Archive | Archive – world business

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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Snapshot on world business, November 2000

Latest: US gdp growth slows, Daewoo kept afloat, the state of India, UK adviser to float, fun & games in outback Europe, East Asian free trade area, US car plants closing, Mazda off to Europe, Mitsubishi loss and another forecast, Railtrack UK earnings cut.

30 November 2000

US gdp growth slowed to 2.4% in the September quarter, the lowest rate in four years.

Insolvent South Korean carmaker Daewoo Motor is being kept afloat, a little like some of those Japanese imports that find their way here. After staff accepted layoffs, Daewoo’s 24 creditor banks agreed to supply the company and its contractors with 729 billion won ($NZ1.5 billion). But that’s not going to keep everyone happy — Daewoo has $US1 billion ($NZ2.5 billion) of unpaid bills for spare parts. General Motors and Fiat are still negotiating to buy the company.

29 November 2000

Tough as it may be to have someone else join us in the dire-straits league, the Indian rupee has also reached a record low against the greenback, 46.87 rupees to the dollar. So far there have been no calls for India to become a state of Australia.

28 November 2000

Obsessively secretive London mergers & acquisitions adviser Cazenove is to end 177 years of partnership and become a public company, though probably with most of the shares held inhouse, so it can finance European expansion. It is a highly influential firm, advising half of the top 100 companies in Britain.

A Russian energy company, Gazprom, has 24.6% of a Hungarian chemical company, BorsodChem,, through an Irish affiliate, Milford Holdings, and must now fight off a purportedly white-knight, but more likely opportunistic buy-in from an Austrian boutique investment banking group, Vienna Capital Partners, which has a nominal holding but also apparently controls 16% BorsodChem shareholder Central European Oil & Gas. Cross-border transactions tend to break down investment barriers. What this complicated set tells me is that Central and East European business will become part of the mainstream and, in due course, the East European property market may be a safe place to invest.

27 November 2000

China, Japan and South Korea have joined the Asean nations in talks on an East Asian free trade area. Hong Kong’s status, as a special economic zone of China, is undecided. Singapore previously baulked at this idea, and also recently signed a trade agreement with New Zealand. That unilateral agreement with Singapore could help New Zealand. Alternatively, not being a member of Asean could work against New Zealand.

23 November 2000

DaimlerChrysler will close three US plants temporarily next week to cut inventory.

21 November 2000

Currency rules: Japanese car company Mazda, 34%-owned by Ford for four years, will close one factory and move production to Europe to combat euro-yen movement. Mazda lost ¥9.5 billion ($NZ220 million) in the June half-year and has forecast a ¥49.5 billion loss for the full year.

19 November 2000

Mitsubishi, now 34% owned by DaimlerChrysler, says its annual consolidated net loss for the year to March 2001 will double to ¥140 billion (NZ3.2 billion). The half-year result was double that for the 1999 first half, at ¥75.6 billion.

Britain’s Railtrack reported a 30% earnings drop to £175 million (NZ621 million) for the September half-year, on turnover down slightly to £1.275 billion, but said compensation and track renewal could cost it £250 million in the second half.

11 November 2000

Taiwanese integrated steelmaker China Steel has reached agreement in principle to build a $US2 billion plant in Malaysia. The plant would be completed in 2005 and initial capacity would be 6 million tonnes of crude steel. Steel companies from five other Asian countries will be tied into the deal.

3 November 2000

Federal regulators want big changes to California’s electricity market to bring prices down.

1 November 2000

Shell Chemicals has tied up the biggest joint venture deal with China yet, a $US4 billion petrochemical contract with China National Offshore Oil Corp. They’ll build a petrochemicals plant at Huizhou, Guangdong, with that money, and follow up with refineries. This deal took 12 years to negotiate.

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Snapshot on world business, week to 1 July 2001

Latest: OUB/UOB friendly bid may foil DBS bank plan, USG bankruptcy impact on building products supplies, Freedom’s Andersons writeoff enables focus on Furniture, Westfield predicts steady NZ trend, Howard Smith cleared to buy NZ unit, gdp cuts through Asia, US cuts interest rate again, Coles Myer forecasts profit drop.

30 June 2001

DBS Group’s $S9.44 billion offer for Overseas Union Bank was challenged on Friday by United Overseas Bank, which has offered $S10 billion and is backed by management of the target bank. A UOB takeover of OUB would promote the second/fourth combination into first place in Singapore banking ahead of DBS, 37% owned by the Singapore Government.

Tag Pacific Ltd, of Sydney, said on Friday supplies to two of its subsidiaries from the insolvent USG Corp of Chicago should not be disrupted because of USG’s chapter 11 bankruptcy-protection filing. Tag said Petter Interior Systems Ltd and the 51% owned Comprador Pacific Pty Ltd sourced significant building products supplies from an international USG subsidiary, which was not included in the bankruptcy filing.

Freedom Group Ltd, of Sydney, will write off $A4.8 million after deciding to close five of its six Andersons full concept and Accents stores. Only the store at Blackburn, Victoria, will remain. The writeoff will cut Freedom’s after-tax earnings by $A3.6 million, but the board said Andersons was always a lossmaker and was forecast to lose $A1.5 million after tax in the September year. Freedom managing director Rod Walker said the closures would enable the group to concentrate on high-yield opportunities such as Freedom Furniture initiatives in Australia and New Zealand, and growth of the Guests stores in New South Wales. Freedom bought the Andersons and Guests chains in July 1999 and opened the first full concept store in May 2000.

Westfield Holdings Ltd expects sales growth at its New Zealand malls to be similar to last year’s, and Australian growth to be similar to or slightly above last year’s 3.7%, held back by the fashion sector. Retail sales at Westfield America Trust’s malls rose by 5% last year but are forecast to grow only 21/1-3% this year.

Sydney-based Howard Smith Ltd, facing takeover by Wesfarmers Ltd of Perth, has won New Zealand Commerce Commission clearance to buy the New Zealand business of OPSM Protector Ltd’s protector safety supply group, while the Australian Competition & Consumer Commission said it would not intervene or impose material adverse conditions. Those clearances enabled the $A60 million purchase to be completed on Friday.

29 June 2001

Projections for the Asian Development Bank’s Asia Recovery report, by London-based Consensus Economics, are for gross domestic product cuts in most countries this year — from 5.3% to 3.7% in Singapore, the hardest hit, and from 4.4% to 3.9% in South Korea. Most other Asian countries would have gdp rises below 3%, except for China at 7.7% and South Vietnam at 5.8%, down from the previously projected 6.1%.

The US Federal Reserve cut the federal funds rate another 25 basis points to 3.75% on Wednesday, the sixth cut of the year, which started at 6.5%.

25 June 2001

Coles Myer Ltd increased fourth-quarter sales (to 17 June), excluding Katies, by 3.2% after a 6.4% third-quarter rise to make the year’s improvement 5.9% so far. Fourth-quarter food & liquor sales grew 8.8%, general merchandise & apparel fell 5.7%. Chief executive Dennis Eck said profit after tax and before one-off restructuring costs for the financial year ending 29 July was likely to be 7-15% below the $A400 million foreshadowed at the third-quarter announcement. Profit net of restructuring costs, forecast to be $A350 million, is expected to fall by a similar amount.

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Snapshot on world business, week to 5 May 2002

5 May 2002

The US unemployment rate hit 6% in April, the highest level in 8 years.

The New York Times has picked up an aspect of the US recession that intrigued me — how the recession would be paid for. I figured the debt mountain would somehow be moved outside the US for foreigners to deal with (by, for example, a shift in exchange rate), allowing a gentler impact on locals. Huge numbers of Americans have been whacked by the slump in tech stocks, plus unemployment, and you could reasonably assume home repossessions would soar. Instead, from a level of 30% repossessions on overdue loans in 1998, the NY Times says banks have cut back to 20% (on a far greater number of delinquent loans) by rescheduling.

1 May 2002

Friends Ivory & Syme plc, 67% owned by British insurer Friends Provident plc, has signed a conditional agreement to buy Royal & SunAlliance Investments, the British asset management business of Royal SunAlliance Insurance Group, for £240 million, adding £36 billion of funds to the £34 billion FIS now manages. FIS will also get an exclusive 10-year contract to manage the whole Royal & SunAlliance group’s British life & general insurance funds, another £29.4 billion of funds business. The deal requires FIS shareholder approval.

Moody’s said 47 issuers defaulted on $US34 billion of bonds in the first quarter of 2002, the worst quarter for defaults on record in terms of dollar volume.

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Snapshot on world business, week to 1 September 2002

26 August 2002

An Australian report today (Robin Bromby writing in The Australian) raises concern about a shift in sheep power: China now has the most (130 million), topping Australia’s 115 million. The Chinese still use most for meat but are expanding their wool industry. This also raises the question: After the dairy boom, and if forestry isn’t to have quite as strong a future, where do New Zealand’s flexible rural land users turn for their next fashion change?

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Snapshot on world business, week to 22 April 2001

Latest: International Paper makes Q1 loss Fed cuts 50 points off fund rate, Citigroup earnings fall 8.3%, Woolworths to get 80 Franklins stores, FAL eyes some of Franklins, Harvey Norman lifts sales 13%, Australia pursues regional exchange.

19 April 2001

Carter Holt Harvey’s major shareholder, International Paper, increased sales 8% to $US6.9 billion in the first quarter, but turned in a $US44 million loss compared to a $US378 million profit in 2000. It blamed the struggling US economy and high energy costs.

The US Federal Reserve chopped another 50 basis points off its federal funds rate yesterday, the fourth cut this year, taking the rate to 4.5%.

Citigroup’s first-quarter earnings fell 8.3% to $US3.54 billion. It has already taken a $US80 million charge in the December 2000 quarter for layoffs to occur during the first two quarters of 2001.

Dairy Farm International, 53% owned by Jardine Matheson, will sell 80 of its 287 Franklins stores in Australia to Woolworths, and expects to dispose of the whole chain, in pieces, over the next nine months. It’s expecting net proceeds of $A300 million. Franklins’ carrying value on the Dairy Farms books was written down by $US129 million in February, leaving the chain with a $US180 million value.

18 April 2001

Perth-based Foodland Associated Ltd, which owns Progressive Enterprises (the Foodtown/3 Guys/Countdown grocery chains) plus Farmers and the remains of Deka in New Zealand, is negotiating with JP Morgan, advisors to the Hong Kong-based Dairy Farm Group (owner of Woolworths in New Zealand) to buy selected Franklins supermarkets in northern New South Wales and Queensland, and associated distribution facilities.

17 April 2001

Australian retail chain Harvey Norman Holdings Ltd raised sales in Australia and New Zealand (but excluding Singapore) by 13% in the 31 March quarter to $A590 million, and by 4.9% on a same-store basis, after adjusting for wholesale tax and comparing the same number of trading days. Over nine months, the sales increase was 18% to $A1.87 billion, 9.6% on a same-store basis.

The Australian Government has begun talks to establish a regional stock exchange and bond market encompassing Australia, Hong Kong and Singapore. The New Zealand exchange pulled out of merger talks with the Australian exchange, but that doesn’t stop larger entities listing overseas. In both cases the merger is defensive, with a view in the latest proposal to competing with the huge northern hemisphere exchanges.

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Snapshot on world business, week to 29 June 2003

27 June 2003

The US Federal Reserve lopped 20% off the federal funds rate yesterday, taking it from 1.25% to 1%. After 13 such cuts in 2½ years, Fed chairman Alan Greenspan still doesn’t have an answer to the declining US economy’s woes. 13 times he has resorted to a kickstart which has failed. Meanwhile the US keeps printing money, devaluing the currency. Currencies which have been printing less should automatically rise against the greenback, as ours has. But by opting for a series of failed quick-fixes and continuing note-printing, Dr Greenspan pushes strength & a long-term fix further away. Costs, such as the huge expense of going to war, are reduced if the dollar price is fixed and there are more dollars in the market. The rest of the world pays for that unless exchange rates shift to match the printing of greenbacks. That’s before any other changes in conditions of exchange occur.

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