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Shr loss three cts vs profit eight cts
Net loss 35,000 vs profit 128,000
Revs 1,133,000 vs 1,528,000
Year
Shr profit four cts vs profit 21 cts
Net profit 72,000 vs profit 339,000
Revs 4,837,000 vs 4,500,000
NOTE: 1985 net income included an after tax gain of 195,000
or 12 cts per share on sale of real property.
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Treasury balances at the Federal
Reserve fell on March 27 to 2.424 billion dlrs from 2.508
billion dlrs on the previous business day, the Treasury said in
its latest budget statement.
Balances in tax and loan note accounts fell to 9.706
billion dlrs from 10.786 billion dlrs on the same respective
days.
The Treasury's operating cash balance totaled 12.131
billion dlrs on March 27 compared with 13.283 billion dlrs on
March 26.
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Shr 35 cts vs 29 cts
Qtly div 12 cts vs 12 cts prior qtr
Net 5,036,000 vs 4,165,000
Revs 147.6 mln vs 132.4 mln
Nine mths
Shr 1.12 dlrs vs one dlr
Net 16.1 mln vs 14.4 mln
Revs 433.4 mln vs 385 mln
NOTE: Per share data reflect March 1986 five pct stock
distribution. Cash dividend is payable April 30 to holders of
record April 15.
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Vanderbilt Gold Corp said
shareholders at a special meeting approved its reincorporation
in Delaware, an increase in authorized common to 25 mln shares
from 12 mln shares, and a non-qualified stock option plan.
It also said shareholders approved the merger of Morning
Star Mine interests held by six corporations in exchange for
issuing 2,098,602 shares of its common. It said the acquisition
brings its ownership in Morning to over 94 pct and it intends
to acquire the remaining interests before mid year.
It said its plans call for 1987 production of 30,000 ounces
of gold with product costs per ounce at about 200 dlrs.
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The U.S. Agriculture Department's
report on Export Markets for U.S. Grain, scheudled for release
today, has been delayed until Wednesday, April 1, a department
spokeswoman said.
No reason was given for the delay in releasing the monthly
report.
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The Bass Group, once thought by
analysts to be eager to sell its holdings in Taft Broadcasting
Co, emerged as another potential bidder for the Ohio
broadcasting company.
The Bass Group, which holds 24.9 pct of Taft, said it had
talked with other taft stockholders and some company managers
and directors "concerning participation in a group to acquire
control" of the company.
The Bass group said it had talks with other Taft
stockholders and members of Taft management about participating
in a group to acquire control. The group, which is led by the
wealthy bass brothers of Fort Worth, Texas, did not identify
any of the other people with whom it had talks.
Taft said Friday it would negotiate with its vice Chairman
Dudley Taft on his group's 150 dlr per share or 1.38 billion
dlr offer for the company.
At the time, the company said it authorized its adviser,
Goldman, Sachs and Co, to explore other takeover proposals and
to supply financial data to other interested bidders.
"If indeed, the reason Dudley Taft is no longer president
is because the bass group tossed him out, I couldn't see them
backing him on any deal," said one analyst, who asked not to be
identified.
"I think they wanted a way out. Now, this sounds like
they're going to join the group and buy themselves out," said
Edward Atorino, media analyst with Smith Barney, Harris Upham
and Co.
Analysts have speculated that Carl Lindner may be
interested in acquiring the company. they speculated he may be
one of the shareholders in talks with the bass group.
Lindner, chairman of American Financial Corp, holds 16.2
pct of Taft. He was not immediately available for comment.
Analysts have said they are baffled by the strength of
Taft's stock price compared to what they see as breakup values
for the company.
Several analysts had estimated a break up value of less
than 150. One analyst said he believes it has a breakup value
of 160 to 165 dlrs per share.
Taft stock closed at 156-1/2, up 1-3/4.
"They (investors) are saying here's another one - another
family dispute," said Dennis McAlpine of Oppenheimer.
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A high level U.S. trade official
said it would be foolish for Japan to strike back against the
United States for its sanctions on Japanese semiconductor
electronics products.
Asked by reporters if Japan was expected to retaliate
against U.S. exports, Deputy Under Secretary of Commerce Bruce
Smart replied, "That would be the height of foolishness."
In addition, he doubted Japan could show enough progress in
meeting the conditions of the agreement to avoid the actual
imposition of the 300 mln dlrs in tariffs on April 17.
Japan's 58.6 billion dlr trade surplus with the United
States last year has come under fire in Congress concerned
about the loss of jobs to foreign competition and with the
record 169 billion dlrs U.S. trade deficit in 1986.
President Reagan's sanctions decision won praise today from
the two Democratic leaders of Congress.
"I think it's about time," Senate Democratic Leader Robert
Byrd of West Virginia told reporters. House Speaker Jim Wright
of Texas told reporters before the opening of the House
session, "It just shows we were right all along when we said
something needs doing."
Smart testified before a Senate Labor Committee hearing
that last Friday's U.S. trade action would help U.S.
negotiations on access to Japan for U.S. auto parts.
Since last August Smart has been leading talks to open up
Japan to purchases of more U.S.-made automotive parts. Last
year, Japan racked up a 3.6 billion dlr trade surplus with the
United States in these products.
Both countries expect to conclude the talks by August 1987.
"It's amazing to me that the Japanese were surprised. I
hope it will persuade them we're serious," Smart said of the
White House trade sanctions.
The United States has tried to convince Japanese car
companies of the quality of American-made parts and to draw
them away from their traditional Japanese suppliers.
"All we ask is a chance. We have a job to do persuading them
we can do better than our reputation seems to be," he said.
Measured per car, each American-made car contained about
700 dlrs in Japanese auto parts while each Japanese-made car
contained about 26 dlrs in U.S. auto parts, Smart said.
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Investor Paul Bilzerian, who has
said he may seek control of Pay 'n Pak Stores Inc, said he
raised his stake in the company to one mln shares, or 9.9 pct
of the total, from 721,900 shares, or 7.2 pct.
In a filing with the Securities and Exchange Commission,
Bilzerian and Bicoastal Financial Corp, a Tampa, Fla.,
investment firm he controls, said they bought 278,000 shares of
Pay 'n Pak common stock on March 26 and 27 at prices ranging
from 13.29 to 17.04 dlrs a share.
Bilzerian last week said he was considering raising his
stake in the company, seeking a board seat or control.
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The Federal Reserve's move to easier
monetary policy, begun with four quick half-point discount rate
cuts in 1986, will likely end with a final rate drop in the
second quarter, analysts said.
A poll of 10 economists shows most expect interest rates to
edge lower, with the Fed likely to drop its basic lending rate
from 5-1/2 pct late next quarter to help the economy.
"The Fed is not likely to ease policy much further without
a full-blown recession," said Raymond Stone, chief financial
economist at Merrill Lynch Capital Markets.
Stone said economic data available by late June may be just
weak enough to prompt one more discount rate cut. But he said
it may only be a quarter-point drop instead of the usual half
point, to avoid hurting the dollar further.
All of the economists agreed that the Federal Open Market
Committee tomorrow will leave Fed policy unchanged.
The average forecast of those surveyed projects roughly
quarter-point drops by the end of June in both the Treasury
bond yield, to 7-1/2 pct, and the Federal funds rate at which
banks lend to one another, to 5-7/8 pct. Most expect the prime
lending rate at major banks to remain at 7-1/2 pct.
Other broad predictions of the survey, relating mainly to
the April-June quarter, follow:
- The dollar is likely to decline five to 10 pct further
against other major currencies because of a large U.S. budget
deficit and a wide, but narrowing, trade gap. Contacted after
the dollar's steep drop in the last two business days, the
economists reaffirmed this view but stressed the risk is that
the dollar will fall more, rather than less, than they expect.
- Oil prices in the second quarter are likely to continue
trading roughly between 16 and 19 dlrs a barrel and could well
test the lower end of that range.
- Stocks will continue to outperform bonds next quarter and
probably for all of 1987. Stocks should gain on strong
foreign demand and a modest second-half economic rise. The
outlook for bonds also is less favorable later in the year
since both inflation and interest rates may be edging up.
- Inflation as measured by the GNP implicit price deflator
will rise to around 3.3 pct this year from 2.7 pct in 1986. The
sharp fall in the dollar to date will add to inflation, as will
a mild economic pickup in the second half of this year.
- U.S. real gross national product, which grew at a two pct
annual rate in the 1986 second half, should expand at
respective rates of about 2.3 pct and 2.5 pct in the 1987 first
and second halves. First-quarter growth is put at a 2.4 pct
annual
rate, slowing to 2.1 pct next quarter.
Robert Brusca of Nikko Securities Co International sees
both the strongest economy and the highest interest rates among
those surveyed. He expects real GNP, which grew at a 1.1 pct
rate in fourth-quarter 1986, to expand at a 3.3 pct rate this
quarter and 3.5 pct next quarter.
"The economy will bounce back more strongly than many
expect," Brusca said. He said an involuntary buildup in
inventories, largely in autos, will add to first-quarter
economic growth, with consumer spending helping later.
"We're running out of special factors to keep the economy
afloat," said Philip Braverman of Irving Securities Corp. His
interest rate and economic forecasts were among the lowest.
Braverman said tax law changes and inventory accumulation
helped lift fourth and first quarter GNP growth, respectively.
He expects 2.5 pct first quarter growth but said that second
quarter growth could be zero or negative.
Braverman said economic activity next quarter will suffer
from a paring of inventories, lower capital investment, slow
government spending and less construction. Only a marginally
narrower trade deficit will add to growth.
He sees a 7.10 pct end-of-June yield on Treasury bonds,
with Federal funds and prime rates at 5.50 and seven pct,
respectively. Nikko's Brusca projects rates of 8.25 pct for
bonds, 6.15 pct for funds and 7.75 pct for the prime rate.
Two of the 10 economists revised rate forecasts up mildly
after the dollar's fall to 40-year lows versus the yen in past
days and news of pending U.S. trade sanctions against Japan.
David Resler of Nomura Securities Co International Inc
raised his end-June bond yield forecast to 7.50 pct from 7.20
pct and a Fed funds rate estimate to six pct from 5.80 pct.
Raul Nicho, president of Money Market Services Inc, lifted
his forecast of bond and Fed funds rates an eighth of a point
to eight pct for bonds and 6-1/4 pct for funds. Both Nicho and
Resler left their end-June prime rate forecast at 7-1/2 pct.
The higher rate forecasts reflected a belief that Japanese
investors will be less eager to buy U.S. bonds because of fear
about further dollar erosion and perhaps in response to U.S.
trade sanctions. Yields may have to rise to lure other buyers.
......END-JUNE U.S. INTEREST RATE FORECASTS....
....................T-bonds..Fed funds..Prime..
Nikko Securities.....8.25......6.15......7.75..
Money Mkt Services...8.00......6.25......7.50..
Discount Corp........7.75......6.25......7.50..
Merrill Lynch........7.30......5.75......7.50..
Bankers Trust........7.25......5.50......7.50..
Wells Fargo Bank.....7.30......5.60......7.00..
Irving Securities....7.10......5.50......7.00..
Dean Witter..........7.00......5.50......7.00..
.FORECAST AVERAGE....7.50......5.875.....7.50..
.CURRENT LEVELS......7.80......6.125.....7.50..
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The Louisiana weekly USDA state crop
report said there were 2.4 days suitable for fieldwork.
Soil moisture supplies rated 41 pct adequate and 59 pct
surplus.
Winter Wheat - fair to good condition. eight pct headed vs
27 pct a year ago and 17 pct average.
Corn - eight pct planted vs 64 pct a year ago and 51 pct
average. two pct emerged vs 45 y/a and 23 avg.
Spring Plowing - seventeen pct completed vs 66 pct a year
ago and 48 pct avg.
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Service Resources Corp's Chas. P.
Young Co subsidiary said it agreed to acquire Atwell Fleming
Printing Ltd, a Canadian financial printer, for about 3.2 mln
dlrs.
Young said the acquisition, which is expected to close in
April, is subject to due dilligence review.
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LL and E Royalty Trust said its monthly
dividend, for January, to unitholders will be 8.37 cts per unit
payable April 15 to holders of record April six.
As previously reported, pending a ruling from the Internal
Revenues Service, the trust's distribution may be reduced by
1.09 dlr per unit, plus interest, spread out over the life of
the productive properties in which the trust has an interest.
LLE said the working interest owner, to which the IRS sent
a notice about a deficiency in the owner's 1983 tax return, is
evaluating the necessity of escrowing some funds, which would
significantly reduce royalties paid to the trust.
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Genova Inc said its shareholders
approved a merger into <Genova Products Inc>, which will be
consumated within a few days. Under the agreement, Genova said
each of its shareholders will receive 5.375 dlrs per share in
cash.
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Imperial Bancorp said it declared a
five pct stock dividend, payable May 29 to shareholders of
record April 17.
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The Texas weekly USDA state crop report
said stormy winter weather limited fieldwork before conditions
improved later in the week.
A snowstorm caused some cattle deaths in the Panhandle, and
cold, wet weather covered many areas. Windy weather followed to
dry fields and limit planting delays.
Small grains made good progress despite cool temperatures
which slowed growth. Additional moisture was needed in some
areas. Many fields were booting and some were beginning to
head. Wheat was rated 16 pct fair, 56 pct good and 28 pct
excellent.
Corn and sorghum planting progressed, and land preparation
was ahead of schedule in the Plains despite snowy weather.
Cotton planting progressed in the Lower Valley.
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Chas. P. Young Co, a subsidiary of
Service Resources Corp, said it signed a definitive agreement
to acquire Atwell Fleming Printing Ltd, of Canada, for about
3.2 mln dlrs.
The transaction is expected to close in April.
ON February 23, Chas. P. Young said it had aquired 19.05
pct of the shares of Sorg INc <SRG> to facilitate a newgotiated
business combination.
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Qtrly div eight cts vs eight cts prior
Pay April 30
Record April 8
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Shell Canada Ltd, 72 pct owned
by Royal Dutch/Shell Group <RD> <ST>, scheduled its annual
maintenance refinery shutdowns during the next two months,
company spokeswoman Judy Wish said.
Wish said refineries will stockpile production before the
shutdowns to maintain normal supply while maintenance is
carried out.
Production at Shell's major refinery at Strathcona Alberta,
will be closed for about one month, Wish said.
There will be no layoffs associated with the refinery
maintenance, she added.
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Dixons Group PLC said that pursuant to
an agreement with Audio/Video Affiliates Inc, part of an
investor group that made a rival bid for Cyclops Corp <CYL>,
all litigation between them has been dismissed.
As part of the agreement, Dixons said Cyacq Corp, the
Audio/Video investor group that includes Citicorp Capital
Investors Ltd, agreed to "promptly" terminate its existing
tender offer for all outstanding Cyclops common at 92.50 dlrs
per share.
Dixons said it agreed to pay an additional 4.75 dlrs per
share, or 95 dlrs per share, to each shareholder whose shares
were purchased under its offer for Cyclops at 90.25 dlrs per
share.
On Friday, Dixons announced that it had increased its
holdings in Cyclops Corp to about 83 pct of the currently
outstanding shares and that it intended to increase to 95 dlrs
from 90.25 dlrs the amount per share paid in the merger of a
Dixons subsidiary with Cyclops.
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The U.S. Department of
Transportation (DOT) said it gave final clearance to the
proposed 225 mln dlr acquisition of AirCal Inc by American
Airlines Inc.
"The acquisition is not likely to substantially lessen
competition or to be inconsistent with the public interest," the
DOT said in a statement.
AirCal is a unit of ACI Holdings Inc while American is a
unit of AMR Corp.
The DOT had given tentative approval to the merger plan
Feb. 20.
American is the third largest U.S. airline in terms of
revenue passenger miles while AirCal--a relatively small
carrier that primarily serves West Coast cities--is the
nation's 17th largest passenger carrier. Their merger would not
alter American's third-place ranking, according to data
compiled by Aviation Daily, a leading industry trade magazine.
The combination would incrase American's share of the U.S.
market to 15.4 pct from its current 14.7 pct, the DOT said.
The DOT said the merger was unlikely to substantially
reduce competition on the four routes on which both carriers
provide either nonstop or single-plane service.
At 13 of the 14 terminals served by both carriers, the DOT
said it found no evidence that other carriers could not
increase or begin service that competed with a merged
American-AirCal.
Concerning the 14th, "While entry may not be possible at the
Orange County Airport in the near future, DOT found that the
service provided at other airports in the Los Angeles area,
especially at the Los Angeles International Airport, will
provide effective competition for Orange County travelers in
long-haul markets," the DOT said.
The merger would give American control of 37 pct of the
authorized takeoff and landing slots at the Orange County
terminal, where environmental concerns and a small terminal
building limit future opportunities for expansion.
The DOT said the Air Line Pilots Association filed comments
opposing the merger but "raised no new facts or arguments."
Under the merger terms, announced Nov. 17, American will
pay 15 dlrs a share for the outstanding stock of ACI Holdings.
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The U.S. credit market ended under
extreme pressure as the dollar's continued slide on the
currency markets triggered an avalanche of U.S. securities
sales, pushing prices to 1987 lows, dealers and analysts said.
"This was a bloodbath," said one money market economist.
"We've been trading in a state of total panic at times today,"
said another.
Mirroring the dollar's fall to a 40-year low against the
yen, the key 7-1/2 pct 30-year Treasury bond price fell nearly
two points to close at 96-7/32, compared with 98-5/32 on
Friday. The corresponding yield jumped to 7.83 pct from 7.66.
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Inland Vacuum Inc said is
board proposed a two-for-one stock split payable to
shareholders of record April 30.
The board also elected Phillip Frost chairman, succeeding
John Durkin, who remains president and chief executive officer.
Frost in early February bought 49 pct of the company, Durkin
said.
Stockholders at the annual meeting approved a measure to
change the company's name to IVACO Industries Inc. Five new
directors were also elected to the company's board. Durkin was
re-elected to the board, the company said.
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Shr loss three cts vs loss 39 cts
Net loss 115,000 vs loss 1,544,000
Rev 6.9 mln vs 7.3 mln
Six months
Shr profit four cts vs loss 44 cts
Net profit 141,000 vs loss 1,772,000
Rev 13.9 mln vs 14.5 mln
NOTE: Net includes loss from discontinued operations of
78,000 dlrs, or two cts a share, versus 597,000, or 15 cts a
share in the prior 2nd qtr.
Six months net includes gain from discontinued operations
of 104,000 dlrs, or three cts a share, versus a loss of 588,000
dlrs, or 15 cts a share, in the prior six months.
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Oper shr loss 44 cts vs profit 58 cts
Oper net loss 2.7 mln vs profit four mln
Revs 13.3 mln vs 28.4 mln
Avg shrs 6.1 mln vs seven mln
NOTE: Prior year excludes extraordinary gain of 21 cts per
share.
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Shr 13 cts vs 5 cts
Net 5,568,319 vs 2,968,437
Rev 36.5 mln vs 34.0 mln
12 months
Shr 1.60 dlrs vs 1.79 dlrs
Net 72,865,101 vs 85,198,853
Rev 521.3 mln vs 420.3 mln
NOTE: Twelve months includes the cumulative effect of a
change in accounting methods for accruing unbilled revenues of
11.4 mln dlrs, or 28 cts per share.
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Shr 13 cts vs 14 cts
Net 1,329,000 vs 1,054,000
Revs 20.7 mln vs 11.4 mln
Avg shrs 10,100,000 vs 7,500,000
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Neoax Inc said it bought
Rexnord Inc's Fairfield Manufacturing Co for 70.5 mln dlrs
cash.
The unit makes custom gears for industrial use and had
sales of 84 mln dlrs in its Oct. 31, 1986 fiscal year.
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Shr 80 cts vs 79 cts
Net 4,212,000 vs 4,142,000
Sales 111.1 mln vs 107.1 mln
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Development of costly shale oil,
liquified coal and other kinds of synthetic fuels, halted in
recent years because of cheap and abundant petroleum supplies,
will become economic again when world oil prices top 30 dlrs a
barrel, an Exxon Co USA executive said.
Joe McMillan, a senior vice president, told Reuters after
addressing a Houston meeting of the American Institute of
Chemical Engineers, "By early in the next century, synthetics
should play a significant role in this country's energy
supply."
McMillan also told reporters at a news conference that he
believed synthetic fuels would become economic to develop when
world oil prices reached a 30 to 40 dlr a barrel price range.
"You're talking about a 50 pct increase in crude oil
prices, but I think that time is coming and we've got to be
prepared," McMillan said.
He predicted U.S. oil demand would rise by about one pct
annually in the next few years while the nation fails to
replace its oil reserves through exploration. By the turn of
the century, world oil prices will be significantly higher
because of declining supplies, McMillan said.
Ashland Oil, Inc. chairman John Hall, who also spoke at the
meeting, advocated some form of federal tax incentives to help
spur development of synthetic fuels.
The United States, Hall said, has nearly 500 billion tons
of demonstrated coal reserves, an amount more than triple that
of all the world's known oil reserves.
"We must encourage research now in order to make synfuels
competitive later," Hall said. The average lead time for
development of a shale oil or liquified coal project is between
five and ten years.
Until last year, the federal government had subsidized
synfuels development through the U.S. Synthetic Fuels Corp., a
research program created during the Carter Administration with
the goal of developing replacements for up to two mln barrels
of oil.
The corporation was shut down last April when Congress
refused to continue funding its eight billion dlr budget
because of uneconomic projects based on forecasts of 50 dlrs a
barrel oil and 10 dlr per mcf natural gas during this decade.
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The Oklahoma weekly USDA crop
report said cold weather slowed crop development and caused
some cattle deaths.
Wheat growth was halted by cold weather, and rain early in
the week prevented fertilizer application and weed spraying.
Fields in the west were short of nitrogen, and moderate insect
activity was noted in the southwest region.
Wheat condition was rated 15 pct fair, 84 pct good and one
pct excellent.
Row crop activity was very slow amid wet conditions.
Topsoil moisture was rated 30 pct adequate and 70 pct surplus,
and subsoil moisture was rated 100 pct adequate. Only two days
were suitable for fieldwork.
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Brazilian President Jose Sarney
announced a move which temporarily legalises the purchase of
U.S. dollars in the parallel currency market, aimed at
promoting imports of foreign goods.
In a speech, Sarney justified his measure as a need to face
"current well known difficulties to obtain foreign loans for the
purchase of goods."
The parallel market, although officially tolerated, is
technically illegal in Brazil. For the past year, the dollar in
the parallel market has sold at between 25 and 100 pct above
the official rate.
Sarney's decision means Brazilian importers of machinery
and industrial equipment can buy dollar currency in the
parallel market without having to wait for an official order
from the Banco do Brasil's Foreign Trade Department (Cacex).
Sarney also announced measures to boost exports in an
effort to strengthen the country's trade balance and alleviate
the risk of a reduction of foreign loans for this sector of the
economy.
The president authorised the National Foreign Trade Council
(CONEX) to resume operating as the ruling body of Brazil's
trade policy, with participation of the private sector.
The Council had been closed three years ago by the military
government of former President Joao Figueiredo.
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Canada's major banks will likely face
stiff pressure to declare their Brazilian loans non-performing
if, as expected, major U.S. banks take similar action after the
end of their first quarter tomorrow, analysts said.
American bankers said last week that slow progress in debt
talks with Brazil increased the likelihood that U.S. banks
would soon declare their Brazilian loans non-performing.
Such action "would put a lot of pressure on the Canadian
banks to do the same," Levesque, Beaubien Inc Toronto-based bank
analyst Donna Pulcine told Reuters.
"They (banks) like to appear to be conservative," said
Pulcine, "and if a major bank puts loans on a non-performing
basis and the Canadian banks don't, there is going to be a lot
of pressure from shareholders as to why one bank is considering
the loans non-performing and another bank is not."
Wood Gundy Inc bank analyst Patricia Meredith said any
willingness by a major Brazilian bank creditor such as Citicorp
<CCI> to declare its Brazilian loans non-performing rather than
let Brazil dictate settlement terms would provide a compelling
example for other creditor banks.
"In order to make that strategy work, they (Citicorp) have
to have the support of the other banks," said Meredith.
Bank analyst Michael Walsh at First Marathon Securities Ltd
said at least one Canadian bank, which he declined to identify,
"wants to put (the Brazilian loans) on a non-performing basis
and is trying to encourage the others to take that position."
Canadian banks are owed about seven billion Canadian dlrs
by Brazil, which late last month suspended interest payments on
its 68 billion U.S. dlr foreign bank debt.
Banks in Canada, although allowed to wait up to 180 days
before declaring loans on which they are receiving no interest
as non-performing, usually move on such loans within 90 days.
They could therefore delay action on the Brazilian loans until
late May, which falls in Canadian banks' third quarter ending
July 31.
<Bank of Montreal>, Brazil's largest Canadian bank
creditor, said last week it was not currently considering
declaring its 1.98 billion dlrs of Brazilian loans as
non-performing.
"I think that is just for the benefit of the public," Walsh
said of Bank of Montreal's statement.
Some analysts predicted minimal earnings impact on Canadian
banks from a move to declare the Brazilian loans
non-performing.
They said Brazil would likely resume interest payments by
the banks' fiscal year-end on October 31, thus allowing banks
to recoup their lost interest income.
"From what Brazil has said, it is quite likely the banks
will get the money," said Meredith. "My outlook at this point is
optimistic that there will be no adjustment for the full-year's
earnings."
Meredith forecast 1987 fully diluted per share earnings of
3.80 dlrs for <Royal Bank of Canada> compared with 3.74 in
1986; 4.30 dlrs for <Bank of Montreal> compared with 3.59; 2.25
dlrs for <Canadian Imperial Bank of Commerce> compared with
2.23; 2.15 dlrs for <Bank of Nova Scotia> compared with 1.94,
and 2.85 dlrs for <Toronto Dominion Bank> against 2.74.
She forecast 1.90 dlrs for <National Bank of Canada>
against 3.30 dlrs before a two for one stock split.
Analyst Pulcine said she might lower full-year earnings
estimates for the banks by between two cts and 10 cts a share,
assuming a possible settlement reduced Brazil's interest costs.
"If the banks didn't receive anything for the rest of the
fiscal year, the impact could range from 16 cts to 70 cts a
share. But I don't see that as a likely scenario," Pulcine said.
Walsh at First Marathon suggested, however, that the
Brazilian debt situation was so complex that "it could drag on
beyond one full fiscal year."
He said he foresaw having to lower his 1987 fiscal earnings
forecasts for the banks. He estimated that Brazil's yearly
interest payments to Canadian banks totaled about 575 mln dlrs
or about 10 pct of their total 1986 pre-tax earnings.
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The Venezuela Guayana Corporation, CVG,
which oversees the state steel, iron, aluminum and other
industries, will invest 75 billion bolivars in new projects
during 1987-89, CVG president Leopoldo Sucre Figarella
announced.
The investments will go to plant expansion, infrastructure
and the extension of hydroelectric facilities in the
mineral-rich Guayana region, south of the Orinoco river.
Sucre Figarella told a news conference the CVG's 12
companies showed an overall increase of 120 pct in profits,
which rose from 1.732 billion bolivars in 1985 to 3.926 billion
bolivars last year.
Among the best performers was steel company Sidor which
earned 1.019 billion bolivars, the first time since 1978 Sidor
turned a profit.
The gain was made possible in part by the refinancing of
1.619 mln dollars of foreign debt.
CVG's three aluminum companies also showed substantial
gains. Interalumina, which makes the intermediate material
alumina, had an increase in profits from 116 to 217 mln
bolivars, Alcasa earned 487 mln bolivars, as compared to 1985's
412 mln and Venalum's profits rose by around half, from 1.042
to 1.504 bln bolivars.
Meanwhile, the state iron company Ferrominera saw its
profits rise from 156 mln bolivars in 1985 to 204 mln bolivars
last year.
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Infinity Broadcasting Corp said it
entered an agreement to acquire radio stations KVIL AM/FM from
Sconninx Broadcasting Co for 82 mln dlrs.
Upon completion of the transaction, Infinity will own nine
FM and four AM stations in 10 major markets.
The transaction is subject to FCC approval.
Reuter
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Shr loss 45 cts vs profit 25 cts
Net loss 641,000 vs profit 352,000
Revs 5,747,000 vs 3,038,000
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Shr loss five cts vs profit 36 cts
Net loss 784,000 vs profit 4,793,000
Revs 90 mln vs 79 mln
Year
Shr profit 27 cts vs profit 65 cts
Net profit 4,010,000 vs profit 8,539,000
Revs 273 mln vs 214 mln
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Amfac Inc said it entered an
agreement to sell the last remaining store of its original
Liberty House of California operation to H and S - San Mateo
Inc.
Terms were not disclosed.
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Harper International Inc
said it intends to buy the major asset, patents and trade name
of Demarkus Corp, a designer and installer of process gas
systems for the soft drink and brewing industries.
The purchase price is about 125,000 dlrs.
Demarkus' sales were 470,000 dlrs in 1986.
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Brazilian President Jose Sarney
announced a move which temporarily legalises the purchase of
U.S. Dollar currency in the parallel market, aimed at promoting
imports of foreign goods.
In a speech, Sarney justified his measure as a need to face
"current well known difficulties to obtain foreign loans for the
purchase of goods."
The parallel market, although tolerated, is technically
illegal. For the past year, the dollar in the parallel market
is being sold at 25 to 100 pct above the official rate.
Sarney's decision means that Brazilian importers of
machinery and industrial equipment can buy dollar currency in
the parallel market without having to wait for the issuing of
an official order from the Banco do Brasil's Foreign Trade
Department (Cacex).
Sarney also announced measures to boost exports in an
effort to strengthen the country's trade balance and alleviate
the risk of a reduction of foreign loans for this sector of the
economy.
The president authorised the National Foreign Trade Council
(CONEX) to resume operating as the ruling body of Brazil's
trade policy, with participation of the private sector.
The Council had been closed three years ago by the military
government of former President Joao Figueiredo.
Tomorrow, Brazil was due to fulfill payment of 15 billion
dollars in short range credit lines, but its economic officials
have suggested a 60-day extension in the deadline in order to
seek a renegotiation with its creditors.
Sarney told members of the Council that for Brazil it is a
must to recover its annual trade balance surplus to the 12
billion dollars average recorded in 1984 and 1985, and which
dropped sharply last year to 8 billion dollars.
He attributed the poor performance of Brazil's trade
balance in 1986 to protectionist moves by industrialised
countries, the fall in the prices of basic goods and the crisis
faced by several of Brazil's Third World trade partners.
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Olson Industries Inc said
it signed a letter of intent to sell substantially all of its
remaining egg operations to Sunny Fresh Foods inc.
Olson said it expects to receive about nine mln dlrs from a
combination of a sale of tangible assets to Sunny Fresh and
realization of intangible and other assets by Olson.
The transaction is expected to result in a charge for
discontinued operations of about two mln dlrs but is also
expected to generate substantial cash flow to pay off
egg-related indebtedness of about 7.5 mln dlrs and to further
improve working capital.
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A group of investment firms which
had once sought control of Comdata Network Inc, told the
Securities and Exchange Commission it sold its remaining
1,113,500-share, or 5.9 pct, stake in the company.
The group, which had owned as much as 9.5 pct of the total,
said it sold the stake on March 27 at 15-3/4 dlrs a share. Last
week it sold 455,000 Comdata shares.
Group members are CNI Partners, an investment partnership,
Mason Best Co, a Texas investment partnership, and Houston
Imperial Corp, a real estate development firm.
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Gencorp Inc said its board urged
shareholders to reject the hostile unsolicited 100 dlr a share
tender offer made March 18 by General Acquisition Inc, an
affiliate of Wagner and Brown and AFG Industries INc.
Gencorp also said it is developing a financially superior
alternative that would enable shareholders to benefit from the
full value of the company.
In a letter to shareholders, Chairman A. William Reynolds
said the offer is a "highly conditional, contingently financed
bust-up offer" that seeks to deny shareholders the true value
of their investment in Gencorp.
Reynolds said the board reached its decision to reject the
offer after careful study with legal and financial advisers. He
said the board has authorized management to explore
alternatives aimed at providing shareholders with a
"financially superior" alternative to the general acquisition
offer.
A Gencorp spokesman, in response to questions, would not
comment on market speculation that the company's management may
develop a leveraged buyout offer of its own. He would also not
comment on when a better alternative might be developed.
Gencorp's stock has traded well above the 100 dlr offer
price since the tender was made. Today, Gencorp closed at
114-1/4, up 1-5/8.
Reynolds said in the letter that for the last few years,
Gencorp management has taken action to enhance shareholder
value, and the stock price and earnings have improved since he
joined the company.
Gencorp said the partnership's offer is a "bargain price"
acquisition that was "using financing from a syndicate of banks
that does not yet exist and a bridge loan from Shearson Lehman
brothers that shearson is not obligated to provide."
Reynolds also said the offer would result in a radical
alteration and selloff of Gencorp's assets, including Aerojet
General to refinance General Acquisition's borrowings with the
profits going to Wagner and Brown and AFG instead of
shareholders.
The letter also said the General Acquisition offer
"jeopardizes the security and interests" of its shareholders,
employees, customers, suppliers and the communities throughout
the country where the company's facilities are located.
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Shr profit 17 cts vs loss three cts
Net profit 14,918,000 vs loss 2,732,000
Revs 74.8 mln vs 54.7 mln
YEAR
Shr profit 80 cts vs profit 15 cts
Net profit 71.6 mln vs profit 12.2 mln
Revs 293.4 mln vs 222.8 mln
Note: 1986 fl-yr net includes extraordinary gain of 56.3
mln dlrs from investment sales, gain on share issue by 57
pct-owned Campbell Red Lake Mines Ltd <CRK> and provision for
decline in value of marketable securities. 1985 fl-yr net
includes gain of 10.1 mln dlrs.
1985 revs restated to exclude revenues from discontinued
coal mining operations.
Under U.S. accounting practises, Dome Mines would have
reported 1986 loss of 192.9 mln dlrs or 2.17 dlrs shr vs yr-ago
loss of 24.9 mln dlrs or 32 cts shr, reflecting different
principles in accounting for 22 pct stake in Dome Petroleum Ltd
<DMP> and 1986 oil and gas writedown.
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The U.S. should reassess
its Mideast policy in light of its rising dependence on
imported oil, according to Charles Ebinger of the Center for
Strategic and International Studies.
"The prospect of rising dependence on oil imports from the
Gulf, and the recent revelations of the Tower Commission
report, mandate more than ever before the need for a
fundamental reassessment of U.S. interests in the Middle East,"
Ebinger said.
He remarks were made in an address to the National
Petroleum Refiners Association meeting.
"Although in the short run it is difficult to see a direct
link between Arab anger and threats to oil supplies, in the
current environment it will be increasingly difficult for
moderate Arab leaders to be seen as friendly to U.S.
interests," Ebinger said.
Oil traders said threats to oil supplies has kept crude
oil prices strong recently although some believe prices will be
weaker if demand falls in the spring.
But William Randol, analyst at First Boston Corp, said
crude oil prices will hold near current levels this spring.
There will be no spring downturn, said Randol, speaking at
the annual refiner meeting. He said there is a 40 pct chance
that crude oil prices could move higher in the second half of
the year, following an OPEC meeting scheduled for late June.
He said he expects OPEC will extend its current agreement
to restrict production.
OPEC will renew its production pricing agreement in June
because the value of the oil exports of the OPEC producers has
declined along with the U.S. dollar, Randol said.
OPEC oil exports are priced in U.S. dollars, and the dollar
has fallen about 30 pct in the last 18 months.
Randol said U.S. crude oil imports will increase 3.5 to
four mln barrels per day by 1990 as consumption rises 1.5 to
two mln bpd, and supplies decline two mln bpd.
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Qtr ended Nov 30
Shr loss nil vs profit nil
Net loss 1,321,940 vs profit 128,164
Revs 4,582,260 vs 5,115,456
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Qtly div eight cts vs eight cts prior
Pay April 24
Record April 10
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Imperial Corp of America said
it declared a 10 cts dividend and four pct stock dividend on
APril 25 to holders of record April 10.
This is the first dividend payment since 1981, the company
said.
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SMITH INTERNATIONAL INC <SII> 4TH QTR LOSS
NEWPORT BEACH, Calif.
Shr loss 1.95 dlrs vs loss 9.10 dlrs
Net loss 44.4 mln vs 206.8 mln
Revs 84.1 mln vs 172.4 mln
Year
Shr loss 6.56 dlrs vs loss 11.66 dlrs
Net loss 149.0 mln vs loss 265.1 mln
Revs 415.2 mln vs 697.3 mln
Note: Current qtr net includes pretax charges of 10.7 mln
dlrs against inventory adjustments and currency costs related
to fluctuations of Italian lira.
Current year net includes pretax charges of 46.6 mln dlrs
for provision to reduce carrying value of excess capital assets
and to writedown certain inventories and other assets. Also
includes charges of 18 mln dlrs covering costs of workforce
reductions, relocation and Chapter 11.
Year-ago net includes pretax charges related to judgment
against company in litigation with Hughes Tool Co of 189.1 mln
for qtr and 216.9 mln dlrs for 12 mths.
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General Acquisition Co said it was
disappointed by Gencorp's response to its tender offer and
questioned how the company might give better value to
shareholders.
Gencorp earlier urged shareholders to reject a 100 dlr per
share tender offer from the partnership, which includes Wagner
and Brown and AFG Industries Inc. The company said it was
studying financially superior alternatives.
The partnership called the response inflammatory and
unproductive, particularly since it had attempted to discuss
the offer with Gencorp.
The partnership said Gencorp failed to say how it would
provide a "superior value yet they continue their attempt to
prevent a satisfactory offer by failing to redeem their poison
pill." Poison pills are shareholder rights plan that make
takeovers more expensive.
Gencorp said in its statement earlier that the date its
rights will trade separately from the common stock was extended
to April six from April three. It said the extension was
subject to further extensions by the board and is conditioned
on no person aquiring beneficial ownership of 20 pct or more of
Gencorp prior to April six.
General Acquisition said it is confident its offer can be
completed in a timely manner using its financial arrangements.
The partnership in its statement again urged management to
work with it to facilitate a transaction.
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Shr nil vs same
Final and yr div nil vs same
Pre-tax, pre-minorities loss 3.53 mln dlrs vs profit 17.40
mln.
Net attributable loss 17.14 mln dlrs vs loss 8.73 mln
Sales 220.84 mln vs 173.50 mln
Other income 17.77 mln vs 12.02 mln
Shrs 666.67 mln vs same.
NOTE - Attributable net loss is after tax 10.04 mln dlrs vs
18.59 mln, interest 82.36 mln vs 65.94 mln, depreciation 64.77
mln vs 35.74 mln and minorities 3.57 mln vs 7.55 mln but before
net extraordinary loss 1.22 mln vs loss 3.91 mln.
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Woodside Petroleum Ltd <WPLA.S> said
its 1986 net loss largely reflected the drop in oil prices
combined with a large tax provision.
Woodside earlier reported attributable net loss rose to
17.14 mln dlrs in 1986 from 8.73 mln in 1985, although group
revenue rose to 220.84 mln from 173.50 mln.
It said it should have received a 1.7 mln dlr tax credit
but instead made a 10.04 mln dlr tax provision. This largely
related to its <Vamgas Ltd> unit, non-allowable exchange losses
and tax benefits from the North-West Shelf project not
recognised in the accounts.
Woodside said the rise in revenue largely reflected full
year sales of gas and condensate from the domestic phase of the
Shelf project, against six month sales in 1985.
Offsetting this was a 23 pct fall in the Cooper Basin gas
and liquids revenue of its 50.6 pct-owned Vamgas unit.
Since the balance date Woodside has accepted a Santos Ltd
<STOS.S> takeover offer for Vamgas.
Woodside said a 92.8 mln dlr capital profit on the sale
would be included in the 1987 accounts.
It said it lifted capital spending on fixed assets to 269.6
mln dlrs from 178.3 mln, mostly on the Shelf project.
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China and the European Community (EC)
signed an agreement on the establishment of an EC office here.
Chinese vice-foreign minister Zhou Nan and the EC's
external relations commissioner, Willy De Clercq, signed the
accord. EC sources said the office was likely to open in the
second half of this year.
In 1986 the EC was China's third largest trading partner,
with Chinese imports from the EC worth 5.7 billion dlrs and
exports worth 2.6 billion dlrs.
De Clercq told the official China Daily that more joint
ventures should be set up in China as a way of reducing China's
trade deficit with the EC.
The EC's affairs in China are currently looked after by
whichever country holds the group's six-monthly rotating
presidency, now held by the Belgians until the Danes take over
in July.
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Prime Minister Yasuhiro Nakasone may have
been dealt a fatal political blow by the yen's renewed rapid
rise and the threat of a trade war with the United States,
political analysts said.
Nakasone, already under fire over an unpopular tax reform
plan, may now be forced to resign before the June economic
summit of seven industrialised nations if local elections later
next month go against candidates from his ruling Liberal
Democratic Party (LDP), they said.
"The close relationship between Nakasone and President
Reagan was an important element of Nakasone's power base,"
Waseda University Political Science Professor Mitsuru Uchida
told Reuters. "So the emergence of U.S. Criticism damages
Nakasone."
Even before the latest trade friction flared, Nakasone was
encountering criticism not only from opposition parties but
also within his own LDP over his proposal to levy a sales tax.
"Many factions within the LDP are distancing themselves from
Nakasone," Uchida said. "His position within the LDP itself is
not so strongly established today."
Nakasone, who has been more popular with the general public
than with many LDP members, is now seeing his public support
eroded, the analysts said.
The yen's rise to record highs and the U.S. Threat on
Friday to impose tariffs on Japanese electronics goods in
retaliation for Japan's alleged violation of a microchip trade
pact are now giving Nakasone's critics fresh ammunition, the
analysts said.
"Apparently the special relationship between Reagan and
Nakasone hasn't worked effectively," Rei Shiratori, director of
the Institute for Political Studies in Japan, said.
This is making the Japanese people doubt Nakasone's
credibility, Shiratori told Reuters.
The cumulative impact of the sales tax issue, the yen's
rise and mounting trade friction could mean serious LDP losses
in the April 11 and 26 local elections, analysts said.
"If the elections go against the LDP, Nakasone may have to
resign early," Shiratori said.
But Nakasone still has a chance to soothe U.S. Tempers
before or during his week-long Washington visit from April 29,
some analysts said.
However, "unless the Japanese political system can move more
quickly to give Nakasone some nice present to take to
Washington on smouldering trade issues, he will face a very
hostile audience," said Merrill Lynch Securities economist
William Sterling.
"If the trip is a major disaster, it would seem to put the
final nail in his coffin," he said.
Reagan's own weakened domestic position, and growing
Republican as well as Democratic anger with Japan, argue
against a quick settlement to the trade dispute, the analysts
said.
But a desire on both sides to find some solution, coupled
with uncertainty at home and abroad over likely successors to
Nakasone, could still lead to an attempt to paper over the
differences and aid Nakasone, they said.
"One factor against a trade war may be that Washington is
not anxious to push Nakasone into his grave," Sterling said.
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CSR Ltd <CSRA.S> and Exxon Corp <XON>
unit <Esso Exploration and Production Australia Inc> said CSR
has agreed to sell its <Delhi Australia Fund> (DAF) to Esso for
985 mln Australian dlrs.
The sale is effective from tomorrow, they said in a joint
statement.
The previously announced float of part of its Delhi
interest will not now proceed, CSR said in the statement.
Delhi Australia Fund owns <Delhi Petroleum Pty Ltd>, which
holds an average of 25 pct in the Santos Ltd <STOS.S>-led
Cooper and Eromanga Basin gas and liquids projects.
In addition to the purchase price, CSR will share equally
in any returns due to increases in crude oil and condensate
prices over certain levels for liquids produced from Delhi's
interests in the next two years, the statement said.
"The Esso proposal to purchase all the Delhi interest will
be more beneficial to our shareholders than proceeding with the
float," CSR chief executive Bryan Kelman said in the statement.
Kelman said the sale of Delhi would enable CSR to focus
efforts on expanding business areas such as sugar and building
materials in which CSR has had long and successful management
experience and strong market leadership.
With the sale, CSR will be able to expand those businesses
more aggressively and earlier, he said.
As reported separately, soon after announcing the Delhi
sale CSR launched a takeover bid for the 68.26 pct of <Pioneer
Sugar Mills Ltd> that it does not already hold, valuing its
entire issued capital at 219.6 mln dlrs.
After Bass Strait, the onshore Cooper and Eromanga Basin is
Australia's largest oil and gas producing area with current
gross oil production of 45,000 barrels per day (BDP), gas
liquids output of 30,000 BPD and gas sales of 480 mln cubic
feet a day, the CSR-Esso statement said.
The purchase gives Esso, a 50/50 partner with The Broken
Hill Pty Co Ltd <BRKN.S> in the Bass Strait, its first onshore
production in Australia, they said.
Esso's chairman Stuart McGill said he hoped Esso can assist
in maintaining the high rate of oil and gas discoveries in the
Cooper-Eromanga area.
"These discoveries will help Australia's self-sufficiency in
oil reserves thereby offsetting in part the decline in Bass
Strait production now under way," McGill said.
In a separately released letter to CSR shareholders, Kelman
said CSR was within days of completing plans for the float of
CSR Petroleum when it received an offer from Esso.
He said CSR is convinced the sale was the correct decision
in view of the risks associated with the oil business.
The price-sharing arrangement provides for CSR to share
equally with Esso in higher returns if oil prices average more
than 20 U.S. Dlrs a barrel in the next two years, he said.
Kelman said a revaluation of CSR's investment in Delhi to
net realisable value as of today, CSR's annual balance-date,
will result in an extraordinary loss of 97 mln dlrs.
However, revaluations and profits on sales of other assets
will significantly reduce this loss, he said.
He also said that CSR is sufficiently encouraged by future
prospects and the opportunity to reposition the group in core
businesses to foreshadow an increase in final dividend payable
in July to 10 cents from nine to make an annual 19 cents
against 18 in 1985/86.
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Commerzbank AG <CBKG.F> said a
dividend of nine marks would be proposed for ordinary
shareholders on 1986 earnings after eight in 1985.
It added in a statement that parent net profit rose to
288.2 mln marks in 1986 from 221.7 mln the prior year.
A Commerzbank spokesman noted the figures were,however,
preliminary and required approval of the bank's supervisory
board which meets today.
The Commerzbank statement added the distributable profit
last year rose to 228.2 mln marks from 161.7 mln in 1985.
With inclusion of the corporate tax allowance, qualifying
domestic shareholders would receive an effective dividend of
14.06 marks per share.
Total dividend payout would rise to 186.8 mln marks from
142.0 mln on 1985 earnings due to the increase in the dividend
and in equity capital, it added.
From the parent net profit, 60 mln marks would be placed in
published reserves, unchanged from the two prior years.
The shareholders' meeting take place on May 22 in Hamburg.
The statement said holders of Commerzbank participation
certificates in a total nominal value of 425 mln marks would
receive the remaining 41.4 mln marks of the distributable
profit. Aside from the basic payment of 8.25 pct of nominal
value, certificate holders would receive an additional 1.5 pct.
The management board of the bank would also propose two
capital measures to shareholders in order to be able to react
quickly to new challenges.
It would ask for authorised capital of a nominal 200 mln
marks for the issue of new shares and for 300 mln for the issue
of warrant bonds, both for the period until April 30, 1992.
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Public Relations consultancy <Shandwick
Plc> said it had agreed to buy the Los Angeles-based <Rogers
and Cowan Inc> which specialises in the entertainment industry.
A total of 2.25 mln dlrs is payable on completion, 1.5 mln
will be injected into the business through an interest free
loan and the expenses of the acquisition amount to 660,000 stg.
Shandwick said it would raise 5.1 mln stg through the
placing of 1.16 mln shares to finance the deal, with the
balance of 2.04 mln stg used to strengthen the balance sheet
and in anticipation of future performance-related payments.
In the year to end-September Rogers' operating income was
more than 10 mln dlrs. After the acquisition Shandwick's U.S.
Operating income will be comparable to that it earns in the
U.K.
Rogers' estimated that pretax profit in the year to
end-1987 would exceed 900,000 dlrs. An extraordinary loss of
504,000 dlrs in 1986 resulted from the write off of assets.
Net tangible assets at end-September were 363,000 dlrs.
Shandwick shares were unchanged at 460p.
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The Bank of England said it had invited
an early round of bill offers from the discount houses after
forecasting a very large shortage of around 1.75 billion stg in
the money market today.
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Hutchison Whampoa Ltd <HWHH.H>
announced a bonus issue of one new "B" share of 2.5 H.K. Cents
each for every two existing ordinary shares of 25 cents a share
par value.
A company statement said Hutchison forecast 1987 dividends
for existing shares of not less than 32.5 cents a share and not
less than 3.25 cents for each "B" share.
Hutchison said the new issue will help increase flexibility
when it is planning future expansion moves or making
acquisitions without affecting the existing control structure
of the group.
"The move will provide long term stability to ensure
continuity of overall control of the Hutchison group in that it
provides Hutchison with a stable framework within which
management, development and the planned growth of the group's
businesses can take place," it added.
Hutchison shares lost one dlr to end at 53 dlrs each today.
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Rising imports of Japanese-made cars and
electronic goods may upset West European officials, but they
generally seem prepared to stay on the sidelines in the latest
trade row between the United States and Japan.
Japan's huge trade surplus is a sore point in West Europe,
as it is in the United States. But U.S. Charges of unfair trade
practices involving computer microchips leave Europeans cold.
The European Community ran a 18.2 billion dlr trade deficit
with Japan last year, and seeks redress when it feels Japanese
trade policy hurts Europeans, diplomats and economists said.
But only in Britain has there been any suggestion of acting
with the U.S. To do something about Japan's huge trade surplus.
"The EC is no more illiberal on trade issues than is the
U.S.," said Martin Wolf, director of studies at the Trade Policy
Research Centre in London. "Basically, their policies are pretty
much the same."
But that did not mean Europe would support the U.S., Or
that the EC would climb on the bandwagon to take advantage of
the U.S. Dispute to press its own claims, Wolf said.Basically,
Europeans have a different approach to trade problems, he said.
"In the U.S., People talk about fair trade, but not here," he
added. "In the U.S., It all has to do with the general ethic of
free competition, while in Europe, the general approach is that
liberal trade is good because it makes countries rich."
Wolf said this basic U.S. Attitude explains Washington's
tendency to impose so-called "countervailing duties" - an import
tax designed to offset advantages alleged to be unfair.
In Western Europe, the approach to trade disputes tends to
be to try to reach a settlement through negotiation, Wolf said.
In the latest U.S.-Japan trade row, President Reagan has
threatened to raise tariffs on selected Japanese electronic
goods by as much as 300 mln dlrs, alleging that Japan has
failed to abide by a 1986 U.S.-Japan pact on microchip trade.
But the European Community has challenged the agreement as
a violation of General Agreement on Tariffs and Trade (GATT)
practices that discriminates against its microchip producers.
"It follows that they're not likely to rally to the side of
the United States in defence of the agreement," said Wolf.
Although British parliamentarians are pushing for a tough
line on Japanese trade issues, government officials in the rest
of Europe told Reuter correspondents they would let the EC take
the lead in any response to the U.S.-Japan trade row.
A spokeswoman for the EC Commission in Brussels told
Reuters there has been no change in the Community's position
since a March 16 meeting of foreign ministers which sent a
strong warning to Tokyo on trade imbalances.
In a statement issued after that meeting, EC foreign
ministers deplored Japan's continued trade imbalance and
appealed for a greater Japanese effort to open up its markets.
EC External Trade Commissioner Willy De Clercq said after
the talks there was a growing impatience with Japan in the EC.
Diplomats accredited to the EC in Brussels said they saw no
signs of any immediate intention to impose any broad-ranging
sanctions against Japan. The EC is anxious to avoid provoking a
trade war, they said.
Instead, the Community is trying to target problem areas in
European trade with Japan, including wines and spirits,
cosmetics, and financial services, and will continue talking to
try to improve the situation, the diplomats said.
In Britain, where the government is angered over the
difficulties telecommunications giant Cable and Wireless has
faced in its bid to crack the Japanese market, officials said
last week that retaliatory action is being considered.
But government officials said last night, "We are not
talking about days or weeks. This is going to take time."
They said the government would consider its options at a
cabinet meeting on Thursday, but added that no final decisions
were expected. The main thing the British would threaten the
Japan with is denial of access to London's booming financial
markets, government officials said.
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The Bank of England said it had provided
the money market with 1.143 billion mln stg assistance in
response to an early round of bill offers from the discount
houses.
Earlier, the Bank forecast the system would face a very
large deficit today of around 1.75 billion stg.
The central bank purchased bank bills outright comprising
393 mln stg in band one at 9-7/8 pct, 649 mln stg in band two
at 9-13/16 pct and 85 mln stg in band three at 9-3/4 pct.
In addition it bought 16 mln stg of local authority bills
in band two at 9-13/16 pct.
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London International Group Plc <LONL.L>
said it had agreed to sell its <Haffenden Moulding Co Ltd> unit
to <Melton Medes Ltd> for 2.1 mln stg.
Haffenden is a moulder of hot water bottles and also
produces a variety of rubber and plastic mouldings. The book
value of its assets is 4.4 mln stg.
LIG said the disposal was part of its strategy of
concentrating on its core activities.
LIG shares were one penny firmer at 277p.
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Shares in Cable and Wireless Plc
<CAWL.L> firmed in morning trading on market speculation that
its participation in a joint telecommunications venture in
Japan would not be curtailed, dealers said.
The company's shares were quoted at 372p at 0915 GMT
compared with 364p last night.
The dealers said the speculation appeared to originate in
Japan. Cable has said it is resisting attempts by the
Federation of Economic Organisations to merge two Japan-based
telecommunications firms, a move which would have cut Cable's
stake from 20 pct in one to three pct in the merged unit.
However, the dealers were uncertain exactly how the dispute
over the shareholdings had been resolved.
British prime minister MargaretThatcher said in parliament
last week that she regarded Cable and Wireless's participation
in the Japanese venture as a test case of how open the Japanese
telecommunications market really was.
A spokesman for Cable said he was unaware if the
speculation had any foundation. Cable itself had issued no
statement today on the issue.
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Today's liberalised financial markets are
making it extremely difficult for Japan's monetary authorities
to prevent the yen's rise against the dollar, but they have
several options other than normal intervention, Bank of Japan
sources said.
A senior central bank official said that such methods as
controlling foreign exchange deals and invoking currency swap
agreements with other central banks, which have not been
invoked since 1978, are all being considered.
"But the time may not be ripe," he said.
"In this era of financial liberalisation, it's almost
impossible to control the flow of capital in and out of Japan,"
said another senior bank official.
But the first official said: "From a technical viewpoint,
the Bank of Japan could activate swap agreements immediately
after other central banks involved agreed to do so."
A swap agreement, an exchange of currency between two
nations, allows both sides to acquire a ready source of the
other's currency in case of need.
"If the Bank invokes such swaps, both parties would announce
the decision jointly," said the first official.
The sources said they believed the limit of currency market
intervention may be being reached after they saw recent
concerted market action by central banks of major industrial
nations was increasingly ineffective in propping up the
battered dollar.
But intervention is at least an option, they said. Further
easing of monetary policy will be very difficult with an
official discount rate already at a record low of 2.5 pct, they
said.
Bank of Japan Governor Satoshi Sumita has repeatedly ruled
out another rate cut due to fears it could revive inflation.
One bank official said he could not deny the possibilty of
the Bank of Japan activating currency swap agreements with the
U.S. And other central banks, if these banks continue
intervening to sell the yen in support of the dollar and run
out of their yen cash positions.
"But we don't think they have become short of yen quite yet,"
he said.
The bank has established a five billion dlr swap limit with
the U.S. Federal Reserve and another 2.5 billion mark and 200
billion yen limit with the West German and Swiss central banks,
according to the sources.
Foreign exchange dealers estimate the Fed had sold two
billion dlrs worth of yen from its own account to support the
dollar in New York last week.
The central bank sources also said Japan may arrange other
currency swap agreements with Britain and France if they find
it necessary, but added they are not actually talking with each
other towards that end.
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Dutch chemicals group
Akzo NV <AKZO.AS> said in its annual report it had revised its
1986 net profit figure up to 842 mln guilders from a
provisional 840 mln guilders announced in January.
The turnover figure was unchanged at 15.62 billion
guilders.
Akzo said it would be difficult to maintain this profit
level in 1987 but it expected positive developments "in the
longer term."
Profits in 1985 totalled 843 mln guilders on a turnover of
18.01 billion.
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The U.K. Exported 612,000 tonnes of
wheat and 498,800 tonnes of barley in February, the Home Grown
Cereals Authority (HGCA) said.
Based on the previous provisional figures issued for
February, wheat exports were increased by 480,200 tonnes and
barley by 283,800 tonnes.
The new figures bring cumulative wheat exports for the
period July 1-March 13 to 3.66 mln tonnes and barley to 3.50
mln, compared with 1.47 and 2.09 mln tonnes respectively last
season.
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South Korea's Finance Minister Chung
In-yong will visit U.S. Treasury Secretary James Baker next
week to discuss U.S. Requests for an appreciation of South
Korea's won against the dollar, finance ministry officials
said.
They said Chung would leave for Washington on Monday to
attend the International Monetary Fund's (IMF) Interim
Committee meeting and for talks with U.S. Officials on ways of
reducing Seoul's trade surplus with Washington.
The dates for the Baker-Chung meeting have yet to be set.
The IMF committee meeting, scheduled for April 9, is
expected to review the resolution reached by the six top
industrialised nations in Paris last month calling for newly
industrialised countries, such as South Korea and Taiwan, to
allow their currencies to rise.
The official said Chung is expected to outline Seoul's
efforts to increase imports of U.S. Goods and to stress the
need for South Korea to maintain a trade surplus in the next
few years in order to cut foreign debts totalling some 44.5
billion dlrs.
South Korea has ruled out a major revaluation of the won,
but is allowing its currency to appreciate slowly.
Trade Minister Rha Woong-bae told the U.S. Chamber of
Commerce earlier this month a sudden won revaluation could
result in South Korea running a large trade deficit and being
forced to renege on its international debt repayments.
The Bank of Korea, the central bank, today fixed the won at
a two-year high of 846.90. The won has gained 5.1 pct since the
beginning of 1986.
South Korea's trade surplus with the U.S. Rose to 7.1
billion dlrs last year from 4.3 billion in 1985.
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The Adelaide Steamship Co Ltd <ADSA.S>
(Adsteam) said it will subscribe to 30 mln shares in listed
British property developer, <Markheath Securities Plc>, at 60p
each, subject to shareholder approval.
The subscription, expected to take place in May, will give
Adsteam 49 pct of Markheath, Adsteam said in a statement.
Adsteam's managing director John Spalvins will become
chairman of Markheath and two other Adsteam nominees will join
its board. "We hope that in time Markheath will become a
significant property and industrial company in the same style
as Adsteam," Spalvins said in the statement.
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Nippon Columbia Co Ltd <NCOL.T> will make
a one-for-20 bonus stock issue on July 14 to pay back remaining
premiums accumulated by 4.5 mln shares issued at market price
through public placement in September 1980, a spokesman said.
The bonus issue will bring its outstanding capital shares
to 65.02 mln from 61.92 mln as at March 31 1987. It is open to
shareholders registered on May 31.
Nippon Columbia's share price fell 20 to 1,260 yen on the
Tokyo Stock Exchange today.
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The Bundesbank declined to comment on
rumours in Tokyo that it was intervening heavily to support the
dollar, but dealers here said they had not seen the German
central bank in the market all morning.
The dollar was quoted at around 1.8040 marks shortly after
midday in nervous but quiet trading, up from its 1.7975/85
opening.
Spreads against the mark remained around 10 basis points,
with some banks quoting only five point spreads. Dealers said
spreads would widen and the dollar would move more sharply if
the Bundesbank did intervene.
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CSR Ltd <CSRA.S> has made a bold move in
selling its oil and gas interests for almost a billion dlrs and
ploughing 150 mln into its traditional sugar business, share
analysts said.
"It sounds like a good deal," Stuart McKibbin of <A.C. Goode
and Co> told Reuters.
CSR said it had dropped plans to float its oil and gas
interests held in the <Delhi Australia Fund> and would instead
sell it to Exxon Corp <XON> unit <Esso Exploration and
Production Australia Inc> for 985 mln dlrs.
In a twin announcement CSR, already Australia's largest
sugar refiner, made a 2.20 dlr a share bid for the 70 pct it
does not already hold in <Pioneer Sugar Mills Ltd>.
"This will be a big shock to the market, which was under the
impression that CSR was well down the road to floating Delhi,"
McKibbin said.
A float of part of Delhi would have raised between 200 and
300 mln dlrs, but in opting to sell outright, CSR had given
itself the cash to practically eliminate its debt and embark on
an ambitious expansion programme in its best-performing
divisions of sugar and building products, analysts said.
CSR not only gets the 985 mln dlrs but also has the right
to share equally with Esso any higher returns resulting from an
oil price over 20 U.S. Dlrs a barrel in the next two years.
Delhi is one of Australia's largest onshore oil producers
yielding about six mln barrels a year from the Cooper Basin.
Analysts said the deal could net CSR as much as three mln dlrs
for every dollar rise in the oil price above 20 dlrs.
Neale Goldston-Morris of Sydney broker <Bain and Co Ltd>
said the move out of Delhi and investment in the sugar industry
was a sensible one but added that it represented the loss of
Australian-owned assets to a foreign company.
"The farm they bought back a few years ago is being sold
back to the Americans," Goldston-Morris said.
The Pioneer Sugar investment would make CSR by far the
largest player in Australia's 850 mln dlr a year sugar industry
and would give it access to some of the best sugar properties
and mills in the country, analysts said.
They said Pioneer Sugar was expected to recommend
acceptance of the bid through which CSR would benefit from the
bottom out of a cyclical downturn in sugar prices.
Sugar prices are forecast to rise to 340 dlrs a tonne next
season from an estimated 270 dlrs this year, they said.
Selling Delhi meant CSR has finally quit a damaging
investment, made in 1981, which has dragged down the company's
overall performance, analysts said.
CSR last year wrote off more than 550 mln dlrs in losses on
what had been a 591 mln U.S. Dlr investment financed entirely
from U.S. Dollar debt, they said.
"It was a bad investment for them. They financed it entirely
with debt, the currency collapsed on them and then the oil
price collapsed on them," Owen Evans of Sydney broker <Meares
and Philips Ltd> said.
Esso not only picked up Delhi's oil and gas output but also
gained as much as 300 mln dlrs in transferable tax losses
accumulated in exploration allowances and other concessions.
Analysts said Esso also gained its first real onshore stake
in Australia in its first major diversification from the 50/50
Bass Strait partnership with The Broken Hill Pty Co Ltd
<BRKN.S>.
"Esso has been very keen to diversify from the Gippsland
Basin. They haven't found too much oil in Bass Strait lately
and Esso needed a large pool of ongoing production,"
Goldston-Morris said.
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Rainfall in the past few days has eased
the threat of drought in the south China province of Guangdong,
the New China News Agency said.
It said 75 pct of early rice fields are ready to be planted
and seedlings have already been transplanted on 90 pct of rice
fields in Hainan island. Some 840,000 hectares of farmland have
been planted with cash crops including sugar cane, peanuts and
soybeans, 67,000 ha more than in 1986.
The provincial government has increased investment in grain
and taken effective measures to combat natural disasters this
year, the agency said, but gave no further details.
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Shr 53.05p vs 45.79p adjusted
Div 8.7p making 14p vs 12p adjusted
Pretax profit 78.84 mln stg vs 60.31 mln
Net after tax 50.71 mln vs 40.54 mln
Extraordinary credit after tax 43.19 mln vs nil
Note - The extraordinary credit represents substantitally
the after tax profit on sale of company's interest in M and G
Group Plc. After providing for the final dividend, retained
earnings were 80.07 mln vs 29.90 mln in 1985.
Merchant and investment banking 81.47 mln vs 63.22 mln
Bullion broking 4.75 mln vs 3.02 mln
U.S. Government security dealing 2.94 mln vs loss 329,000
Investment management and unit trusts 10.62 mln vs 7.88 mln
Other activities loss 3.12 mln vs profit 1.42 mln
Interest on loan capital 17.82 mln vs 14.90 mln.
Disclosed shareholders funds 365 mln vs 286 mln
Disclosed capital resources available 626 mln vs 467 mln.
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Dividend 24 francs vs 30
Consolidated net profit 115.7 mln francs vs 108.3 mln of
which attributable to group 110.8 mln vs 102.5 mln
Consolidated net turnover 11.16 billion francs vs 11.42
billion
Parent company net profit 115.5 mln vs 95.0 mln
Parent co net turnover 9.99 billion vs 9.91 billion
Note - The electrical contracting company is 99.9 pct owned
by the state-run Compagnie Generale d'Electricite <CGE>.
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British Prime Minister Margaret Thatcher
said she and Soviet Premier Nikolai Ryzhkov had set targets for
increased trade between the two countries during talks earlier
today.
She said she hoped more economic exchanges between Britain
and the Soviet Union "will also lead to increased friendship and
increased understanding."
Earlier, she told a meeting of Soviet and British
businessmen that she had agreed with Ryzhkov that they would
work to achieve a total volume of 2.5 billion roubles in
bilateral trade by 1990.
This would entail an increase by each side of 350 to 400
mln stg over their present export levels.
"Mr Ryzhkov handed me a list of import and export
opportunities which I hope you will all jump at," she told the
meeting to mark the opening of new offices of the British-
Soviet Chamber of Commerce.
After her talks with Ryzhkov, Thatcher and the Soviet
Premier were joined for the signing of agreements covering new
scientific and cultural exchanges by Kremlin leader Mikhail
Gorbachev, who had nine hours of talks with her yesterday.
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Consuming countries, chastened by the
collapse of International Tin Council (ITC) price support
operations in 1985, are insisting more than ever before that
commodity pacts reflect the reality of the markets they are
serving, a Reuter survey showed.
They want price ranges to be more responsive to market
trends - to avoid overstimulating output and straining the
accords' support operations - and intervention rules that avoid
the risk of exports by non-members undermining the pacts.
Consumers and producers, mindful of ITC buffer stock losses,
have also sought strict conditions for buffer operations.
Importers and some key exporting countries have shunned a
generalised approach to commodity price stabilisation and
prefer to assess each commodity case by case, the survey
showed.
The International Cocoa Organization (ICCO) last week set
precise limits on what the Buffer Stock Manager (BSM) could do
under the new agreement. It imposed daily and weekly purchase
limits, prohibited the BSM from operating on futures markets
and stipulated, after consumer insistence, that up to 15 pct of
total buffer stock purchases could be of non-member cocoa. This
will help prevent lower quality cocoa from Malaysia, the
world's fourth largest producer, undermining the market.
The cocoa pact establishes precise differentials the Buffer
Stock Manager must use when purchasing varying grades.
A new International Natural Rubber Agreement (INRA) was
adopted earlier this month in Geneva. Importing and exporting
countries agreed several changes to make the reference price
more responsive to market trends and they eliminated provisions
under which the buffer stock could borrow from banks to finance
operations. Direct cash contributions from members will fund
buffer stock purchases. Bank financing was a particular feature
of the failed ITC buffer stock which suffered losses running
into hundreds of millions of sterling. Legal wrangles continue.
Recent International Coffee Organization (ICO) negotiations
in London exemplified the degree to which consumers insist that
agreements reflect market reality, commodity analysts said.
Consumers and a small group of producers argued that
"objective criteria" should be used to define export quota
shares, which would have meant a reduction in the share of
Brazil, the world's leading producer. Brazil wanted to maintain
its previous quota share of 30 pct. The talks broke down and,
although an ICO executive board meeting starts in London today,
delegates and trade sources see chances of any near term
negotiations on export quota distribution as remote.
International agreements exist for sugar and wheat. These
do not have any economic clauses but provide a forum for
discussions on possible future economic agreements, collect
statistics and draw up market analyses. Analysts said
differences between sugar exporting countries have held up any
progress towards an accord with economic teeth, while sheer
competition between major exporters amid a world grain glut
militate against any pact with economic provisions for wheat.
An alternative focus for commodity discussions are
international study groups, made up of governments with advice
from industry, such as those for lead and zinc and rubber.
The U.N. Common fund for commodities, with a planned
directly contributed capital of 470 mln dlrs, has failed to
become operational because neither the U.S. Nor the Soviet
Union has ratified it. U.S. Officials in Washington said the
U.S. Doubts the fund would be able to fulfil its objectives,
citing the lack of widespread support.
U.S. Officials in Washington and Malaysian officials in
Kuala Lumpur expressed a policy of looking at each commodity
pact case by case. U.S. Officials said it has been willing to
study individual cases for economically sound, market-oriented
commodity accords balancing producer and consumer interests.
"We see little to be gained by attempting to increase the
price of a commodity whose long-term trend is downward,"
official Administration policy states. The U.S. Currently
belongs to only two international commodity agreements that
have economic clauses - the International Coffee Agreement
(ICA) and INRA - but it is also a member of the sugar and wheat
pacts.
The U.S. Did not join the International Cocoa Agreement
because it considered its proposed price ranges unrealistic and
not designed to protect the interests of consuming countries,
the State Department said. U.S. Officials singled out the INRA
as the one commodity agreement that seems to be working.
U.S. Negotiators were successful in getting other members
of the pact to agree that the price review and adjustment
mechanism of the rubber agreement would accurately reflect
market trends and also to continue the accord as a market
oriented agreement, U.S. Officials said.
Canadian officials in Ottawa also said they have
consistently tried to look at membership of commodity pacts on
the merits of each case. Malaysian Primary Industries Minister
Lim Keng Yaik told Reuters in Kuala Lumpur his country, the
world's top producer of rubber, tin and palm oil, decides its
participation in international commodity pacts case by case.
Malaysia is a member of the Association of Tin Producing
Countries (ATPC) which produce 65 pct of world tin. The ATPC
launched a plan to limit member tin exports to 96,000 tonnes
for a year from March to cut the tin surplus to 50,000 from
70,000.
Economist in the West German Ministry of Agriculture and
delegate to cocoa, wheat and sugar agreements Peter Baron told
Reuters in London, "Agreements with economic clauses to
stabilise prices could function if fixed price ranges were
close to market reality, if there was full participation by
producers and consumers, and if participants were prepared to
take their obligations in the framework of the agreement
seriously."
But Baron added, "No real sanctions are available for a
country that doesn't stick to its obligations...The German
approach is sceptical. We don't think agreements are the best
instrument to help developing countries. They were never meant
to be a vehicle for the transfer of resources and that is how
developing countries often interpret them."
Traditionally Britain has always been supportive of
commodity agreements, reflecting its strong links with Third
World producing countries. But recently demands for more
stringent and justifiable pacts with emphasis placed on the
need for "intellectual honesty" and "objective criteria" have
grown.
British officials stress the need for commodity pacts to be
a two way partnership in trade rather than a disguise for aid.
It is now seen as essential that any pacts involving direct
market participation through a buffer stock have a high degree
of transparency and do not contain the risk of open-ended
borrowing that occurred in the tin pact, they said. U.K.
Delegates talk of stabilisation and the need for prices to
reflect changes in market structure and price trends rather
than dictate what prices should be.
A Foreign Ministry official in Tokyo said Japan urges price
realism in commodity pacts, adding high prices inflate supply.
A government spokesman in Paris said France is favourable
to commodity pacts. France, a large consumer and producer of
sugar, favours a sugar pact as long as it reflects the real
market situation, particularly regarding stocks.
Indonesia's Foreign Minister Mochtar Kusumaatmadja told
Reuters in Jakarta: "These agreements can work as long as the
problems are cyclical..But it's another matter when there are
structural problems..But we are still committed to commodity
agreements as an act of faith." Nicaraguan External Trade
Minister Alejandro Martinez Cuenca said in London producers
cannot afford not to give their backing to commodity
agreements.
"The political will is not there on the part of some
consumers to make agreements work," Martinez Cuenca said.
The head of the economics department in the Brazilian
Foreign Ministry, Sebastiao do Rego Barros, told Reuters an
agreement can be successful if it keeps a link with market
reality. If you have an agreement such as coffee with a system
of quotas, with a link between prices practised inside the pact
and actual market prices, it can work. UNCTAD spokesman Graham
Shanley said consuming countries realise steady export earnings
enhance developing countries' ability to service debt and mean
greater demand for industrialised nations' capital goods.
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Leading domestic semiconductor makers
will boost imports and cut production of key memory microchips
from next month in line with government attempts to ward off
U.S. Trade sanctions, company spokesmen said.
The moves might persuade the U.S. To call off the
sanctions, despite obstacles to full implementation of the
plans, analysts said.
The tariffs will affect about 300 mln dlrs worth of
products and are in retaliation for Japan's alleged failure to
honour a semiconductor trade pact.
In announcing the sanctions last Friday, President Reagan
said Japan had not fulfilled its promise to halt predatory
pricing and open Japan's market to foreign products.
But U.S. Trade representative Clayton Yeutter said
yesterday on U.S. Television that the U.S. Is willing to drop
the tariffs if Japan shows a "clear indication" that it will open
its markets to U.S. Goods.
The Ministry of International Trade and Industry (MITI) has
urged producers to slash output of the chips by 11 pct in the
second quarter, following a call to reduce production by more
than 20 pct the previous quarter.
MITI also urged makers to boost chip imports.
Analysts said the moves could encourage Washington to
cancel the tariffs ahead of next month's meeting between Prime
Minister Yasuhiro Nakasone and President Reagan.
"The U.S. Wants to be satisfied. It has rattled its sword
and shown that it can and will do business," said analyst Nick
Edwards at Jardine Fleming Securities Ltd in Tokyo.
But analysts cautioned that although Japanese producers can
cut output, boosting imports -- the key to U.S. Withdrawal of
the sanctions -- is more difficult.
"The U.S. Does not have the low-end consumer IC's
(integrated circuits) that the Japanese need for consumer
products. They're well supplied here," said Richard May, senior
analyst at Barclays de Zoete Wedd Ltd in Tokyo.
The U.S. Leads in production of medium and high-end IC's,
but Japanese makers are keen to develop their own high-end
production skills, the analysts said.
"The Japanese must be prepared to trade some losses on
semiconductors in return for free access to other areas," said
Edwards.
A spokesman for Hitachi Ltd <HIT.T>, said the firm's
reduced output of 256 kilobit dynamic random access memory
(256K DRAM) was unrelated to MITI's efforts to ward off the
trade sanctions. Decreased production was a natural result of
the company increasing output of one-mln bit DRAM's, he said.
Company officials unveiled the following plans -
- NEC Corp <NESI.T>, Japan's largest chipmaker, plans to
slash production of 256K DRAM semiconductors by 29.41 pct to
six mln per month from a monthly average of 8.5 mln last
quarter.
In the year beginning April 1, NEC will boost chip
imports, which comprised some 20 pct of all NEC chip
consumption the year before.
- Hitachi Ltd's <HIT.T> April output of 256K DRAM's will
fall by 25.93 pct to four mln compared to 5.4 mln in March. The
company is trying to boost imports but has not set a specific
target. Imports are currently very low.
- Toshiba Corp <TSBA.T> will reduce April 256K DRAM
production by 16.67 pct to just over four mln and is
considering ways to boost imports, a company official said.
Toshiba has an agreement with Motorola Inc (MOT.N) to sell
the U.S. Firm's chips in Japan. The firms are planning a
joint-venture production of memory chips in Sendai, northern
Japan.
- Mitsubishi Electric Corp (MIET.T) will trim second
quarter output by about 10 pct to between 5.5 mln to 5.6 mln
chips compared to the first quarter. Plans call for increased
imports but an official said "boosting imports will be difficult
as it depends on sales demand."
- Fujitsu Ltd (ITSU.T) will cut production in accord with
MITI guidelines and boost imports from currently low levels.
- Oki Electric Industry Co Ltd (OKIE.T) will reduce April
production by 10 pct from March's 3.2 mln. Oki is studying ways
to increase imports by 10 pct in the fiscal year beginning
April 1 from the previous year's total of more than five
billion yen, a company official said.
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Year 1986
Div 7.0p vs 12.2p
Shr 9.6p vs 31.3p
Pretax profit 4.4 mln stg vs 118.0 mln
Net 17.6 mln vs 37.7 mln
Total turnover 183.8 mln vs 348.0
Amortisation 71.4 mln vs 86.3
Traded oil purchases 41.2 mln vs 44.5 mln Administration
expenses 6.2 mln vs 8.0 mln
Net interest payable 6.4 mln vs 4.8 mln
Related company's credit 6.1 mln vs nil
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The Bank of England said it provided the
market with a further 570 mln stg assistance during the morning
after revising its estimate of the liquidity shortage to 1.85
billion stg, before taking account of its early round of bill
purchases.
Initially, the Bank put the likely shortage at some 1.75
billion and to help offset this gave early assistance of 1.143
billion.
Its total help so far today amounts to 1.713 billion stg.
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(CORRECTION) - MARCH 30 - YUGOSLAV TRADE FALLS
In Belgrade item of yesterday "Yugoslav trade falls in 1st
qtr on year ago" please read on page one "This year current
exchange rates were used for the first time instead of a fixed
rate of 264.53 dinars to the dollar."
(corrects from 24.53).
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CSR Ltd has made a bold move in selling
its oil and gas interests for almost a billion dlrs and
ploughing 150 mln into its traditional sugar business, share
analysts said.
CSR said it had dropped plans to float its oil and gas
interests held in the Delhi Australia Fund and would instead
sell them to Exxon Corp unit Esso Exploration and Production
Australia Inc for 985 mln dlrs.
In a twin announcement CSR, already Australia's largest
sugar refiner, made a 2.20 dlr a share bid for the 70 pct it
does not already hold in Pioneer Sugar Mills Ltd.
A float of part of Delhi would have raised between 200 and
300 mln dlrs, but in opting to sell outright CSR had given
itself the cash to all but eliminate its debt and embark on an
ambitious expansion programme in its best-performing divisions
of sugar and building products, analysts said.
The Pioneer Sugar investment would give CSR by far the
largest stake in Australia's 850 mln dlr a year sugar industry
and access to some of the best sugar properties and mills in
the country, they said. Pioneer Sugar was expected to recommend
acceptance of the bid, through which CSR would benefit from the
bottoming out of a cyclical downturn in sugar prices.
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London and Scottish Marine Oil Plc
(Lasmo) <LASL.L> will have an advantage when oil prices rise
again and it is confident this will happen early in the next
decade, the company said in a statement accompanying results.
Lasmo said its advantage comes from its reserves of oil and
gas which at the end of 1986 stood at 210 mln barrels of oil
equivalent, a group record. Reserves have increased every year
since 1983 at a compounded rate of 10 pct a year.
The company reported a 1986 pretax profit of 4.4 mln stg,
down from 118 mln in 1985.
It said falling oil prices caused the downturn.
The company said it reacted swiftly to the sharp drop in
oil prices which began over a year ago. Capital expenditure,
which had been budgeted at over 150 mln stg, was cut to 51 mln
stg net of disposals. Managers responded well to the demand for
lower operating costs and this has been achieved worldwide.
The company said had very few exploration wells committed
for 1987 and therefore retains maximum flexibility in its
exploration program. Even without further success, the existing
fields and recent discoveries will contribute significantly to
profit and cash flow for some years to come, it said.
Lasmo shares were down 2p at 251 after the announcement.
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One or two large West German banks
effectively drained the domestic money market of liquidity at
the end of the month in order to achieve higher rates from
their overnight deposits, money dealers said.
As a result, call money soared in active trading to around
the Lombard rate of five pct from 3.70/80 pct yesterday as
banks found themselves short of minimum reserve funds.
Bundesbank figures showed that banks held an average daily
51 billion marks in interest-free minimum reserve assets at the
central bank over the first 29 days of the month.
Though this was above the March requirement of 50.7
billion, actual holdings at the weekend were 44.2 billion.
To meet the daily average, dealers said, banks must raise
holdings by two billion marks to 46.3 billion today and
tomorrow. But liquidity was tight in early business because
banks excessively took up the Bundesbank's offer for sale of
Treasury bills on Friday. This provides a rate of 3.50 pct for
three-day deposits and is an effective floor to the market.
Though some liquidity, from bills bought on Thursday,
flowed back into the market today, the bulk would not return
until tomorrow, the start of the new month, dealers said.
Dealers said the large banks, which they did not name,
commanded short-term money requirements of as much as five
billion marks or so.
With a knowledge of their own needs until the end of the
month, the banks bought excessive amounts of treasury bills,
draining liquidity for three days. When other banks sought
funds, rates rose and large banks were able to place excess
funds on deposit at a considerably higher average return.
One senior dealer said the Bundesbank, with advanced
knowledge of the market's needs, should have curtailed its
sales of treasury bills on Friday.
Though dealers only late in the day learn of the total
minimum reserve holdings of the previous day, the Bundesbank
has an immediate overview of the situation and could anticipate
the strength of demand for funds the following day, he said.
"(Bundesbank dealers) could easily have said we are not
selling any treasury bills or we're not selling them in this
amount," he said. "If the Bundesbank wants to finely steer the
market then they should avoid such excesses. Tomorrow it will
be different. Call money will fall back to 4.0 pct or so."
But the Bundesbank would not approve of the sharp jump in
rates, given the delicate state of currency markets.
International central banks have been at pains to prevent a
dollar fall against major currencies, including the mark.
Dealers said a rise in call money gives the mark a firmer
undertone, contributing to downward pressure on the dollar.
"The whole tender policy is to have a call money of between
three and four pct. In that case the excesses as we have today
cannot be very popular," the senior dealer said.
Dealers said the large banks probably achieved average
rates of return on their excess funds of between 3.75 pct or
four pct. This is a higher return than they would have earned
without the excessive draining through the treasury bill
mechanism.
Because of the currency situation and the wage negotiations
between Germany's major employers and the unions, the
Bundesbank would be very unlikely to make any changes to
monetary policy at its council meeting on Thursday, they said.
Bundesbank figures showed that banks fell back on the
Lombard emergency funding facility to draw down 1.5 billion
marks yesterday as rates began to tighten in late business.
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CSR Ltd <CSRA.S> and Exxon Corp <XON>
unit <Esso Exploration and Production Australia Inc> said CSR
has agreed to sell its <Delhi Australia Fund> (DAF) to Esso for
985 mln Australian dlrs.
The sale is effective from tomorrow, they said in a joint
statement.
The previously announced float of part of its Delhi
interest will not now proceed, CSR said in the statement.
Delhi Australia Fund owns <Delhi Petroleum Pty Ltd>, which
holds an average of 25 pct in the Santos Ltd <STOS.S>-led
Cooper and Eromanga Basin gas and liquids projects.
In addition to the purchase price, CSR will share equally
in any returns due to increases in crude oil and condensate
prices over certain levels for liquids produced from Delhi's
interests in the next two years, the statement said.
"The Esso proposal to purchase all the Delhi interest will
be more beneficial to our shareholders than proceeding with the
float," CSR chief executive Bryan Kelman said in the statement.
Kelman said the sale of Delhi would enable CSR to focus
efforts on expanding business areas such as sugar and building
materials in which CSR has had long and successful management
experience and strong market leadership.
With the sale, CSR will be able to expand those businesses
more aggressively and earlier, he said.
As reported separately, soon after announcing the Delhi
sale CSR launched a takeover bid for the 68.26 pct of <Pioneer
Sugar Mills Ltd> that it does not already hold, valuing its
entire issued capital at 219.6 mln dlrs.
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CSR Ltd <CSRA.S> said it will offer 2.20
dlrs cash each for the shares it does not already hold in
<Pioneer Sugar Mills Ltd>.
CSR already holds 31.74 pct of Pioneer's 99.80 mln issued
shares, it said in a statement.
The offer price values the entire Pioneer Sugar share
capital at 219.6 mln dlrs and compares with today's closing
market level of 1.85 dlrs a share.
CSR said it will announce further details of the offer
soon, including an alternative offer of CSR shares for Pioneer
Sugar stock.
It said the offer is generous since it will give Pioneer
Sugar shareholders a price equivalent to 29 times Pioneer's net
earnings last financial year and a premium of 22 pct over
yesterday's market price which CSR said it believed already
contained an element of takeover speculation.
It also gives a premium of 91 pct over Pioneer's last
reported net tangible assets per share, CSR said.
CSR said the generous offer price reflects the cost savings
which will flow from integrated management of CSR's and
Pioneer's raw sugar mills and building materials businesses.
These economies can only be achieved through CSR control
and management of Pioneer Sugar, it added.
The takeover announcement came soon after CSR's earlier
reported statement that it will sell its <Delhi Petroleum Pty
Ltd> unit to an Exxon Corp <XON> unit for 985 mln dlrs and not
proceed with the previously announced float of part of Delhi.
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The Bundesbank declined to comment on
rumours in Tokyo that it was intervening heavily to support the
dollar, but dealers here said they had not seen the German
central bank in the market all morning.
The dollar was quoted at around 1.8040 marks shortly after
midday in nervous but quiet trading, up from its 1.7975/85
opening.
Spreads against the mark remained around 10 basis points,
with some banks quoting only five point spreads. Dealers said
spreads would widen and the dollar would move more sharply if
the Bundesbank did intervene.
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<Fletcher Challenge Ltd> (FCL)
Managing Director Hugh Fletcher said he was disappointed that
<Rada Corp Ltd> had decided to sell its shares in <N.Z. Forest
Products Ltd> (NZFP) to Australia's <Amcor Ltd>.
He said in a statement that FCL had made an offer for the
24 pct of NZFP held by Rada. He said the FCL offer was better
than Amcor's because it would have been made to all NZFP
shareholders, but he gave no further details.
Amcor and NZFP said earlier today they were merging their
pulp and paper interests in a joint partnership and were
increasing their existing cross-shareholdings.
The plan involves NZFP increasing its current holding in
Amcor to about 20 pct from four pct. Amcor will acquire Rada's
NZFP stake to add to its existing 11 pct and will seek
statutory approval to increase its holding to 50 pct.
Rada bought its stake for 505.5 mln dlrs from <Wattie
Industries Ltd> last year, but it has not disclosed the price
to be paid by Amcor.
FCL originally launched a takeover bid for NZFP late last
year with a scrip and/or cash offer at 3.90 dlrs a share,
valuing the company at 1.3 billion dlrs. NZFP shares ended at
3.88 dlrs today.
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Group shr 4.91 yen vs 6.59
Net 7.72 billion vs 10.38 billion
Current 16.81 billion vs 20.84 billion
Operating 45.56 billion vs 52.02 billion
Sales 734.50 billion vs 996.15 billion
NOTE - Company forecast for current year is group net 14
billion, current 30 billion and sales 740 billion based on
rationalisation efforts and expected market price increases in
agricultural chemicals and petrochemical products following the
recovery in world oil prices.
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The Peking-owned China International
Trust and Investment Corp (Citic) bought the unfinished City
Garden Hotel in Hong Kong from a subsidiary of Cheung Kong
(Holdings) Ltd <CKGH.HKG> for 235 mln H.K. Dlrs, Cheung Kong
director Albert Chow said.
Cheung Kong's subsidiary <International City Holdings Ltd>
will complete work on the hotel by the end of 1988, when it
will be handed over to Citic. The deal does not include the
decoration or fitting out of the interior of the hotel.
The 600-room hotel stands on a 26,700 sq ft site on the
eastern side of Hong Kong island.
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Mannesmann AG <MMWG.F> expects a
difficult year for the capital goods industry in 1987, chief
executive Werner Dieter told a news conference.
Dieter said West German producers would see a downturn in
foreign business because of lower energy prices and the higher
mark, as well as a deterioration of the economies of customer
nations.
Domestic business was also declining and orders for West
German engineering goods have been falling since July 1986,
Dieter said.
Mannesmann's profit fell by an undisclosed amount in 1986.
Dieter said Mannesmann's pipe activities would suffer a
set- back, although measures to cut costs, which were started
last year, were now having an effect.
Dieter noted, however, that pipes and related products
accounted for less than 30 pct of Mannesmann's turnover. The
company saw good chances in the automation sector, which Dieter
said had become one of Mannesmann's "strategic aims."
He said the company's drive to combine activities in
mechanical and electronic engineering was a particular "plus
point" for Mannesmann.
Mannesmann, which yesterday announced it had agreed to take
a majority stake in the Fichtel und Sachs AG car parts group
for an undisclosed sum, saw third party group turnover fall
nine pct in 1986 to 16.60 billion marks. Its world group net
profit in 1985 was 255.9 mln marks.
It has blamed the fall in 1986 profits on the weaker dollar
and lack of demand for steel pipe.
Dieter said there were signs that prices for steel pipe
were bottoming out and would slowly start to rise, but he added
the company would continue to cut personnel in this sector this
year.
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The Bank of Japan will sell tomorrow a
total of 800 billion yen worth of financing bills from its
holdings to help absorb a projected money market surplus of
1,700 billion yen, money traders said.
Of the total, 300 billion yen will yield 3.8992 pct on
sales from money houses to banks and securities houses in a
23-day repurchase accord maturing on April 24.
The remaining 500 billion yen will yield 3.8990 pct in a
31-day repurchase pact maturing on May 2, they said.
The repurchase agreement yields compare with the 3.8750 pct
one-month commercial bill discount rate today and the 4.28/11
pct rate on one-month certificates of deposit.
Tomorrow's surplus is attributable to excess bank holdings
from sales of yen to buy dollars and to huge cash amounts to be
redeposited at banks after the current financial year-end
today, the traders said.
The operation will put the outstanding bill supply at about
3,200 billion yen.
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<British Caledonian Group>, Britain's
second largest airline, has announced a 19.3 mln stg pretax
loss for the financial year ending last October, compared with
a record pre-tax profit of 21.7 mln stg in 1985, chairman Sir
Adam Thomson told reporters.
A decline in U.S. Transatlantic traffic following terrorist
attacks in Europe, the U.S. Bombing of the Libya, the Chernobyl
disaster and a slump in the oil industry which affected Middle
East traffic were the main causes of the loss, Thomson said.
He said the poor results were caused by "a range of
exceptional circumstances wholly outside our direct control" and
predicted a return to profitability this year.
Last year, the airline was forced to axe 1,000 jobs, sell
some of its assets and cut the number of its flights across the
Atlantic and to the Middle East following the fall in business
.
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<Hapag Lloyd AG> said it ordered a new
container vessel from China for its Australia service.
The order was given to the <Hudong shipyards> in Shanghai
after lengthy negotiations with West German shipbuilders, the
company said in a statement.
The Chinese firm offered to build the vessel at over 30 mln
marks less than West German yards, despite government subsidies
which Bonn pays its ailing shipbuilding industry, Hapag said. A
company spokesman would not comment on the total order value
but said the new vessel would replace the 33,333 dwt Sydney
Express in 1989 and would carry 2,700 container units.
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State-owned <Cie Generale
d'Electricite>'s electrical contracting unit <CGEE ALSTHOM> has
taken a 34 stake in the U.S. Computer firm <ESCA Corp>, CGEE
ALSTHOM chairman Philippe Boisseau told a press conference.
According to an agreement in principle between the two
companies CGEE ALSTHOM could take a majority stake in the
future but no time-scale has been set, he added.
ESCA, which had a turnover of 13.6 mln dlrs in 1986 and is
expected to see this rise to 20 mln this year, is one of the
leading U.S. Suppliers of electric despatching and telecontrol
systems.
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General Acquisition Co said it was
disappointed by Gencorp's response to its tender offer and
asked how the company might give better value to shareholders.
Gencorp had earlier urged shareholders to reject a 100 dlr
per share tender offer from General Acquisition, an affiliate
of Wagner and Brown and AFG Industries Inc, and said it was
studying financially superior alternatives.
The General Acquisition partnership called the response
inflammatory and unproductive, particularly since it had tried
to discuss the offer with Gencorp.
The partnership said Gencorp failed to say how it would
provide a "superior value yet they continue their attempt to
prevent a satisfactory offer by failing to redeem their poison
pill." Poison pills are shareholder rights plans that make
takeovers more expensive.
Gencorp said in its statement earlier that it planned to
put off the date its rights will trade separately from the
common stock to April 6 from April 3. It said the extension was
subject to further extensions by the board and is conditional
on no person acquiring beneficial ownership of 20 pct or more
of Gencorp before April 6.
General Acquisition said it is confident its offer can be
completed in a timely manner using its financial arrangements.
The partnership in its statement again urged Gencorp
management to work with it to facilitate a transaction.
REUTER
| [
1,
0,
0,
0,
0,
0,
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0,
0,
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]
|
The U.S. Is willing to drop tariffs on
Japanese electronic imports if Japan shows it will abide by an
agreemement opening its markets to American goods, U.S. Trade
Representative Clayton Yeutter said in a TV interview.
"But there has to be a clear indication that they are
willing to act," he said.
Yeutter said difficulties in the Japanese economy caused by
the U.S. Tariffs and the yen's rise against the dollar are
problems "they have brought on themselves."
The dollar fell to 40-year lows against the yen today.
"Certainly the movement of the yen is causing some economic
turmoil in Japan," he said. "My only response is that we have
gone through about five years with the dollar going in just the
opposite direction. Although I can sympathise, it's occurred
for only a few weeks or months in Japan."
The tarriffs, announced on Friday by President Reagan, will
affect about 300 million dlrs worth of products, only a tiny
fraction of Japan's total exports to the U.S.
Even so, Reagan's decision "doesn't give us any joy. We
don't want to take retaliatory action here if we don't have to,"
Yeutter said.
Yeutter said the meetings scheduled next month in
Washington between Reagan and Prime Minister Yasuhiro Nakasone
will include "some difficult items on the agenda."
Japan has failed to implement two parts of a three-part
semiconductor agreement, Yeutter said.
Japan has stopped dumping chips in the U.S. But it has
failed to open its domestic markets to U.S.-made chips and has
failed to end predatory pricing in Third World countries,
undercutting U.S. Products, he said.
REUTER
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Sedgwick Group Plc <SDWK.L> said its
wholly-owned Canadian subsidiary Sedgwick Tomenson Inc had
acquired BSi Incorp for a maximum eight mln Canadian dlrs.
The funds will be raised through the issue of up to 1.16
mln ordinary Sedgwick shares to the vendors of BSi by no later
than 31 January 1991. Some 427,054 shares already have been
issued.
BSi is a privately-held Canadian company involved in
actuarial, employee and executive benefits consulting and
administration. Its 1986 pretax profits excluding extraordinary
items totalled 1.14 mln Canadian dlrs.
Reuter
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1,
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The Bank of England said it had revised
its estimate of the deficit in the money market today up to a
record two billion stg, before taking account of its morning
operations, from 1.85 billion at midday.
The Bank has provided the system with around 1.71 billion
stg assistance so far today.
REUTER
| [
0,
0,
0,
0,
0,
0,
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0,
0,
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|
Rexnord Inc, 96 pct owned by Banner
Industries Inc <BNR> following a recent tender offer, said it
has completed the sale of its Fairfield Manufacturing Co
subsidiary to NEOAX Inc for 70.5 mln dlrs in cash.
Rexnord said it still plans to sell its Process Machinery
Division and Mathews Conveyor Co as part of its planned program
to divest five businesses with 200 mln dlrs in assets.
Bellofram Corp and Railway Maintenance Equipment Co have
already been sold.
Reuter
| [
1,
0,
0,
0,
0,
0,
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0,
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