia," Judge Clark said in her ruling. "Such activities require the continued participation of the Russian government." Yukos had argued that a US court was entitled to declare it bankrupt before its Yugansk unit was sold, since it has local bank accounts and its chief finance officer Bruce Misamore lives in Houston. Yukos claimed it sought help in the US because other forums - Russian courts and the European Court of Human Rights - were either unfriendly or offered less protection. Russia had indicated it would in any case not abide by the rulings of the US courts.
In her ruling, the judge acknowledged that "it appears likely that agencies of the Russian government have acted in a manner that would be considered confiscatory under United States law". But she said her role was simply to decide on jurisdiction. The US court's jurisdiction had been challenged by Deutsche Bank and Gazpromneft, a former unit of Russian gas monopoly Gazprom which is due to merge with Rosneft. Analysts said the ability of Gazprom and Rosneft to trade freely overseas had been stifled while the ownership of Yugansk remained unclear.
Yukos said it would consider its options in light of the ruling. However, it claimed that the court had backed its argument in four out of five key issues. "We believe the merits of our case are strong and simple," said chief executive Steven Theede. "Our assets were illegally seized. We want them back or damages paid."
| The court ruling is a blow to efforts to get damages for the sale of Yugansk, which Yukos claims was illegally sold.Yukos had argued that a US court was entitled to declare it bankrupt before its Yugansk unit was sold, since it has local bank accounts and its chief finance officer Bruce Misamore lives in Houston.A judge has dismissed an attempt by Russian oil giant Yukos to gain bankruptcy protection in the US.Texas Judge Letitia Clark said Yukos did not have enough of a US presence to establish US jurisdiction.Yukos claimed it sought help in the US because other forums - Russian courts and the European Court of Human Rights - were either unfriendly or offered less protection.Yukos said it would consider its options in light of the ruling."The vast majority of the business and financial activities of Yukos continue to occur in Russia," Judge Clark said in her ruling.Yukos filed for Chapter 11 protection in Houston in an unsuccessful attempt to halt the auction of its Yugansk division by the Russian authorities.The US court's jurisdiction had been challenged by Deutsche Bank and Gazpromneft, a former unit of Russian gas monopoly Gazprom which is due to merge with Rosneft.Russia had indicated it would in any case not abide by the rulings of the US courts. |
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US trade deficit widens sharply
The gap between US exports and imports has widened to more than $60bn (£31.7bn), an all-time record.
Figures from the Commerce Department for November showed exports down 2.3% to $95.6bn, while imports grew 1.3% to $155.8bn on rising consumer demand. Part of the expanding deficit came from high prices for oil imports. But the numbers suggested the sliding dollar - which makes exports less expensive - has had little impact, and could indicate slowing economic growth.
The trade deficit - far bigger than the $54bn widely expected on Wall Street - prompted a rapid response from the currency markets.
By 1650 GMT, the dollar was trading against the euro at $1.3280, almost a cent and a half weaker than before the announcement. Against the pound, the dollar was down about 0.7% at $1,8923. "The dollar's fall has been sudden, violent and appropriate given this number," said Brian Taylor of Wells Fargo in Minneapolis. "Recent exchange rate movements certainly haven't had any impact yet." Treasury Secretary John Snow put a brave face on the news, saying it was a sign of strong economic expansion. "The economy is growing at such a fast rate that it is generating lots of disposable income... some of which is used to buy goods from our trading partners."
Although the White House officially still backs the US's traditional "strong dollar" policy, it has tacitly indicated that it would be happy if the slide continued. The dollar has fallen by 50% against the euro - as well as by 30% against the yen - in the past three years. The main catalyst, most economists accept, is the large budget deficit on the one hand, and the current account deficit - the difference between the flow of money in and out of the US - on the other. The trade deficit is a large part of the latter. In November, the fall in exports was largely due to a decline in sales of industrial supplies and materials such as chemicals, as well as of cars, consumer goods and food. One small bright spot for US policy-makers was a slight decline in the deficit with China, often blamed for job losses and other economic woes. Although China's overall trade surplus is expanding, according to Chinese government figures, the Commerce Department revealed the US's deficit with China was $19.6bn in November, down from $19.7bn the month before. But the deficit with Japan was at its worst in more than four years.
| Although China's overall trade surplus is expanding, according to Chinese government figures, the Commerce Department revealed the US's deficit with China was $19.6bn in November, down from $19.7bn the month before.Against the pound, the dollar was down about 0.7% at $1,8923.But the deficit with Japan was at its worst in more than four years.The gap between US exports and imports has widened to more than $60bn (£31.7bn), an all-time record.One small bright spot for US policy-makers was a slight decline in the deficit with China, often blamed for job losses and other economic woes.By 1650 GMT, the dollar was trading against the euro at $1.3280, almost a cent and a half weaker than before the announcement.But the numbers suggested the sliding dollar - which makes exports less expensive - has had little impact, and could indicate slowing economic growth.The trade deficit is a large part of the latter. |
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Home loan approvals rising again
The number of mortgages approved in the UK has risen for the first time since May last year, according to lending figures from the Bank of England.
New loans in December rose to 83,000, slightly higher than November's nine-year low of 77,000. Mortgage lending rose by £7.1bn in December, up from a £6.4bn rise in November. The figures contradict a survey from the British Bankers' Association, which said approvals were at a five-year low.
Analysts say the figures show the market may be stabilising but still point to further house price softness. "The modest rise in mortgage approvals and lending in December reinforces the impression that the housing market is currently slowing steadily rather than sharply," said Global Insight analyst Howard Archer, commenting on the BoE's figures. The BBA believes that the property market is continuing to cool down. Changes to mortgage regulation may have artificially depressed figures in November, thus flattering the December figures, analysts said. In October last year, new rules came into force, which meant some lenders were forced to withdraw mortgage products temporarily in November and defer some lending until they had made sure they had complied with the rules properly. Separately, the Bank of England said that consumer credit rose by £1.5bn in December, more than the £1.4bn expected and above the £1.4bn reported in the previous month.
| Mortgage lending rose by £7.1bn in December, up from a £6.4bn rise in November.Changes to mortgage regulation may have artificially depressed figures in November, thus flattering the December figures, analysts said."The modest rise in mortgage approvals and lending in December reinforces the impression that the housing market is currently slowing steadily rather than sharply," said Global Insight analyst Howard Archer, commenting on the BoE's figures.Separately, the Bank of England said that consumer credit rose by £1.5bn in December, more than the £1.4bn expected and above the £1.4bn reported in the previous month. |
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Dollar slides ahead of New Year
The US dollar has hit a new record low against the euro and analysts predict that more declines are likely in 2005.
Disappointing economic reports dented the currency, which had been rallying after European policy makers said they were worried about the euro's strength. Earlier on Thursday, the Japanese yen touched its lowest versus the euro on concerns about economic growth in Asia. Currency markets have been volatile over the past week because of technical and automated trading and light demand. This has amplified reactions, analysts said, adding that they expect markets to become less jumpy in January.
"People want to go into the weekend and the New Year positioned for a weaker buck," said Tim Mazanec, director of foreign exchange at Investors Bank and Trust. The dollar slid to a record $1.3666 versus the euro on Thursday, before bouncing back to $1.3636. Against the yen the dollar was trading down at $103.05.
The yen, meanwhile, dropped to 141.60 per euro in afternoon trading. It later strengthened to 140.55. Investors are concerned about the size of the US trade and budget deficits and are betting that George W Bush's administration will allow the dollar to weaken despite saying they favour a strong currency. Also playing on investors' minds are mixed reports about the state of the US economy. On Thursday, disappointing business figures from Chicago brought a sudden end to a rally in the value of the dollar. The National Association of Purchasing Management-Chicago said its index dropped to 61.2, more than analysts had expected. German Chancellor Gerhard Schroeder and Italian Prime Minister Silvio Berlusconi voiced concerns about the strength of the euro. Mr Berlusconi said the euro's strength was "absolutely worrying" for Italian exports. Mr Schroeder said in a newspaper article that stability in foreign exchange markets required a correction of global economic imbalances.
| Against the yen the dollar was trading down at $103.05.The US dollar has hit a new record low against the euro and analysts predict that more declines are likely in 2005.The dollar slid to a record $1.3666 versus the euro on Thursday, before bouncing back to $1.3636.Disappointing economic reports dented the currency, which had been rallying after European policy makers said they were worried about the euro's strength.The yen, meanwhile, dropped to 141.60 per euro in afternoon trading.Mr Berlusconi said the euro's strength was "absolutely worrying" for Italian exports.Earlier on Thursday, the Japanese yen touched its lowest versus the euro on concerns about economic growth in Asia. |
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Novartis hits acquisition trail
Swiss drugmaker Novartis has announced 5.65bn euros ($7.4bn; £3.9bn) of purchases to make its Sandoz unit the world's biggest generic drug producer.
Novartis, which last month forecast record sales for 2005, said it had bought all of Germany's Hexal. It also acquired 67.7% of Hexal's US affiliate Eon Labs, and offered to buy the remaining shares for $31 each. Novartis said that it would be able to make cost savings of about $200m a year following the acquisitions. Novartis' shares rose 1% to 57.85 Swiss francs in early trading.
The deal will see Novartis' Sandoz business overtake Israel's Teva Pharmaceuticals as the world's biggest maker of generics. Based on 2004 figures the newly merged producer would have sales of more than $5bn, the company estimated. Novartis said that it would merge a number of departments, adding that there may be job cuts.
"The strong growth outlook for Sandoz, which will create jobs, is expected to partially compensate for necessary reductions in the work force," the firm said in a statement. Generic drugs are chemically identical to their more expensive branded rivals. Producers such as Sandoz can copy the branded products usually after their patent protection expires and can sell them more cheaply as they do not have to pay research and development cost.
There are more than 150 generic drugmakers worldwide and analysts have predicted consolidation in a market that they call fragmented. However, not all analysts were initially convinced about the deal. "This is a very expensive acquisition," Birgit Kuhlhoff, from Sal Oppenheim investment bank, told Reuters. "I find it strange that they are making acquisitions in exactly those markets where they suffered price pressure."
| Swiss drugmaker Novartis has announced 5.65bn euros ($7.4bn; £3.9bn) of purchases to make its Sandoz unit the world's biggest generic drug producer.Novartis said that it would be able to make cost savings of about $200m a year following the acquisitions.Novartis said that it would merge a number of departments, adding that there may be job cuts.The deal will see Novartis' Sandoz business overtake Israel's Teva Pharmaceuticals as the world's biggest maker of generics.Novartis, which last month forecast record sales for 2005, said it had bought all of Germany's Hexal.Novartis' shares rose 1% to 57.85 Swiss francs in early trading. |
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India seeks to boost construction
India has cleared a proposal allowing up to 100% foreign direct investment in its construction sector.
Kamal Nath, Commerce and Industry Minister, announced the decision in Delhi on Thursday following a cabinet meeting. Analysts say improving India's infrastructure will boost foreign investment in other sectors too. The Indian government's decision has spread good cheer in the construction sector, according to some Indian firms.
A spokesman for DLF Builders, Dr Vancheshwar, told the BBC this will mean "better offerings" for consumers as well as builders. He said the firm will benefit from world class "strategic partnerships, design expertise and technology, while consumers will have better choice."
The government proposal states that foreign investment of up to 100% will be allowed on the 'automatic route' in the construction sector, on projects including housing, hotels, resorts, hospitals and educational establishments. The automatic route means that construction companies need only get one set of official approvals and do not need to gain clearance from the Foreign Investment Promotion Board, which can be bureaucratic. The government hopes its new policy will create employment for construction workers, and benefit steel and brick-making industries.
Mr Nath also announced plans to allow foreign investors to develop a smaller area of any land they acquired. "Foreign investors can enter any construction development area, be it to build resorts, townships or commercial premises but they will have to construct at least 50,000 square meters (538,000 square feet) within a specific timeframe," said Mr Nath, without specifying the timeframe. Previously foreign investors had to develop a much larger area, discouraging some from entering the Indian market. This measure is designed to discourage foreign investors from buying and selling land speculatively, without developing it. Anshuman Magazine, managing director, of CB Richard Ellis - an international real estate company - told the BBC this was "a big positive step."
However, Chittabrata Majumdar, general secretary of the Centre of Indian Trade Unions (CITU), said allowing FDI in the country is compromising India's own "self reliance". He said, "No country can develop on the basis of foreign investment alone." Mr Majumdar also said an assessment should be made as to whether foreign investment is indeed beneficial to the country - in terms of employment and money generated - or just another way of international companies filling their deep pockets.
| He said, "No country can develop on the basis of foreign investment alone."India has cleared a proposal allowing up to 100% foreign direct investment in its construction sector.The government proposal states that foreign investment of up to 100% will be allowed on the 'automatic route' in the construction sector, on projects including housing, hotels, resorts, hospitals and educational establishments.Mr Nath also announced plans to allow foreign investors to develop a smaller area of any land they acquired.Mr Majumdar also said an assessment should be made as to whether foreign investment is indeed beneficial to the country - in terms of employment and money generated - or just another way of international companies filling their deep pockets.Analysts say improving India's infrastructure will boost foreign investment in other sectors too.Previously foreign investors had to develop a much larger area, discouraging some from entering the Indian market. |
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Japanese growth grinds to a halt
Growth in Japan evaporated in the three months to September, sparking renewed concern about an economy not long out of a decade-long trough.
Output in the period grew just 0.1%, an annual rate of 0.3%. Exports - the usual engine of recovery - faltered, while domestic demand stayed subdued and corporate investment also fell short. The growth falls well short of expectations, but does mark a sixth straight quarter of expansion.
The economy had stagnated throughout the 1990s, experiencing only brief spurts of expansion amid long periods in the doldrums. One result was deflation - prices falling rather than rising - which made Japanese shoppers cautious and kept them from spending.
The effect was to leave the economy more dependent than ever on exports for its recent recovery. But high oil prices have knocked 0.2% off the growth rate, while the falling dollar means products shipped to the US are becoming relatively more expensive.
The performance for the third quarter marks a sharp downturn from earlier in the year. The first quarter showed annual growth of 6.3%, with the second showing 1.1%, and economists had been predicting as much as 2% this time around. "Exports slowed while capital spending became weaker," said Hiromichi Shirakawa, chief economist at UBS Securities in Tokyo. "Personal consumption looks good, but it was mainly due to temporary factors such as the Olympics. "The amber light is flashing." The government may now find it more difficult to raise taxes, a policy it will have to implement when the economy picks up to help deal with Japan's massive public debt.
| The growth falls well short of expectations, but does mark a sixth straight quarter of expansion.The first quarter showed annual growth of 6.3%, with the second showing 1.1%, and economists had been predicting as much as 2% this time around.The effect was to leave the economy more dependent than ever on exports for its recent recovery.The economy had stagnated throughout the 1990s, experiencing only brief spurts of expansion amid long periods in the doldrums.Growth in Japan evaporated in the three months to September, sparking renewed concern about an economy not long out of a decade-long trough.But high oil prices have knocked 0.2% off the growth rate, while the falling dollar means products shipped to the US are becoming relatively more expensive. |
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HealthSouth ex-boss goes on trial
The former head of US medical services firm HealthSouth overstated earnings and assets to boost the company's share price, it was claimed in court.
Richard Scrushy, 52, is accused of "directing" a $2.7bn (£1.4bn) accounting fraud at the company he co-founded in Alabama in 1984. Prosecutors said he was motivated by wealth - spending about $200m between 1996 and 2002 while earning much less. Defence lawyers said Mr Scrushy had been deceived by other executives. Several former HealthSouth employees have already pleaded guilty to fraud and are expected to give evidence against Mr Scrushy.
"We will present evidence that Richard Scrushy knew about the conspiracy, that he participated in the conspiracy and that he profited," prosecutor Alice Martin told the court. Mr Scrushy is the first chief executive to be tried for breaching the Sarbanes Oxley Act - a law introduced in the wake of the Enron and WorldCom frauds which obliges corporate bosses to vouch for the accuracy of their companies' results. Among the charges he faces are conspiracy to commit fraud, filing false statements and money laundering. After federal agents raided HealthSouth's offices in March 2003, the company said none of its past financial statements could be relied on. The firm has since reorganised its board and management team and currently operates about 1,400 health clinics.
| Several former HealthSouth employees have already pleaded guilty to fraud and are expected to give evidence against Mr Scrushy.Defence lawyers said Mr Scrushy had been deceived by other executives.Richard Scrushy, 52, is accused of "directing" a $2.7bn (£1.4bn) accounting fraud at the company he co-founded in Alabama in 1984."We will present evidence that Richard Scrushy knew about the conspiracy, that he participated in the conspiracy and that he profited," prosecutor Alice Martin told the court. |
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Electrolux to export Europe jobs
Electrolux saw its shares rise 14% on Tuesday after it said it would be shifting more of its manufacturing to low-cost countries.
The Swedish firm, the world's largest maker of home appliances, said it is to relocate about 10 of its 27 plants in western Europe and North America. It did not say which facilities would be affected, but intends moving them to Asia, eastern Europe and Mexico. The company has two manufacturing sites in County Durham. It makes lawn and garden products in Newton Aycliffe, and cookers and ovens in Spennymoor. The Newton Aycliffe plant could also be affected by Electrolux's separate announcement that it is to spin-off its outdoor products unit into a new separate company.
Electrolux's subsidiary brands include AEG, Zanussi and Frigidaire. The company said it was speeding up its restructuring programme, which aims to save between £190m and £265m annually from 2009. "We see that about half the plants in high-cost countries - that is around 10 - are at risk," said Electrolux chief executive Hans Straberg. "It looks pretty grim," said Swedish trades union official Ulf Carlsson. "What are we going to end up producing in Sweden?"
| The Newton Aycliffe plant could also be affected by Electrolux's separate announcement that it is to spin-off its outdoor products unit into a new separate company.Electrolux saw its shares rise 14% on Tuesday after it said it would be shifting more of its manufacturing to low-cost countries.The Swedish firm, the world's largest maker of home appliances, said it is to relocate about 10 of its 27 plants in western Europe and North America.The company said it was speeding up its restructuring programme, which aims to save between £190m and £265m annually from 2009."We see that about half the plants in high-cost countries - that is around 10 - are at risk," said Electrolux chief executive Hans Straberg. |