Archive | Archive – world business

Snapshot on world business, week to 28 January 2001

Latest: More steel alliances, mergers accounting basis changes, Lucent $US1b loss and restructure to follow, Lone Star to buy Tokyo Sowa bank, Greenspan supports tax cuts.

28 January 2001

Japan’s second largest steelmaker, NKK, is talking to ThyssenKrupp of Germany about expanding their alliance. Japan’s biggest, Nippon Steel, has formed a technology link with Usinor of France. Both agreements so far are focused on the car industry.

26 January 2001

The US Financial Accounting Standards Board has dumped the pooling method of accounting for mergers, and adopted a revised purchase accounting method. Under pooling, balance sheets were combined, but this didn’t reflect the value of stock exchanged in a takeover. Under purchase accounting, companies had to write off goodwill over 20 years but now they will only have to write it off when they see an asset value decline, which means they can continue reporting larger profits until it suits not to.

Lucent Technologies, spun off from AT&T five years ago, will take a restructuring charge of $US1.2-1.6 billion and eliminate 10,000 jobs. It will lose 25% of its 123,000 workforce by that cut, selling the divisions that employ another 6000 and spinning off a components business employing 16,500. It turned a $US1 billion profit on continuing operations in the December 1999 quarter into a $US1 billion loss, and a bottom-line loss of $US395 million, compared to a $1.25 billion profit a year earlier.

Private Texan equity funder Lone Star Group will take over bankrupt Japanese bank Tokyo Sowa for a 27% discount on the face value of its loans, two months after a sale to WL Ross fell through. The Japanese Government will pump the bank up with ¥702 billion ($NZ13.8 billion) in new capital for the deal to proceed.

Federal Reserve chairman Alan Greenspan has told the US Senate’s budget committee the country’s economy is close to standstill, and that both debt reduction and tax cuts could be employed. That goes some way to supporting the new Republican president’s desire to bring $US1.6 trillion of tax cuts over the next decade.

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Snapshot on world business, week to 3 June 2001

Latest: Harvey Norman files Rebel bid, another Hudson rejig.

2 June 2001

Harvey Norman Holdings Ltd, through subsidiary Becto Pty Ltd, has offered Rebel Sport Ltd shareholders 83c/share, provided it can get at least 50% of the company. Perhaps looking to take advantage of short-term thinking among Rebel investors, chairman Gerry Harvey said in the offer statement: “Retail trading conditions remain very difficult.” The offer expires on 25 July. Harvey Norman has a 69% ratio of current liabilities to current assets, leaving working capital at its December balance date of $A226.5 million.

28 May 2001

In another Jihong Lu/Savoy Equities-related restructure, Sydney-based Hudson Investment Group Ltd wants to buy the rest of Hudson Pacific Group Ltd, offering one share and A6c for every two shares. Hudson Investment already owns 54.7% of Hudson Pacific. Last week, Hudson Timber & Hardware (the company that was the Australian investment channel into the Britomart development in Auckland) bought a hardware company from Savoy Investment.

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Snapshot on world business, week to 28 April 2002

27 April 2002

Australia & NZ Banking Group Ltd increased after-tax operating profit 17.3% to $A1.05 billion in the March half, and earnings/share by 18.8% to A66.3c. The bank’s raised its interim dividend (fully franked) 18.2% to A39c and showed an increase in return on equity from 19.6% to 21.6%.

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Snapshot on world business, week to 21 July 2002

20 July 2002

After the Americans came to the Southern Hemisphere on an energy-company spree, they are gradually being replaced. A buyer is yet to be found for the “cornerstone” (that means steady, long-term) shareholding in UnitedNetworks, but change is occurring in Australia: Hong Kong billionaire Li Ka-Shing’s Cheong Kong Infrastructure and Hong Kong Electric agreed on Friday to buy Victorian gas & electricity supplier CitiPower from American Electric Power for $A1.56 billion. Origin Energy of Australia will take over the retail business.

18 July 2002

This will interest anyone who doesn’t have a corporate guardian looking out for viruses attacking their computer (people like me; I’ve suffered 2 serious attacks last year & this, which affected people in my address book): Symantec, which runs Norton anti-virus, has bought 3 US startup companies for $US355 million. SecurityFocus offers security-intelligence products, Riptech provides information security systems and Recourse Technologies offers a system to manage threats & intrusions.

15 July 2002

A US survey of auditors by Weiss Ratings found auditing firms gave a clean bill of health to 94% of the public companies subsequently cited for accounting irregularities. The survey group included 33 publicly traded companies which reported bookkeeping errors.

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Snapshot on world business, week to 1 April 2001

Latest: Marks & Spencer cuts back, Delphi Automotive cuts back, CyberWorks makes $US886m loss,
Mitsubishi staring at $NZ5.3b loss this year, recommendation to ban Peregrine high-fliers for incompetence.

31 March 2001

British retailer Marks & Spencer will abandon its 38-store European chain, sell its Brooks Brothers clothing chain and Kings Supermarkets in the US, franchise its Hong Kong chain and cut about 4400 jobs. It also wants to improve the use of its £2.4 billion property portfolio, including leasing half its Manchester store’s building to competitor Selfridges.

Delphi Automotive Systems Corp, the world’s biggest car parts maker spun off by General Motors two years ago, will close nine of its 175 factories, cut its workforce by 5.5%, or 11,500 jobs, and make a $US400 million after-tax first-quarter provision. It expects, at best, to break even this year. Two-thirds of the cut will occur in the US, which significantly reduces Delphi’s average labour cost from $US19/hour when the company was spun off to $US16.25/hour. Average labour cost of the jobs being cut was $US30/hour.

Pacific Century CyberWorks, headed by Hong Kong magnate Li Ka-shing’s son Richard Li Tzar-Kai, made a $US886 million loss last year on consolidated operating profit of $US520 million, the result slashed by one-off provisions on internet and telecom subsidiaries. It wrote off $US22 billion of goodwill from its Cable & Wireless HKT purchase against reserves, sending shareholder equity to a negative $US1.8 billion.

Mitsubishi Motors expects to lose ¥270 billion ($NZ5.3 billion) this year after the local recall of a million cars and through restructuring, and a ¥100 billion loss in Europe, but intends to break even at operating level next year. Among plants with an uncertain future is its Adelaide operation, which will be decided by June.

27 March 2001

Accountability: Peregrine Holdings chairman Philip Tose and three other directors, all paid millions of US dollars a year, have been deemed incompetent in the just-released report of Hong Kong Inspector Richard Farrant, who completed his investigation 13 months ago. Peregrine collapsed in 1998 and the 1997 Asian financial crisis was the direct cause. No fraud was involved. But the inspector said they mismanaged the group, lent three-quarters of the group’s funds to two Indonesian businesses, and had not instituted good reporting or accounting procedures, risk management or internal audit. He said they should be banned from being directors, which could be for up to 15 years.

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Snapshot on world business, week to 11 May 2003

8 May 2003 2003

AMP Ltd continues to put its spin on events which seem to have moved beyond its control. Crikey website campaigner Stephen Mayne’s stand for the AMP board may actually win him a seat – though he’s stated he’ll resign once the split of the Australasian and British businesses gets under way. Mr Mayne published his reform programme, which AMP’s existing board set about putting in place though it opposed his election. Mr Mayne needs to unseat audit committee chairman Richard Grellman, and now has some institutional investors and newspapers raising the call for Mr Grellman to resign. Mr Mayne also demanded withdrawal of equity incentive schemes for chief executive Andrew Mohl & Henderson Global Investors managing director Roger Yates. Today AMP said it would remove resolutions relating to these packages from the agenda for the 15 May annual meeting. AMP chairman Peter Willcox said, in a release, “in light of the demerger proposal announced last week, it was no longer appropriate to seek approval for the resolutions.” More to the point, AMP is raising $A1.9 billion to get the demerger through after losing $A10 billion.

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Snapshot on world business, August 2000

28 August 2000

While President Clinton was in Nigeria he mentioned it would be nice if his hosts could help lobby other oil producers to get the price of oil down, a bizarre way of supporting income growth in a third-world nation. Then, over the weekend, a report appeared of China flying in tens of thousands of troops plus prisoners-turned-security guards to the Christian and animist southern Sudan, to quell the long-running southern rebellion against the Muslim north. Why? To protect Sudan’s oil production, which began last year with supportfrom the Chinese and Malaysian national oil companies. Two British companies have also just won Sudanese pipeline contracts.28 August 2000

25 August 2000

Melbourne’s Crown Casino, which lost $A350 million two years ago before Kerry Packer bought it from Lloyd Williams, has bumped up operating profit 50% in the June 2000 year to $A273 million. The Nine TV network increased operating income 26% to $A282 million and the two business’ parent, Publishing & Broadcasting, made $A324 million.

US premium-range whiteware maker Maytag, No 3 in the US behind Whirlpool and General Electric, is said to be testing takeover prospects with Electrolux of Sweden, Siemens and Bosch of Germany.

20 August 2000

The sons of Chinese president Jiang Zemin and Taiwanese tycoon YC Wang, good friends Jiang Mianheng and Winston Wang, are to form a joint venture to build a $US800 million semiconductor plant in Shanghai. Taiwan bans such investment and Mr Wang Sr’s Formosa Group will provide no funding. Winston Wang heads Hung Jen Group, which has big petrochemical investments in China and will put together investments totalling $US6.4 billion from other sources for more semiconductor projects.

19 August 2000

Maersk Sealand, the world’s biggest container line, will move its business from Singapore to Tanjung Pelepas, the Malaysian state of Johor’s new port just round the corner. That will cut about 12% from Singapore operator PSA Corporation’s business, just a year from the government company’s plan to float. Maersk will own 30% of the new port and operate its terminal. Tanjung Pelepas will become a serious alternative for companies in Singapore’s western Jurong industrial belt. But Maersk’s New Zealand shipping will continue to go through Singapore.

Ong Beng Seng and his wife Christina will take 41.7% of English luxury goods company Mulberry for £7.6 million, with the ability through 8 million preference shares to take full control of the company within two years. The billionaire Ongs of Singapore have substantial hotel interests, particularly in Australia, control Armani in Britain and hold the Asian franchise for Planet Hollywood. The deal involves expanding Mulberry into the US, starting with at least five stores at a £5 million cost.

16 August 2000

Citigroup will issue ¥155 billion of Samurai bonds in the next month, joining non-Japanese bankers taking advantage of the low interest on Japanese government bonds and strong investor demand. Samurai bonds, issued in yen by non-residents, have doubled this year to ¥1.34 trillion.

15 August 2000

Australian property giant Lend Lease Corporation is establishing a vulture fund, focusing on Japan, Korea and Thailand, as Asia’s huge institutional debt portfolios are unravelled. The Lend Lease International Distressed Debt Fund will be run by the asset management division of Lend Lease Real Estate Investments, formerly Amresco, a company formed in Texas in 1986 to help that region out of the US banking crisis. It is looking for investments of at least $US5 million, with an expectation of generating at least a 25% annual return.

9 August 2000

Accountancy firm Arthur Andersen and Andersen Consulting have been split by the Paris-based International Chamber of Commerce, ending a three-year case and a decade of acrimonious battles over business poaching. The arbitrator ordered the consulting side to pay the accountants $US1 billion, but not the $US14.5 billion penalty payments the accountants were claiming and to stop using the Andersen name.

KPMG’s consultancy unit should split from the parent accountancy firm this year, forming a $US5.6 billion public company. The KPMG accountancy side and internet service provider Cisco Systems will hold 20% each in the new company, which will not bear the KPMG name. The accountants will sell down over five years and 55% of the new company will be for sale in the float.

3 August 2000

The Indonesian restructuring agency, Ibra, is looking at whether to sell the Salim group as one unit, back to its original owners, or break it up for sale of the parts, but will leave that call to the Government. The group has 108 companies in 14 industries and in the couple of years before the 1997 Asian financial crisis that brought it down it become a more international investor, including being an original investor in the Hong Leong-led Camerlin consortium which bought into Brierley Investments. Salim is said to be worth about $3.8 billion.

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Snapshot on world business, week to 25 March 2001

Latest: Hutchison Whampoa profit falls 71%, Cheung Kong profit falls 67%, David Jones raises profit 22%, BHP and Billiton to merge, Toshiba to move TV production to China, Asian Development Bank warns of slowdown, Tokyo Mutual Life admits bankruptcy, loss for US plumbing manufacturer Amcast, Boeing to move HQ from Seattle.

25 March 2001

Hutchison Whampoa’s profit fell 71% from its record-breaking 1999 result to $HK34.12 billion ($NZ10.5 billion) last year after it made a $HK34 billion provision for its Vodafone stake. The company’s parent, Cheung Kong (Holdings) Ltd, which derived 87% of its profit from Hutchison Whampoa, saw earnings fall 67% to $HK19.4 billion.

Australian retailer David Jones Ltd increased net profit 22% to $A30.3 million on revenue up 32% to $A1.1 billion in the 26 weeks to 27 January. Pretax profit fell 17.5% to $A34.7 million. The core retailing business’s profit fell 9% to $A32.8 million on same-store sales up 6% to $A827 million and gross profit up 13.4% to $A307 million.

BHP and Billiton plc have agreed to merge into a diversified resources group, BHP Billiton, with an aggregate market capitalisation of $US28 billion and enterprise value of $US35 billion at the time of the announcement. BHP also said it would spin out its complete steel flat products business.

Japanese consumer electronics giant Toshiba Corp said it would move its entire television production operation from Japan to Dalian, in China’s north-east.

The Asian Development Bank said countries hit hardest by the 1997 Asian economic crisis faced a severe drop in growth this year. The development bank cuts its growth forecast for Indonesia, South Korea, Malaysia, the Philippines and Thailand from an overall 7.1% to 4%., rising to 5% in 2002.

24 March 2001

Tokyo Mutual Life Insurance filed for protection from its creditors yesterday after Daiwa Bank refused to extend credit. The insurance company, the fifth in Japan to close in a year, had net liabilities of Â¥34.1 billion ($NZ670 million). Prime Minister Yoshiro Mori told Parliament it was time the country’s banks cleaned out their bad loan files — Â¥32 trillion ($NZ630 billion) last September, rising above Â¥60 trillion when problem loans are included.

US plumbing manufacturer Amcast Industrial Corp, maker of Flow Control products, made a $US6.7 million second-quarter net loss ($US300,000 profit last year) on turnover down 18% to $US123 million, and expects to make a third-quarter loss. The company also serves the car industry.

23 March 2001

The Boeing Co said yesterday it was evaluating Chicago, Denver and Dallas as sites for its headquarters, ending 80 years of being based in Seattle. But it plans to continue making planes in Seattle, where it provides jobs for about 80,000 people. The head office staff number about 500.

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Snapshot on world business, week to 21 October 2001

20 October 2001

Chapter 11 bankruptcy protection applications in the US have come in thick & fast lately. Here’s a few examples from the past week: Bethlehem Steel Corp, third-biggest US steel company, folded on Monday, blaming cheap foreign competition, high labour costs & high pension costs. Birmingham Steel Corp doubts it can stay in business, given its huge debt repayment requirements & lack of working capital. Polaroid Corp filed a week ago. Regal Cinemas Inc, biggest cinema chain in the US, has been struggling for a long time but expects to emerge from Chapter 11 in 2-3 months after selling at least 20 cinemas. Its reorganisation plan will transfer control from Kohlberg Kravis Roberts & Co and Hicks Muse Tate & Furst Inc to a consortium led by Denver businessman Philip Anschutz, who owns the United Artists and Edwards chains. Household goods specialist Lechters went the Chapter 11 way in May, has given up and will liquidate its stock.

Although China and Taiwan are in a permanent state of semi-war, there are regular contacts between the two. Taiwanese journalists made their presence felt at the Apec conference in Shanghai this week, and Taiwanese investment in the mainland leapt some 180% in the year to September, to $US365 million. Residents of two Taiwan-run islands off the Chinese coast, Jinmen (Quemoy) & Matsu, have ferry links to mainland cities Xiamen & Fuzhou. Now Taiwanese legislators want to create casinos on the islands and allow direct air travel between them and the mainland, effectively creating direct (dog-legged) air links for all Taiwanese to the mainland.

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Snapshot on world business, week to 30 November 2003

25 November 2003

Amid US fears of the consequences of exporting thousands of junior analyst jobs to India, London financial services consultancy Troika estimates 100,000 British banking & insurance back-office jobs will go overseas, mainly to India & China, over the next 7 years.

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