Archive | Archive – world business

Snapshot on world business, week to 2 June 2002

1 June 2002

Just Jeans has bought Melbourne-based fashion retailer Portmans from Bloom brothers Barry & Norman. Portmans has 86 shops and turnover of about $A100 million. It recently entered the New Zealand market, where Just Jeans is already established. Just Jeans, controlled by the Catalyst private equity group, also owns the Jay Jays and Jacqui E labels, and has turnover of more than $A500 million.

Continue Reading

Snapshot on world business, week to 23 September 2001

23 September 2001

Good old American socialism, helping the weak & poor. Most of the US airlines which will get a $US15 billion bailout following the 11 September terrorist attacks were already flying with no fat in their wallets. The bailout will maintain industry surplus competing for fewer passengers, slowing rationalisation.

The Disney Co was quick to find funds after the 11 September terrorist attacks, raising $US1 billion from corporate bonds. At the end of the week Disney used $US750 million buying 50 million of its own shares from members of the oil-based Bass family of Texas, whose billionaire status didn’t stop them having to find quick cash to make margin calls.

Asahi Bank has joined the weak Daiwa Group of Daiwa, Kinki Osaka & Nara Banks to form Daiwa Bank Holdings, which will cut staff by 6300, more than a quarter, as it tries to save ¥68 billion/year ($NZ1.45 billion) and overcome a bad debt mountain. Asahi lost ¥7.84 billion ($NZ167 million) in the March year and had ¥1.4 trillion ($NZ30 billion) of bad debts. Daiwa lost ¥23.4 billion ($NZ500 million) and had ¥814 billion ($NZ17.4 billion) of bad debts, though it received ¥408 billion in a government bailout in 1999.

22 September 2001

Collapse of Japan’s fourth-largest supermarket chain, Mycal, with Â¥1.7 trillion ($NZ36 billion) of group liabilities, will also send banking group Mizuho Holdings (the creation last September of a three-way alliance between Dai-Ichi Kangyo, Fuji & Industrial Bank of Japan) to a Â¥260 billion ($NZ5.6 billion) net loss for the September half.

Continue Reading

Snapshot on world business, week to 16 March 2003

14 March 2003

Remember the story a couple of years ago, that you were going to be able to hire videos online & on demand, without having to go to the video shop? It was an Enron scheme, through the giant US energy company’s intelligent network, in an exclusive 20-year deal with Blockbuster. Turns out Enron couldn’t make it work and Blockbuster couldn’t supply all the movies anyway. Never mind, Enron booked $US53 million profit from it in the 4th quarter of 2000, which it needed to meet market profit expectations. The deal fell apart the next quarter, but Enron still booked $US58 million profit as it moved from the exclusive relationship to “initiating discussions with content providers.” In October 2001 Enron wrote off the $US111 million of supposed profits, and the web began to untangle. 2 more Enron executives look like heading to jail. The whole show was a sham from start to finish, just to get the books looking right.

12 March 2003

Corporate governance, AMP-style, raises some interesting questions. The company has just lost $A896 million, its managing director and chairman have fallen on their swords, 2 other non-executive directors have agreed to go, 2 will offer themselves for re-election at the annual meeting and the new chairman & 2 recently appointed executive directors will also stand for election. The day before the company announced its loss in February, new chairman Peter Willcox said AMP would look at appointing another 3 non-executive directors over the next few months. When nominations to the board, to be put to the annual meeting, closed on Monday, AMP listed them as 3 “current AMP directors standing for election,” 2 “current AMP directors standing for re-election” and “There is one external shareholder nomination for the board: Stephen Mayne.” Mr Mayne runs the Crikey media, business & political website in Melbourne, which is struggling to keep afloat itself, and he’s in too much of a hurry to worry excessively about grammar & spelling but probably can’t do sums any worse than the elite who’ve run AMP into the ground. Putting him on the board would probably shut him up but, his expertise & capacity to direct a big company aside, the governance issue arises from the description “external shareholder nomination”. Who counts as “internal”? He had to gather enough shares to stand, had to be nominated by shareholders. Whose company is it? Would Crikey be allowed to use the executive washroom if he won a board seat?
Website: Crikey

11 March 2003

British venture capital firm Terra Firma Capital Partners Ltd, spun out of Nomura Investments in 2001, lost a bid to buy €1.9 billion of apartments in Cologne and has moved on to a £2 billion bid for Northumbrian Water, put on the market by French water group Suez, which needs to cut its €27 billion of debt. Terra Firm’s investment strategy is contrarian: It targets companies that are large, low growth, complex, out of favour & don’t rely on market appreciation or IPO exits to achieve profits.

Continue Reading

Snapshot on world business, week to 14 January 2001

Latest: Audit shows Chinese irregularities.

8 January 2001

A report arising from a national meeting of China’s auditors says the audit of the 1999 accounts of 1290 large and medium-sized state businesses 68.5% didn’t properly reflect their financial state or operating revenue. The report of Auditor-general Li Jinhua said 3.4% of state assets, worth 22.88 billion yuan ($NZ6.1 billion), was lost through nonpayment of bank debt, off-balance-sheet transactions or what it said was improper behaviour during reform. Irregularities in road-building accounts amounted to 8.57 billion yuan ($NZ2.23 billion), or 15% of total investment.

Continue Reading

Snapshot on world business, week to 29 July 2001

Latest: US gdp 0.7% as inflation and business investment fall, Fujitsu warns of $NZ4.3 billion loss, J Hardie chases international tax gains, Renong restructure begins.

28 July 2001

US second quarter gross domestic product growth was 0.7% and inflation fell a full percentage point, from 3.3% in March to 2.3%. Business investment, which rose 12.2% in the June 2000 quarter, fell 13.6% this time.

Japanese computer maker Fujitsu is the latest to join the redundancy trail, forecasting several thousand worldwide will go in the next year. It’s forecast a Â¥220 billion ($NZ4.3 billion) loss this year.

25 July 2001

Should the New Zealand Government match its tax rate with Australia’s, should we all just head offshore looking for the best deal, or will governments rationalise their tax treatments? James Hardie Industries Ltd says its reasoning for heading offshore from Australia for the sake of a better tax rate is exceptional — chief executive Peter Macdonald said the company earned 85% of its income in the US but had 90% of its shareholders in Australia, and the global market for its building products was rising. James Hardie will incorporate a new parent company in the Netherlands and list it in New York, but keep its main listing in Australia. The restructuring uses the double tax treaty between the US and the Netherlands, so dividend withholding tax would be cut from a 15% minimum to a 5% maximum. Tax on interest would fall from 38.5% to 15%. The new structure would increase the group’s after-tax profit by about $A30 million/year and allow James Hardie to maintain a global tax rate of 25-30% over the long term, compared to a rate of 40-50% that would arise under the current structure. “Additionally, the restructuring will not crystallise a capital gains tax liability for shareholders when it is implemented,” Mr Macdonald said. Approval will be sought at a shareholder meeting in September, followed by court approval. Website: James Hardie’s restructure web pages

24 July 2001

Malaysian Government investment company Khazanah Nasional has made a $US1 billion takeover bid for construction company United Engineers (Malaysia) Berhad, as the first step in restructuring the Renong group. Part of the troubled group’s empire is Opus International Consultants Ltd, the former New Zealand Government Works Consultancy Services, which was bought by a Renong subsidiary, Kinta Kellas, five years ago. UEM has 32.6% of Renong, and Renong 37.1% of UEM. Both have been headed by Halim Saad, a Victoria University of Wellington accountancy graduate and close associate of former Malaysian finance minister Daim Zainuddin, who resigned on 1 June.

Continue Reading

Snapshot on world business, week to 14 September 2003

14 September 2003

Retailer Harvey Norman Holdings Ltd increased June year aftertax profit by 17.8% to $A151 million on pretax operating profit up 23.2% to $A233.3 million and sales up 14.4% to $A3.17 billion. Basic earnings/share rose 16% to A14.31c/share. July-August sales from the franchised Harvey Norman complexes, group stores in New Zealand, Slovenia & other trading operations (excluding operations of Pertama Holdings Ltd, Singapore, & Rebel Sport Ltd) were up 21% at $A590.4 million. Same-store sales rose 12.7%.
Website: Harvey Norman

12 September 2003

Insurance group Royal & SunAlliance launched a deeply discounted £960 rights issue in Britain on 4 September to cover an £800 million reserves gap, and has since had £500 million wiped off its share price. The 1:1 rights issue is at 70p/share.

Continue Reading

Snapshot on world business, week to 10 February 2002

4 February 2002

Macau has awarded two 20-year casino licences to Las Vegas operators Wynn Resorts and Galaxy Casino. Stanley Ho, who has had a monopoly on casinos in the former Portuguese enclave across the Pearl Delta from Hong Kong for 40 years, also got one of the new licences, which will require the operators to invest about $US500 million in new premises.

Continue Reading

Snapshot on world business, week to 13 May 2001

Latest: Daewoo shipyard wins $US2 billion of orders, Taiwanese shipyard racks of huge losses, 5% Taiwanese growth forecast, Dell to lay off 10%, Hunan may let investment company collapse, Macquarie Bank restructures to maintain growth, Millers to buy Woolworths’ Crazy Prices.

8 May 2001

Korean shipyard Daewoo Shipbuilding & Marine Engineering, still being restructured, has won 11 new orders worth $US1 billion and preliminary contracts for another $US1 billion as it prepares for a trade battle with European shipyards, which claim it receives unfair government subsidies. Government-controlled banks control 77% of Daewoo Shipbuilding.

In Taiwan, the Commission of National Corporations has forecast the state-controlled China Shipbuilding Corp will run up $NT4.5 billion ($NZ325 million) of losses this year on top of NT6.5 billion ($NZ470 million) last year, against a net value now of NYT3.2 billion ($NZ231 million). Half the 5000 staff would lose their jobs in a proposed restructuring of the shipyard, in the southern city of Kaohsiung.

The chairman of Taiwan’s Council for Economic Planning and Development, Chen Po-chih, said at the weekend the island’s economy could grow 5% this year if it can speed up infrastructure construction. Growth last year was 6%. The statement was part of Taiwan’s continual political wrangling over how to run the economy.

The world’s biggest personal computer maker, Dell, will lay off 4000 staff — 10% of its workforce — this year.

The Hunan provincial government in China may let its Hong Kong investment window company, Hunan Sanxiang Group, be bankrupted in a repeat of the 1998 liquidation of the Guangdong International Trust & Investment Corp (Gitic). Two out of every three of its 30 subsidiaries are unprofitable and the group’s operating loss last year was $HK160 million ($NZ49 million). Group debt is 1.65 billion yuan ($NZ474 million).

Macquarie Bank has formed a new investment banking group containing its wholesale structuring, equities and advisory capabilities, to be led by asset & infrastructure group head Nicholas Moore with corporate advisory & institutional stockbroking group joint head Alastair Lucas as chairman. Macquarie managing director Allan Moss said the two separate entities had grown strongly but that structure was no longer relevant and would have hindered further offshore growth. Macquarie’s international earnings have risen from 12% in 1997 to 31% in the September 2000 half.

Miller’s Retail Ltd of Sydney is completing due diligence to buy Woolworths Ltd of Australia’s discount variety chain, the 125 Crazy Prices stores, for about $A40 million, including inventory.

Continue Reading

Snapshot on world business, week to 7 July 2002

4 July 2002

Heard all those complaints about high taxes in New Zealand? Stanley Works, the maker of Stanley tools, wants to move its address from Connecticut to Bermuda purely to avoid tax. It won a vote in May by a slim margin, after pension fund non-votes were subsequently apportioned according to the voting split, which gave chairman John Trani the win. The next day the state attorney-general and treasurer, Richard Blumenthal and Denise Nappier, sued the company alleging it misled shareholders, and the company cancelled the result. The officials want to stop a second vote, saying 1 page of the new prospectus claims Bermudan law, despite differences, won’t substantially change shareholders’ rights. On another page, it says that because the laws are different their rights might be adversely altered.

Shipyard company Babcock-Borsig was a step from bankruptcy on Wednesday as the prime minister of German state North-Rhine Westphalia, Wolfgang Clement, organised a meeting in Babcock’s headquarters city of Dusseldorf with creditor banks, management & shareholders. The company has been seeking €200 million of urgent funding, including €50 million to pay wages. Half of Babcock’s 22,000 employees work in Germany.

Reports from Canberra today said Australia had joined 5 other countries (New Zealand, Fiji, the Cook Islands, Samoa & Tonga) in signing up for an economic agreement that will take 14 Pacific nations into a free-trade bloc. Australia’s Treasurer, Peter Costello, signed at a meeting of economic ministers in Vanuatu.

While New Zealand talks about the knowledge economy but does little more than that (though there are some exceptions), here’s an example of what’s happening overseas: Hong Kong billionaire Li Ka-shing’s new biotech company, CK Life Sciences International Holdings Inc, intends to raise about $HK2.6 billion by selling 20% of itself, then spend a third of that on research, development, testing drugs & applying for patents.

Continue Reading