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IBM takes on the 
might of Microsoft 



Two cheers for 
Gordon Brown 

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World Car Industry 
New Broadcast Media 


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Europe's Business Newsoaoc-r 


US lifts ban on 
official contact 
with Sinn Fein 

Washington yesterday lifted its ban on official 
contacts with Sinn Fan, the political wing of the 
Irish Republican Army, and invited visiting leader 
Gerry Adams to meet US officials. Tlie news was 
broken to the Sinn Fein president in a telephone 
call from US vice-president Ai Gore. Washington's 
move puts additional pressure on London to r-ingr 
the way for preliminary talks with Sfan rain but 
Downing Street gave a low key response to the US 
decision yesterday. London hag promised to start 
discussing how to admit Sinn Kin to political farnrc 
on Northern Ireland's future within three n in ths of 
a permanent end to IRA violence. Page 8 

Markets t ak e fright Financial markets in 
Europe and the US fell again amid pessimism about 
the direction of US and UK interest rates. In Lon- 
don, the FT-SE 100 index fell 42A points to 2,983.5. 
Page 18; World stocks. Page 42; London Stock 
Exchange, Page 31 

Middle East neighbours closer to peace 


TUESDAY OCTOBER 4 1994 


OS523A 




Israeli foreign minister Shimon Peres (right) and 
Jordan's Crown Prince Hassan took another step on 
the path to peace when they met at the White 
House with President Bin Clinton and announced 
several economic and commercial projects. Their 
meeting came as Israeli premier Yitzhak Rabin told 
his country's parliament that he hoped to sign a 
peace treaty with Jordan before the end of the year. 
Page 6 

Italian agriculture chief arrested: Filippo 
Galli, head of the state body that controls European 
agriculture aid in Italy, was arrested on charges of 
abusing his office. The move, part of a probe into 
agricultural fraud, follows the arrest of Mr Gain's 
deputy. Page 3 

J. Sainsbury, Britain's biggest retail grocery, is 
taking a $S25m (£205m) stake m Washington-based - 
supermarket chain Giant Food of the US. Page 19; 
Lex, Page 18 

Brazilians go to polls: Fernando Henrique 
Cardoso, a champion of free markets and social 
reform, was poised to win the presidency of Brazil 
as 95m voters started casting their ballots yester- 
day. Page 4 

Londoners rush to buy Diana book: London 
bookstores reported huge demand for Princess in 
Love, the controversial book which claims to reveal 
details of a love affair between the Princess of 
Wales and former soldier James Hewitt Observer, 
Page 17 

Japan Air Lines is poised to disclose billions of 
yen of long-suspected foreign exchange losses. JAL 
refused to conform reports that its unrealised loss 
was Y45bn ($45Gm). Page 19 

Deutsche Bank hopes to strengthen cooperation 
with Morgan Grenfell, its merchant banking subsid- 
iary. The move could ultimately lead to the integra- 
tion of their investment banking operations. 

Page 20 

Mexican assassination move: Mexico's 
Congress said it would lift immunity from Manuel 
Munoz Rocha, a member implicated by the attor- 
ney-general's office in last week's assassination of 
Jos£ Francisco Ruiz Massieu, senior official in the 
governing FRI party. Page 4 

Tourists killed as bridge collapses-. At least 
38 people died when a suspension bridge collapsed 
at a beauty spot in Guangdong province, south-east 
rhina_ pitching scores of tourists into a lake. 

Row over French scarf barn French police 
blocked the entrance to a school in Lille to keep out 
about 20 Moslem girls who were trying to defy a 
government ban on wearing Islamic scarves in pub- 
lic schools. 

Farmers' protest: Welsh farmers warned of a 
disastrous drop in livestock prices because of a 
ferry companies' ban on live animal exports and 
urged the government to intervene. Yesterday calf 
prices at Wales’s biggest livestock market fell by up 
to £70 ($111) to just £10 of £15 because of the ban. 


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Estonia ferry’s bow doors were torn off in storm 


By Christopher Brown-Humas 
to Stockholm 

The outer bow door of the Baltic 
ferry Estonia was ripped off in 
heavy storms, allowing water to 
surge in and capsize the vessel in 
minutes, investigators said last 
night. 

The three-nation accident team 
said video footage of the stricken 
vessel, lying in 80 metres of 
water, showed a 1 metre gap 
along the top edge of the nor- 
mally water-tight bow ramp. The 


opening had allowed water to 
rush into the cavernous car deck, 
rapidly destabilising the ship and 
causing it to sink. 

More than 900 lives were lost 
when the Estonia went down last 
Wednesday in stormy seas off 
Finland. The vessel had been sail- 
ing from the Estonian capital 
Tallinn to Stockholm. 

Mr Raimo Tnlikainen, head of 
the rescue operation, acknowl- 
edged yesterday that there had 
been a 30-minute delay before 
news of the Estonia's distress 


was passed from Finnish to 
Swedish rescue authorities. He 
promised a separate inquiry into 
the delay. 

Accident commission members, 
including representatives from 
Finland, Sweden and Estonia, 
highlighted the failure of a bow 
door locking device. They said 
they had seen video footage of 
broken hinges but had not been 
able to locate the visor-style 
outer bow door itself. 

“The water inflow through the 
partly dislodged forward ramp 


has been of sufficient magnitude 
to result in a lack of stability and 
the capsizing of the ferry. The 
water-tight bow ramp behind the 
visor is still in place although 
there is a lm gap along the top 
edge," the investigators said. 

The findings confirm eye- 
witness testimony and expert 
opinion that only an event as 
dramatic as the tearing off of the 
bow door could have caused the 
Estonia to capsize so quickly. 

Finland's transport minister. 
Mr Ole Norrback. said yesterday 


he would consider banning the 
use of bow doors on ferries. 

In a pre-emptive move, Nords- 
trom & Tfaulin. the Swedish joint 
owner of the Estonia, said it 
would permanently seal the bow 
doors of the Vironia, a replace- 
ment ferry which is due to start 
sailing between Stockholm and 
Tallinn later this month. The 
company said all loading and 
unloading would take place 
through the stern in an arrange- 
ment which it claimed would 
“totally remove possible safety 


risks" at the front of the ship. 

Meanwhile, Swedish inspectors 
yesterday stopped a ferry sailing 
from Sweden to Denmark after 
discovering serious faults in the 
bow section. Tbe Lion Prince, 
operated by Lion Ferry, a Siena 
Line subsidiary, was taken out of 
service before it sailed from Var- 
berg. south of Gothenburg, to 
Grenaa on the Jutland peninsula. 

Mr Eric Wedin, an inspector 
with Sweden’s National Maritime 
Board, soidcr&ks were found in 
the bow ramp and the bow door. 


EU banks 
faulted on 
cross-border 
transactions 

Deals cost more and take longer 
than a year ago, study shows 


By Emma Tucker to Brussels 

British banks charge the most for 
transferring money across Euro- 
pean borders, but complete the 
payments faster than any of their 
EU counterparts, a survey from 
the European Commission dis- 
closed yesterday. 

The survey also shows that it 
costs more and takes longer to 
-transfer money between member 
states in tbe EU than it did a 
year ago. The performance of EU 
banks falls well short of volun- 
tary targets on the expense and 
speed of cross-border payments 
set by the Commission 10 months 
ago. 

The research is likely to lead to 
legislation from the Commission. 
Such a move would cheer con- 
sumer groups and small busi- 
nesses that for years have con- 
demned bank service quality. 

According to the report. 
Europe's businesses and consum- 
ers pay an average Ecu25.4 
($3L50) per EculOO cross-border 
payment, Ecu2 more than they 
paid a year ago. The average 
total time for a transaction is 
almost five working days, with 
averages in the member states 
ranging from three to eight work- 
ing days. 

UK banks charge the most for 
sending a payment, followed by 
France and Portugal. Charges are 
lowest in the Netherlands. Spain 


and Luxembourg. Banks in 
Greece charge the most for 
exchanging foreign currency, and 
the UK and Belgium the second- 
most Overall, costs are highest 
in France, the UK and Greece, 
and lowest in Italy, the Nether- 
lands and Luxembourg. 

The survey targeted 352 bank 
branches, carrying out 1,000 
urgent money transfers and more 
than 100 non-urgent transfers. On 
average, it cost less to send a 
non-urgent transfer, and those 
were also carried out more 
quickly. 

Banks in Portugal, Ireland and 
Italy were the slowest to send, 
while banks in Spain, Luxem- 
bourg and again Portugal, the 
slowest to receive. Service was 
most efficient in the UK. 

The banks were ordered to 
charge the sender all the costs 
for the cross-border payments so 
that the beneficiary would 
receive the fUD amount Even so, 
charging at both ends occurred 
in 36 per cent of the urgent trans- 
fers. 

The report also highlighted the 
banks' poor record on providing 
information on costs. 

Mr Raniero Vanni ITArchirafi. 
commissioner responsible for 
financial services, said; "The 
study results need urgent assess- 
ment by the Commission so that 
the necessary follow-up measures 
ca n be implemented." 



S.G. Warburg 
warns of sharp 
fall in profits 


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By Norma Cohan 
and Nicholas Denton 

S.G. Warburg, the UK investment 
bank, yesterday warned that 
profits for the six months ended 
September 30 would be less than 
half those of the same period of 
1993 because of sharply lower 
trading profits. 

The group forecast income of 
£55m ($86.9m) to £65m against a 
record £148 .8m for the corre- 
sponding period a year ago. Mer- 
cury Asset Management, in 
which Warburg has a 75 per cent 
stake, said its profits would hold 
up. Income from the investment 
h anking side of the business 
appears to have collapsed. 

Analysts downgraded their 
forecasts for Warburg’s results 
for the full financial year to a 
range of £16Sm to £ 180 m, com- 
pared with the £297m recorded 
for March 1993 to March 1994. 
Warburg’s share price fell 
sharply by lOlp to close at 569p. 

The decline was mirrored in 
price falls at other leading City of 
London firms. Smith New Court, 
the leading independent market- 
maker - regarded as highly 
exposed to potential trading 
losses - saw its shares price drop 
40p to 334p yesterday. 

Shares in other leading UK 
firms experienced more modest 
slides. Schraders, the merchant 
bank, saw shares drop by 43p to 
1335pand shares in Kleinwort 
Benson, the second-largest inte- 
grated UK investment bank, fell 
Up to 440p. 

Warburg’s profits warning 
comes after a round of trading 


losses and redundancies at US 
investment banks such as Salo- 
mon Brothers, which have seen 
market conditions deteriorate 
from the first quarter. 

Yesterday Lord Cairns, War- 
burg's chief executive, stopped 
short of committing the invest- 
ment bank to a significant cost- 
cutting effort although he said a 
review was under way. 

"Clearly we' have to look very 
hard at our cost base and find 
ways of cutting if we can do so 
without eating into muscle," he 
said. 

In the year ended March 31, 

Shivers in the City Page 19 

Lex Page 18 

Editorial Comment Page 17 


staff costs rose 40 per cent over 
the previous year, much of that 
in performance-related bonuses. 
Warburg’s average staff expenses 
were the highest in the quoted 
merchant banking sector last 
year at £95,000 per head, accord- 
ing to estimates by Barclays de 
Zoete Wedd Research. 

Lord Cairns blamed the poor 
performance on “thin, illiquid 
and quite volatile markets" in 
equities, bonds and derivatives. 
Most trading activities in the UK 
and in the US were affected, as 
were some in Europe. Fee and 
commission income may also 
prove slightly lower than last 
year, after the disappointments 
of the Eurotunnel rights issue 


Continued on Page 20 


Prayerful pose: Gatt chief Peter 
Sutherland at a news confer- 
ence at which he expressed 
optimism that a number of 
global trade accords would be 
approved. IMF/World Bank 
reports. Page 5 and Page 19 ap 


S Africa gets confidence vote 
from credit rating agency 


By Patti Waidrnetr 
in Johannesburg and 
Richard Lapper In London 

South Africa’s foreign borrowing 
plans were given a boost last 
night when US credit rating 
agency Moody’s gave the repub- 
lic’s sovereign debt an “invest- 
ment grade” rating, though Stan- 
dard & Poor’s, the other leading 
US agency, awarded a lower rat- 
ing. 

South Africa's minister of 
finance, Mr Chris Liebenberg. 
welcomed news that Moody’s had 
awarded a BAAS rating, saying 
this demonstrated “confidence in 
the coherence of tbe economic 
policies and political stability 
brought to the country by the 
government of national unity". 

He said that Standard & Poor's, 
which awarded a BB or sub- 
investment grade rating, had also 
said it forecast a “positive out- 
look” for the country. 

South Africa had been seeking 
an international credit rating 
since last April’s elections 
brought President Nelson 
Mandela's government to power, 
yet its first formal rating, from 


the European agency IBCA. was 
a disappointing BB, putting 
it on a par with countries 
such as Mexico, Hungary and 
Argentina. 

That news was greeted with 
dismay in South Africa because 
m any international fund manag- 
ers are prevented from buying 
sub-investment grade bonds. 

Officials said they were pleased 
with Moody’s higher rating, 
which pats South Africa ahead of 

International bonds — Page 25 
World stocks — Page 42 


both Mexico and India. 

Moodys’ said this was based on 
South Africa’s low external debt, 
as well as on the the new govern- 
ment's commitment to redirect 
spending to a comprehensive 
development programme while 
reducing the public sector deficit 
The agency said it believed the 
international community would 
provide more financial aid, credit 
and investment to support tins 
effort 

Mr Carlos Cordero, a partner 


with Goldman Sachs, the invest- 
ment bank that is advising the 
government, said he was 
“delighted" with the rating, 
which should allow South Africa 
to “access a wider range of capi- 
tal around the world”. 

South Africa has borrowed 
money in European markets 
without an official rating, but 
yesterday’s news will permit it to 
re-enter the US market. In its 
June budget, the government 
said it would raise RL8bn ($500m) 
from the international capital 
markets in the current financial 
year. 

External debt has been paid 
down In net terms since 1985, 
when International banks refused 
to roll over loans to the 
republic, in response to political 
unrest. 

Moody’s said it had also based 
its rating on the expectation that 
South Africa's political, civil 
service, and business leadership 
would guide the political and 
economic transition effectively. 

However, many investors still 
doubt whether the new leaders 
will be able to resist pressure for 
more populist economic policies. 


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CONTENTS 


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Leader Paga. 
Ledert . 

Maragwwrt. 

Observer — 
Techndogy _ 
Business law 
Aits 


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4!> THE FINANCIAL TIMES LIMITED 1994 No 32.488 Week No 40 


LONDON • PARIS ■ FRANKFURT ■ NEW YORK • TOKYO 



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2 


NEWS; EUROPE 


FINANCIAL TIMES TUESDAY OCTOBER 4 1994 


EUROPEAN NEWS DIGEST 


Bonn to press 
for CO, cuts 


The current German presidency of the European Union wiU 
today try to push for new cuts in carbon dioxide emis sions 
running Into the next century, even though the Twelve have 
still to put in place measures sufficient to meet existing 
targets on greenhouse gas reduction. Draft conclusions for 
today's meeting of EU environment minis ters in Luxembourg 
call on the European Commission to set reduction targets for 
CO, to 2005 and 2010. The Union is committed to stabilising 
C0 2 emissions at 1990 levels by 2000, under the Rio Convention 
on Climate Change. The conclusions acknowledge that “the 
measures taken so far by individual member states and at 
European level will not suffice" to meet this pledge, and call in 
addition for EU-wlde taxation of energy sources. The nearly 
three-year-old Union plan for a mixed carbon and energy tax 
of up to $10 per barrel of oil equivalent - strongly backed by 
Germany and northern states - now looks as though it will 
give way to an aggregate of national taxes on fuel. “The 
Germans are much more flexible about what a tax instrument 
might be," said one official from the UK, which opposes the 
principle of an EU-level tax. David Gardner, Brussels. 


Consumer confidence grows 


Business and consumer confidence is climbing strongly in the 
European Union as the first effects of the economic recovery 
filter through, the European Commission said yesterday. Not 
only were consumers less worried about their own financial 
situation in August, but there was also a marked decline in 
fears about job security, it said. The review noted that indus- 
trial capacity utilisation had recovered to 80.4 per cent the 
same as In October 1992 although still well below the peak of 
S5.8 per cent at the height of the last economic boom in 1988. 
But it stressed that there was no immediate risk of capacity 
shortages which could trigger a sudden rise in inflation. The 
Commission noted tbat domestic demand was rising steadily, 
broadening the base of the economic recovery which is still 
mainly export-led. “The latest business survey findings indi- 
cate particular optimism in Greece, Ireland, the Netherlands 
and the United Kingdom." it said. Reuter. Brussels 


Turkish privatisation snag 


A draft law to speed up Turkey’s privatisation bit new obsta- 
cles after the resignation of a left-wing minister at the week- 
end, unnerving the stock market and raising fears about the 
stability of tbe ruling coalition. The departure on Saturday of 
state minister Mr Flkri Saglar to prepare his Social Demo- 
cratic Populist party (SHP), the junior coalition partner, for 
by-elections in December interrupted the draft's progress 
toward parliament. Cabinet members had last week 
announced the bill was ready to go before parliament, giving a 
lift to the Istanbul stock market The market index pulled 
back almost 2 per cent to 26,321.62 yesterday amid renewed 
fears of delays and signs of fragility in tbe ruling coalition. 
Also missing is the signature of Mr Mumtaz Soysal. foreign 
minister, who was attending a United Nations meeting in New 
York last week, and the fotmer public works minister. Mr 
Mustafa Yilmaz. Political analysts said the latest blow to 
privatisation was a result of political haggling after SHF’s 
insistence on simultaneous approval of a democratisation 
package, scrapping some laws limiting personal freedoms. 
Privatisation, one of Prime Minister Tansu Ciller's remedies to 
contain the big budget deficit, expected to hit TLl30,000m 
(£2.4bn) this year, first ran into trouble when two earlier bills 
were annulled by the supreme court after opposition chal- 
lenges. If approved, the bill will pave the way for the sale of 
big companies in telecommunications, airlines, iron and steel, 
petroleum distribution and refining, mining and electric 
power. Reuter, Istanbul 


Lisbon acts on shop hours 


Portugal's municipal authorities are to be given powers to 
regulate retail opening hours in response to a campaign by 
small shopkeepers to ban Sunday opening by hypermarkets 
and other big stores. Mr Fernando Faria de Oliveira, trade and 
tourism minister, said yesterday the government would 
require large stores to close at midday on Sundays in areas 
where local authorities had failed to stipulate timetables by 
February 1995. He also announced an Es70bn (£280m> incentive 
programme to help small retailers modernise. The commerce 
confederation has threatened to boycott a social pact being 
forged between government, employers and unions without a 
government promise to ban Sunday opening and freeze the 
licensing of new hypermarkets. Portugal has 3.3 retail food 
outlets per 1,000 inhabitants, the highest level in the European 
Union. Peter Wise. Lisbon. 


The FDP is struggling to find its constituency, writes Judy Dempsey 


East Germans reluctant to come to party 


Mr Werner Kol- 
\ Vf \ morgen Is 

\ exactly the 

^ kind of person 

the Free Demo- 
crats. the 

junior partner 

,faVf in Chancellor 
. Helmut Kohl's 

governing 
y? coalition, 
wants among 

GERMAN its ranks in 
ELECTIONS eastern Ger- 

Octobar 16 ™ of 

enthusiasm 

after the Berlin Wall collapsed 
five years ago, Mr Kolmorgen 
set up his own car repair and 
sales business In the small 
town of Teterow in tbe eastern 
state of Mecklenburg-Vorpom- 
mern. He also joined the FDP 
after being a member of the 
Liberal Democratic party of 
Germany, a former “bloc" 
organisation sanctioned by the 
east German Communist- party. 
He even ran for local govern- 
ment, becoming elected deputy 
mayor for the tiny hamlet of 
Gross Wokem. 

But two years ago, Mr Kol- 
morgen, 42. left the party. “I 
just gave up with the FDP. I 
pulled out of the party. I could 
not identify with it any more. 
It had no direction, no rele- 
vance for me,” he said. 

Now Mr Kolmorgen is not 
certain for which party he will 
vote in federal elections next 
month The fact that this hard- 
working manager, who repre- 
sents the fledgling Mittelstand, 
the small and medium-sized 
enterprises which formed the 
backbone of the FDP in west- 
ern Germany, has turned his 


back on the party reveals a 
problem common to all the 
western parties in eastern Ger- 
many. They are having great 
trouble finding their natural 
constituencies. 

After German unification, 
tbe FDP had a big advantage 
over tbe other parties. It inher- 
ited two large “bloc" parties: 
the Liberal Democratic party 
of Germany which had 120,000 
members, and the National 
Democratic party of Germany 
which had a membership of 

105.000. 

As there was with the other 
bloc parties, there was a mas- 
sive exodus of members after 
1990; there was no longer the 
political pressure to join a 
party. By then, the newly 
founded FDP in eastern Ger- 
many had about 130,000 mem- 
bers. Today, it has fewer than 

31.000. 

“The first difficulty is that 
we have no Mittelstand - no 
strong economic or entrepre- 
neurial class to underpin the 
party," said Mr Wulf Oehme, 
the FDP’s manager in Berlin. 

About 40 per cent at its mem- 
bership in the east consists of 
the Handuxrk, or small crafts 
and trades; intellectuals and 
scientists make up about 30 per 
cent, the rest are pensioners 
and teachers. 

The second problem is that 
the FDP has no personalities. 
“We had Hans-Dietrich Gen- 
scher [the former foreign min- 
ister]. The easterners identified 
with him. They do not Identify 
with Klaus Kink el [the leader 
of the FDP and foreign minis- 
ter]." 

Yet both Mr Oehme and Mr 
Kolmorgen believe these rea- 



Extreme left-wing demonstrators failed to disrupt celebrations yesterday of the fourth anniversary 
of German unification, writes Quentin Peek Police said 250 were arrested and widespread damage 
caused to shops in the centre of Bremen, where the main festivities took place. Inside the city's 
congress centre, political leaders heard President Roman Herzog praise the east Germans for “the 
first successful democratic revolution in our history." ap 


sons do not fully explain the 
extraordinary demise of the 
FDP, which in the 1990 elec- 
tions gained 11 per cent of the 
federal vote and more than 10 
per cent In eastern Germany. 
But in the recent elections in 


Saxony-Anhalt, Saxony, and 
Brandenburg, the party did not 
even gain the 5 per cent 
needed to enter the state par- 
liaments. 

“The party foiled to establish 
a separate political identity, 


whether it was in coalition or 
not with governments in east- 
ern Germany," said Mr Oehme. 
“Maybe we were always under 
the shadow of the Christian 
Democrats or the Social Demo- 
crats in the east. In any case, 


we foiled to be different, and 
we foiled to seek new allies.” 

More crucially for the FDPb 
political philosophy, Mr Oehme 
believed, east Germans simply 
did not identify with the pjm 
ty*s liberal traditions and val- 
ues. “In fact, liberalism, and I 
suppose politics, means very 
little to them. They have other 
more important things to think 
about, like coping with unem- 
ployment or adapting to the 
tremendous changes brought 
about by unification. 

“The east Germans do not 
want any more change. So 
when they voted for the CDU 
in Saxony or the SPD in Bran- 
denburg, they opted for big 
majority governments based 
on strong personalities, not 
party policies. The easterners 
want certainty and they want 
leaders who will come down 
hard on law and order. They do 
not think about accountabil- 
ity," said Mr Oehme. 

Belatedly, the FDP has tried 
to woo back the vote in eastern 
Germany. Instead of plastering 
the region with posters of Mr 
Kinkel, the FDP in Mecklen- 
burg-Vorpommern has insisted 
that it put its own local person- 
alities on the election posters. 
But party activists admit these 
policies are unlikely to have 
much impact in time for the 
elections. 

“At the end of the day, the 
economic development of east- 
ern Germany will influence the 
emergence of politics based on 
policies rather than personali- 
ties. Then we might have a 
chance." said Mr Oehme. Per- 
haps then it might woo back 
Mr Kolmorgen. 


Belgrade’s hopes ride on report of UN monitors 


By James Whittington 
In Belgrade 


Belgrade is holding its breath 
as it awaits news of a delayed 
report by a United Nations 
team on whether Serbia's Pres- 
ident Slobodan Milosevic has 
fulfilled his promise to dose 
the border with the Bosnian 
Serbs to everything but food 
and humanitarian goods. 

If the report is positive, this 
will dear the final hurdle to 
suspending some of the 28- 
month-old international sanc- 
tions on Serbia and Montene- 
gro. the two remaining constit- 
uents of Yugoslavia. Belgrade's 
airport will be reopened to for- 
eign flights, and sporting and 
cultural exchanges will once 
again be allowed. Expectations 
are running high and many 
Serbs hope a favourable report 
by the UN monitors will be the 
beginning of the end of their 
country’s pariah status. 

Eighty-five UN monitors 
have been set the Herculean 
task of patrolling the 550km 
border for the past io days to 
see if military and other strate- 
gic supplies are still slipping 


Hie United Nations and Nato have failed to bridge their 
differences over the use of air power against Bosnian Serbs, 
agencies report from Split Mr W illiam Perry, US defence 
secretary, discussed the issue for nearly three hours with Mr 
Yasushi Akashi, the UN special representative. Afterwards, Mr 
Akashi indicated that the two sides had agreed on the need for a 
speedier response to provocations, but he could not 1 '*• 

unconditionally agree with Nato’s call for strikes to be made 
without warning. In Sarajevo, the UN announced that seven 
convoys carrying supplies for Its peacekeeping forces were being 
allowed to proceed by the Bosnian Serbs, despite a day's delay in 
implementing an agreement 


through. Working in small 
groups, they move from one 
border crossing to another 
with an English translator to 
observe Serbian police and cus- 
toms officials checking outgo- 
ing traffic. 

Over the weekend at the 
Zvornik border crossing on tbe 
main road from Belgrade to 
Pale, the Bosnian-Serb capital, 
two tight-lipped Finnish moni- 
tors watched a light stream of 
cars cross the Drina river to 
Bosnian Serb-held territory. 
Some 40km north, another 
group was monitoring the 
Sremska Raca crossing 
through which heavy vehicles 


carrying food and medicine 
waited to pass. Drivers’ identi- 
ties were checked and car 
boots and lorry trailers were 
briefly surveyed by the Serbs 
while the UN monitors looked 
on, occasionally taking notes. 
One Serbian lorry driver carry- 
ing potatoes and smuggled pet- 
rol for Serb-held Krajina admit- 
ted that “the inspections are 
not as tight as they could be. 
But we get through nothing 
compared to before". 

more than two months ago, 
some of these border posts 
were the main supply route to 
Bosnian-Serb fighters on the 
front line. Often the roads 


would be packed with every- 
thing from Yugoslav-made T-55 
tanks to cars stuffed with light 
weapons and grenades. Mr Mil- 
osevic said he would stop this 
traffic in early August when 
Dr Radovan Karadzic, the Bos- 
nian Serb leader, refused to fol- 
low him in accepting the peace 
plan devised by the so-called 
contact group of nations. 

Diplomats in Belgrade say 
they believe Mr Milosovic is 
committed to closing the bor- 
der with his former proteges. 
“He has been let down and 
embarrassed by Karadzic and 
must now concentrate on get- 
ting his own house in order. 
This means getting sanctions 
lifted," says one. 

But a comment by Mr Wil- 
liam Perry, US defence secre- 
tary, at the Nato summit in 
Seville over the weekend sug- 
gests the Americans, at least, 
are not convinced Mr Milosovic 
has closed the border com- 
pletely. “We have incomplete 
reports that indicate that [the 
blockade] has been partially, 
but not fully, complied with. 
[There is] certainly not a com- 
plete stoppage," he said. 


Even the UN monitors on the 
ground admit that the diffi- 
culty in monitoring such a 
long border with so few men 
means that their report will be 
by no means definitive. A final 
decision on whether the sanc- 
tions will be suspended rests 
with Dr Boutros Boutros Ghali, 
UN secretary general, but he is 
unlikely to risk undermining 
Mr Milosevic's attempt to 
co-operate. 

The sanctions under review, 
however, will not drastically 
effect economic life in Serbia. 
Few Serbs can afford air tick- 
ets, and any international 
sporting and cultural links will 
only provide a much-needed 
psychological boost. As they 
wait for the report to be finali- 
sed and made public, they are 
surviving the blanket eco- 
nomic sanctions through mas- 
sive smuggling operations. 
Most goods are easily available 
in Belgrade - at a price - and 
there are thousands of cars in 
the city running on smuggled 
petrol Economists say that the 
smuggling is severely damag- 
ing the country’s fragile econ- 
omy and until sanctions are 


completely lifted, the threat of 
economic collapse is never far 
away. 


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FINANCIAL TIMES TUESDAY OCTOB ER 4 1994 * 

NEWS: EUROPE 







3 


Italy’s EU 
farm aid 
chief held 


Business as usual in Baltic, even with faulty door 


Hugh Carnegy sails from Stockholm to Helsinki on the world’s 
largest car-passenger ferry and finds few concerns for safety 


By Robert Graham 

Police yesterday arrested Mr 
Filippo Galli, the director-gen- 
eral of Aima, the state body 
controlling EU agricultural aid. 
on charges of abuse of office as 
part of a year-long investiga- 
tion into agricultural fraud. 

Mr Galli’s arrest concerns 
the receipt of an alleged L2G0m 
($128,500) bribe from Mr Franco 
Ambrosio, the so-called “King 
of Grain", who runs his Ital- 
grani trading empire from 
Naples. Mr Ambrosio has 
already been interrogated 
about Aima aid but yesterday 
denied he had made any pay- 
ment to Mr G alli. 

The Galli arrest follows that 
of Mr Giuseppe Fugaro. the 
deputy head of Aima. for 
alleged abuse of office related 
to favours provided to Mr Pas- 
quale Casillo, the owner of 
Foggia football club and the 
entrepreneur in the south with 
the biggest business interests 
after Mr Ambrosio. Mr Casillo 
is alleged to have benefited 
from EU support for fake and 
inflated third country sales of 
agricultural produce. 

Mr Casillo is believed to be 
still in jail Naples magistrates 
are currently assessing how to 
tackle the problems arising 
from the seizure of almost 
L2,000bn worth of Mr Casfllo’s 
assets, including several grain 
trading companies. Meanwhile, 
Aima has recently changed its 
name to Eima and the govern- 
ment is considering its dis- 
bandment. 

In a separate development 
yesterday in the corruption 
investigations, a close confi- 
dant of Mr Bettino Craxi, the 
former Socialist leader and 
prime minister, told a Milan 
court he had operated two 
secret Swiss banks for him 
with funds totalling L30bn. 

Hie admission came from Mr 
Giorgio Tradati, who was 
arrested last week on corrup- 
tion charges relating to the 
receipt of a Llbn bribe paid to 
the Socialists by the state- 
owned Ansaldo engineering 
group. His arrest followed evi- 


An Italian opposition leader 
has caused a political storm by 
colouring up a scenario in 
which Mr Silvio Berlusconi, 
prime minister, could be 
accused of corruption, 
allowing the far right to 
replace him with a top 
magistrate, Reuter reports 
from Rome. Mr Rocco 
Buttiglione, leader of the 
Popular party, the former 
Christian Democrats, said on 
Sunday: “Some people are 
saying that there could be a 
judicial warning against the 
prime minister and a good 
substitute would be [Mr 
Antonio] Di Pietro.** 
Magistrates issue judicial 
warnings when formally 
announcing they suspect 
someone of having committed 
a crime. Mr Di Pietro is Italy’s 
leading anti-graft magistrate 
and spearhead of the war on 
corruption which has swept 
away the political old guard. 
Italy's corruption scandals 
have brushed perilously dose 
to Mr Berlusconi. 


dence uncovered in Switzer- 
land that h ank accounts had 
been opened in the early 1980s 
at SBS in Chiasso and Ameri- 
can Express in Geneva, by Mr 
Tradati as a front for Mr Craxi. 
Mr Tradati claimed Mr Craxi 
bad asked him to close the 
accounts when the corruption 
scandals began to break but he 
refused. 

Mr Tradati said only L2bn of 
the L30bn had been transferred 
to Italy, to help pay the Social- 
ist party’s debts and wages of 
staff at L’ A venire, the party 
newspaper. The prosecution 
alleged the monies had been 
kept secret in Switzerland 
largely for Mr Craxi’s personal 
use. 

This led Mr Craxi to send yet 
another of his many faxes from 
his self-imposed exile in Tuni- 
sia. saying all the money in the 
accounts was for party 
expenses. Mr Craxi is refusing 
to return to be interrogated, 
arguing he cannot obtain a fair 
hearing. 


If such issues as safety were 
bothering the 1.503 mainly 
Swedish and Finnish passen- 
gers travelling on Sunday 
night from Stockholm to Hel- 
sinki on the world’s biggest 
combined passenger and car 
ferry, the Europe - with a 
faulty bow door welded fast - 
they were well disguised. 

It may have been a national 
day of mourning in Sweden for 
the victims of the Estonia 
disaster, but the Europa’s nine 
restaurants and seven bars 
were busy; the nightclub 
dance floor was packed; and 
the cabaret show went ahead 
with all its usual glitter. 

Ms Harriet Johans, the 
cruise manager on board, said 


By John Rkkflng in Parts 

The French government is 
preparing to launch trial com- 
munications and computer ser- 
vices in selected towns to 
determine whether to proceed 
with ambitious proposals to 
develop a national information 
superhighway linking French 
businesses and households. 

The move reflects a growing 
debate within the government 
and France Telecom, the state 
teleco mmuni cations operator, 
about the technology and 
investments required to 
develop autoroutes d'informa- 

tiOTL 

The debate has been fuelled 
by a report commissioned by 
the government from Mr 
Gerard Th6ry, former manag- 


Azerbaijan’s President Haydar 
Aliyev imposed a state of emer- 
gency yesterday after interior 
ministry troops held the gen- 
eral prosecutor captive over- 
night to demand the release of 
jailed colleagues, Reuter 
reports from Baku. 

In a television address Presi- 
dent Aliyev said the seizure of 
general prosecutor Mr Ali 
Umarov by the special interior 
ministry police amounted to a 
“coup d’etat”. 

“What has happened testifies 
to the fact that aggressive 


there had been few cancella- 
tions and “surprisingly little" 
concern expressed by passen- 
gers about safety procedures. 

The Europa, built in 1993 at 
the same German shipyard 
that built the Estonia 14 years 
ago, does not have the verti- 
cally-opening, visor-type bow 
door which was at fault on the 
snnken ferry. Its outer bow 
doors instead open outwards 
and backwards. 

Yet in the rescue operation 
of the doomed Estonia on 
Wednesday night, tbe heavy 


ing director of France Telecom. 
The report is currently being 
studied by the prime minis ter’s 
office and is expected to be 
published wi thin w eeks . 

Mr Thery's conclusions 
favour a substantial invest- 
ment in the infrastructure 
needed to build a national 
information superhighway 
over the next 15 years. The aim 
would be to connect 5m house- 
holds and businesses to infor- 
mation networks by the the 
year 2000. The cost of the infra- 
structure, including the exten- 
sion of fibre optic cables to 
households and businesses, is 
estimated at about FFrlObn 
(£ 1 . 2 bn) each year. 

The scale of the proposed 
project, however, has drawn a 
concerned reaction from 


forces inside and outside the 
country are still trying to 
destabilise the republic.” he 
said. 

Mr Umarov was freed yester- 
day after being held by a 100- 
strong unit which seized con- 
trol, of the b uilding where he 
worked. 

The president said the force 
demanded the resignation of 
the general proseentor and the 
interior minis ter. He rejected 
these d emands. 

Government troops then 
encircled the base to where the 


seas damaged the hinges and 
opening mechanism of the 
Europa’s port bow door, ren- 
dering it inoperable. 

As the ferry had slipped 
stealthily out through the nar- 
row passageways of the Stock- 
holm archipelago, Captain 
Vekko SjOlund insisted his 
ship's faulty bow doors would 
have been safe even if they 
had not been welded shut after 
the disaster that befell the 
Estonia. 

“Oar bow door is like a cork 
in a wine bottle," said the cap- 


France Telecom and some 
industry observers. The state 
telecoms operator, which 
would be expected to shoulder 
a significant burden of the 
investment under Mr Thery’s 
proposals, is struggling to 
reduce a debt burden which 
totalled FFrl05bn at the end of 
last year. It also believes that 
the technology required is still 
evolving and that such a large 
investment in fibre optic net- 
works may be premature. 

“Mr Thery’s prescriptions 
are very bold, but potentially 
risky,” says one telecoms ana- 
lyst in Paris. “The government 
is tempted by the idea of a 
grand, populist project, but it 
is also anxious to have some 
idea of the potential demand 
for services." 


disgruntled units had with- 
drawn after releasing Mr 
Umarov. 

All telephone lines were cut 
between the capital Baku and 
Russia and other former Soviet 
republics. Some satellite linms 
bad also been shut down and 
the main post office in the cap- 
ital was dosed. A night-time 
curfew was expected to come 
into effect 

The state of emergency tight- 
ens regulations on entering 
and leaving the country, 
imposes media censorship and 


tain as he stood on his dark- 
ened bridge watching the navi- 
gation lights around the archi- 
pelago's hundreds of islands 
sliding past the 60.000 gross 
tonne Silja Europa. 

"It seals tighter the more it 
is pushed into the hull. The 
bow on the Estonia was more 
like the top on a cola bottle." 

Captain Sjolond and his 
Chief Officer Teijo Seppelin 
made a persuasive case that 
the Europa and other Ro-Ro 
ferries are nothing like tbe 
deathtraps they have tended to 


Behind such concerns lie the 
experience of tbe Plan Cable, 
tbe government-backed scheme 
of the early 1980s to develop a 
nationwide cable network. 
Despite FFrSObn of investment 
by tiie government and the pri- 
vate sector, however, cable ser- 
vices remain relatively under- 
developed in France, with 
operators continuing to suffer 
losses. 

The aim of the trial services 
would be to ascertain the level 
of demand for new services, 
from scientific and communi- 
cations databases to interac- 
tive entertainment systems. 
The sites for the experiments 
have yet to be selected, but 
each trial is expected to 
involve several thousand 
hnrmw; and businesses. 


bans demonstrations and 
strikes. 

It also empowers the presi- 
dent to suspend the activities 
of political parties seen as 
destabilising the country. 

Witnesses reported that sev- 
eral tanks were patrolling 
Baku streets, guarding govern- 
ment buildings and mili tary 
installations. 

News reports said govern- 
ment troops had briefly 
exchanged fire with the inte- 
rior ministry forces but there 
had been no casualties. 


be portrayed as since last 
week if they ere properly 
maintained and crewed. “I 
wouldn’t be here if they were 
not safe,” said the skipper. 

The ship has a panel of 16 
indicator lights prominently 
displayed on the bridge 
connected to all the hull doors 
which switch from green to 
red if the electronic monitors 
detect a breach or broken seal. 

Colour television screens on 
the bridge scan the cargo 
decks and all areas of tbe ship 
sensitive to its stability. On 


may force 

By David Buchan in Paris 

Widening allegations that 
France's centre-right Republi- 
can party has illegally funded 
itself are prompting calls for a 
further reform of the country's 
political finance laws. 

Mr Philippe SCguin. the 
national assembly president, 
has proposed an all-party study 
into reforming legislation on 
the funding of political parties, 
a move which, according to a 
Louis Harris poll in yesterday's 
Infomatin newspaper, would 
have the backing of 90 per cent 
of French people. 

Mr S6guin criticised Mr 
Edouard Balladur. the prime 
minis ter, for foiling to respond 
to the allegations surrounding 
his trade and industry minis- 
ter. Mr G&rard Longuet, by 
instituting a wider reform. The 
prime minis ter confined him- 
self to saying that the investi- 
gation of -Mr Longuet's affairs 
should pursue its course, but 
that if by tbe end of this month 
this led to the minis ter being 
formally charged, he would be 
asked to resign. 

A Paris prosecutor has asked 
the Justice Ministry to appoint 
a magistrate to Investigate 
allegations that the Republican 
party received some FFr28m 
($5 -3m) in cash during 1987-91, 
that it set up an advertising 
company as a front to cream 
off commissions from compa- 
nies, and that it received “par- 
ticularly advantageous” financ- 
ing -terms from property 


Sunday night, even a man 
enjoying a Jacuzzi in tbe pool 
room was clearly visible to the 
bridge officers on tbe 
monitors. 

However, the two senior offi- 
cers admitted tbe open cargo 
decks of a Ro-Ro make them 
quickly unstable if water does 
get into the ship. They agree 
that building Ro-Ros with 
bulkheads - transverse walls 
to divide the deck space - 
would make them less 
vulnerable. 

“If you bad bulkheads it 
would be safer of course.” said 
Mr Seppelin. “But it costs 
more money and it makes 
loading slower." 


reforms 



Mr Edouard Balladur target 
of criticism 


companies to buy its Paris 
headquarters. 

These allegations come from 
the same judge. Mr Renaud 
Van Ruymbeke. who has 
claimed that Mr Longuet. the 
party’s president and past trea- 
surer, allowed a friendly con- 
tractor to subsidise building of 
his Riviera villa. 

Until 1988. all corporate con- 
tributions to French political 
parties were technically illegal, 
though in practice they were 
widespread. Laws passed in 
1983 and 1990 legalised 
declared corporate contribu- 
tions up to certain limits, with 
an amnesty in 1990 for every- 
one except MPs involved in 
previous wrongdoing. - 


Trials planned to test demand for information services 

French caution on ‘superhighways’ 


Party funding probe 


Azerbaijan in state of emergency 



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FINANCIAL TIMES TUESDAY OCTOBER 4 L 994 



NEWS: THE AMERICAS 


Bonds, dollar fall on 
US inflation fears 


Brazil votes with Cardoso tipped to win 



The main candidates in Brazil: Fernando Henrique Cardoso (left) and Lula da Silva nca*« mw 


By George Graham 

in Washington 

Financial markets took fright 
again yesterday as another eco- 
nomic indicator fuelled fears 
that the US economy was still 
growing faster than it could 
sustain without provoking a 
surge in inflation. 

The National Association of 
Purchasing Managers said its 
index rose from 562 per cent in 
August to 58.2 per cent in Sep- 
tember, a level that usually 
indicates a strongly expanding 
economy. 

Mr Ralph Ka uffma n, head of 
procurement and materials 
management at Oryx Energy 
and chairman of the associa- 
tion's survey committee, said 
that on past experience an 
index level of 58.2 per cent, 
if it were sustained, would be 
consistent with an overall 


growth rate of around 4.0 
per cent 

The survey of purchasing 
managers also showed that 
almost all sectors of manufac- 
turing industry were having to 
pay higher prices for their raw 
materials. 

Treasury bonds fell quickly 
In response to the NAPM 
results, and the dollar also 
slid against most major 
currencies. 

Many dealers believe the 
Federal Reserve has already 
been too slow to raise Interest 
rates to choke off the expan- 
sion to a growth rate below 22 
per cent, which the economy 
could absorb without succumb- 
ing to Easter inflation. 

Among professional econo- 
mists. however, more are 
inclined to believe that the 
Fed, by raising short term 
interest rates by 1% percentage 


points so far this year, has 
already done enough to engi- 
neer a "soft landing." steering 
the economy back to a sustain* 
able pace of growth. 

Mr Kauffman said the 
NAPM’s production index 
improved from 58.1 per cent in 
august to 61.2 per cent in Sep* 
tember. while the new orders 
index rose from 60.7 per cent to 
61.6 per cent. 

The leather, apparel, paper, 
fabricated metals, printing and 
publishing industries showed 
the biggest gains in September. 

The NAPM*s price index rose 
from 7-L5 per cent in August to 
77.1 per cent in September, its 
highest level for six years. 

Of the 20 manufacturing 
sectors covered by the NAPM 
survey, 19 reported paying 
higher prices for their raw 
materials. 


By Angus Foster in S3o Paulo 

Brazil yesterday held its 
biggest round of elections in 40 
years, with last-minute opinion 
polls predicting that Mr 
Fernando Henrique Cardoso, a 
sociology professor turned 
social democratic politician, 
was set to become the coun- 
try's next president 
Three opinion polls, con- 
ducted at the weekend and 
released yesterday, showed 
him with a big lead over his 
nearest rival, Mr Luiz Inicio 
Lula da Silva of the left-wing 
Workers' Party. According to 
the largest poll, by Batafolha, 
Mr Cardoso was to win 48 per 
cent of the vote against Mr da 
Silva’s 22 per cent 
It also suggested Mr Cardoso 
had a lead of nine percentage 
points over all the other candi- 
dates combined. If he does take 
more votes than all his rivals, 
he will win the presidency 
without the need for a second 
round next month. 

Mr Cardoso was cheered by 


supporters when he left his Sdo 
Paulo home to vote early yes- 
terday. He said he felt “very 
emotional” amid the excite- 
ment Advisers said he would 
wait until Wednesday before 
commenting on the results. 

Also yesterday, Brazil was 
electing state governors, two 
thirds of the federal senate. 


and all seats in the federal 
House of Representatives and 
state legislatures. 

Voting is compulsory and big 
queues were expected at poll- 
ing stations as nearly 95m Bra- 
zilians. including man illiter- 
ates, chose among 12,000 
candidates. 

Electoral authorities expect 


to need 10-15 days to count the 
votes. The first results, proba- 
bly from urban areas of S3o 
Paulo state, were not expected 
until this afternoon at the ear- 
liest. 

Mr da Silva, who led in opin- 
ion polls until July, said he 
remained confident that there 
would be a second round. He 


described the election as “ille- 
gitimate” because of the sup- 
port Mr Cardoso has received 
from the government. 

The latter, who resigned as 
finance minister this year to 
seek the presidency, is the man 
most closely linked with Bra- 
zil's new currency, the Real, 
which has led to a sharp fall in 
inflation. 

Mr da Silva also repeated 
accusations that Mr Cardoso's 
party had distributed false bal- 
lot papers in which Mr da Sil- 
va's name appeared in the 
wrong place. The left-winger 
candidate suggested these 
papers were designed to con- 
fuse illiterate voters. 

The elections were generally 
reported to have been peaceful 
However, in the north-eastern 
state of Alagoas, where nearly 
half the state's electoral judges 
are under police protection 
after receiving threats, early 
reports suggested voting had 
been delayed in four districts 
after allegations of electoral 
fraud. 


New Supreme Court faces watershed cases 


By Jurek Martin in Washington 

The second youngest US Supreme Court 
this century opened its autumn term 
yesterday with a case load Ught even by 
recent standards, but including some 
important political, social and business- 
related judgments. 

Probably the most widely watched 
ruling will centre on the constitutional- 
ity of imposing term limits on members 
of Congress. At issue is the (minion of 
the Arkansas Supreme Court which 
invalidated a 1992 state referendum 
imposing limits on congressional repre- 
sentatives while upholding them for 
elected state officials. 

Article one of the US constitution 
stipulates age, citizenship and resi- 
dency requirements for members of 
congress. The Supreme Court must 
decide whether additional requirements 


may be added, such as ceilings on the 
number of years that may be served, 
with little legal precedent as a guide. 

Term limits are a populist cause and 
15 states have adopted variations on 
them since 1990 for local officials. Were 
the Supreme Court to find them uncon- 
stitutional at the congressional level 
the Republican party Is likely to press 
even harder for a constitutional amend- 
ment mairing- them mandatory. 

The Court will also hear arguments 
on a number of desegregation, discrimi- 
nation and congressional redlstricting 
cases. But the most politically contro- 
versial ruling, already exciting the gun 
lobby and its opponents, stems from a 
clause in the 1990 Crime Control Act 
prohibiting the knowing possession of a 
firearm wi thin 1.000 feet of a school. A 
federal appeals court ruled that this 
provision interfered with commerce and 


should, in any case, be a matter of local 
not federal jurisdiction. 

No far-reaching business cases appear 
on the Court docket, with the possible 
exception of Bentsen vs Coors Brewing, 
which involves commercial free speech. 
The government is seeking to uphold a 
1935 Prohibition-era ban on brewers 
advertising the strength of their prod- 
uct. unless state law requires the infor- 
mation be placed on bottles and cans. 

The Court will also determine a long- 
standing dispute between the hanking 
and insurance industries rule over 
whether banks may act as agents or 
brokers in selling annuities to their cus- 
tomers. At issue is whether annuity 
contracts constitute “insurance" under 
the terms of the National Banking Act 

Among judgments held over from the 
summer but ann o unced yesterday, the 
bench refused to overrule a lower court 


ruling setting aside civil racketeering 
charges against Mr Michael Milken, the 
convicted financier. 

The policies of the new court are not 
easy to discern in advance beyond the 
presumption that its consensus-seeking 
centre has been strengthened by the 
arrival of Justice Stephen Breyer. The 
retirement of Justice Harry Blackmun 
leaves only Justice John Paul Stevens 
as a classic liberal, but the conservative 
fiauk also appears more marginalised, 
with only Chief Justice William Rehn- 
quist and Justices Antonin Scalia and 
Clarence Thomas consistently in the 
right-wing comer. 

The arrival of Justice Breyer. 56, 
brings the average age of the nine mem- 
ber bench down to 60, the youngest in 
over 50 years. The Chief Justice, who 
was 70 last Saturday, is the longest 
serving member. 



If the 

rainforests arc 
being destroyed at 
the rate of thousands 
trees a minute, how can planting 
just a handtul of seedlings make a difference? 

A WWF - World Wide Fund For Nature tree 
nursery addresses some of the problems lacing people 
that can force them to chop down trees. 

Where hunger or poverty is the underlying cause 
of deforestation, we can provide fruit trees. 

The villagers of Mugunga, Zaire, lor example, cat 
papaya and mangoes from WWF trees. And rather than 
having to sell timber to buy other food, they can now 
sell the surplus fruit their nursery produces. 

Where trees are chopped down for firewood, 
WWF and the local people can protect them by planting 
fast- growing varieties to form a renewable fuel source. 

This is particularly valuable in the Impenetrable 
Forest, Uganda, where indigenous hardwoods take 
two hundred years to mature. The MarkhamU lotea 
trees plan red by WWF and local villages can be 
harvested within five or six years of planting. 

Where trees are chopped down to be used for 
construction, as in Panama and Pakistan, we supply 
other species that are last-growing and easily replaced. 

These tree nurseries are just part of the work we 
do with the people of the tropical forests. 

WWF sponsors students from developing countries 
on an agroforcstrv course at UPAZ University in 
Costa Rica, where WWF provides technical advice on 
growing vegetable and grain crops. 


Unless 
is given, 
soil is exhausted 
very quickly by “slash 
and burn" farming methods. 
New tracts of tropical forest would then have 
to be cleared every two or three years. 

This unnecessary destruction can be prevented by 
combining modern techniques with traditional 
practices so chat the same plot of land can be used to 
produce crops over and over again. 

In La Planada, Colombia, our experimental farm 
demonstrates how these techniques can be used to 
grow a family’s food on a small four hectare plot. 
(Instead of clearing the usual ten hectares of forest.) 

WWF fieldworkcrs are now involved in over 100 
tropical forest projects in 45 countries around the world. 

The idea behind all of this work is that the use of 
natural resources should be sustainable. 

WWF is calling for the rate of deforestation in the 
tropics to be halved by 1995, and for there to be no 
net deforestation by the end of the century. 

Write to the Membership Officer at the address 
below to find out how you can help us ensure that 
this generation does not continue to steal nature’s 
capital from the next. It could be with a donation, 
or, appropriately enough, a legacy. 


WWF World Wide Fund For Nature 

(formerly World Wildlife Fund) 

International Secretariat, 1 196 Gland, Switzerland. 


FOR THE SAKE OF THE CHILDREN 

WE GAVE THEM A NURSERY. 


Mexico move to 
charge deputy 


US takes 
out Haiti 
faction 

US forces in Haiti yesterday 
stormed the headquarters of 
Fraph, the nationalist paramil- 
itary faction loyal to the army 
government, as the US took 
the initiative on Haiti’s politi- 
cal stability, reports James 

Warding iq W ashing ton. 

The attempt to neutralise 
the Front for the Progress and 
Advancement of Haiti, which 
killed at least five people at a 
pro-democracy march last Fri- 
day, was the first instance of 
the more aggre ss ive US policy 
to disarm those Haitians 
thought to be trying to derail 
the restoration of President 
Jean-Bertrand Aristide. 

After US soldiers had raided 
the offices of Fraph in down- 
town Port-an-Prtnce and pat a 
tank outside the bonding, a 
crowd of Aristide supporters 
gathered outside. 

The raid will be seen as a 
response to criticisms, after 
the violence at the end of last 
week, that the US forces were 
foiling to guarantee security of 
pro-Aristide demonstrators. It 
may also have been pre-emp- 
tive - Fraph members were 
reported to be planning 
attacks on Aristide activists in 
the week before his scheduled 
return about October 16. 

The importance of disarming 
the opposition was reinforced 
yesterday when a US soldier 
was shot and injured. 


By Damian Fraser 
in Mexico City 

The Mexican Congress has 
moved to strip immunity from 
the member Implicated by the 
attorney-general's office in the 
assassination last week of Mr 
Jos6 Francisco Ruiz Massieu, 
who was the number two offi- 
cial in the governing party, the 
PRL 

The Congress stated that the 
necessary steps will be taken 
to lift the immunity of Mr Man- 
uel Munoz Rocha, a PRI con- 
gressman from the north- 
eastern state of Tamaulipas. 

The attorney-general’s office 
is ready to charge Mr Munoz 
with having masterminded the 
assassination. 

The deputy was reported 
missing yesterday, although 
newspapers suggested that he 
may be willing to surrender 
himself. 

Investigators said they were 
told by an accomplice to the 
assassination that Mr Munoz 
Rocha and Mr Rubio Canales, a 
former colleague of Mr Ruiz 
Massieu now in prison, plotted 
the murder to slow political 
reform in the country, to settle 
an old score with an enemy, 
and to weaken the govern- 
ment's battle against drug 
traffickers. 

The dead man’s brother, Mr 
Mario Ruiz Massieu, is the dep- 
uty attorney-general responsi- 


ble for drug enforcement 

Financial markets in Mexico 
were rattled by the accounts of 
an alliance between drug traf- 
fickers and political reaction- 
aries willing to kill reform- 
minded politicians. 

At mid-morning yesterday, 
the Mexico City stock market 
was down 0.9 per cent. 

There has been much specu- 
lation in Mexico on whether 
other government politicians 
were involved in the assassina- 
tion, and whether there was a 
link between this crime and 
the killing last March of Mr 
Luis Donaldo Colosio, the PRI’s 
presidential candidate. 

The government's special 
prosecutor has concluded that 
Mr Colosio was killed by a 
lone, deranged gunman. 

The attorney -general's office 
said Mr Ruiz Massieu was shot 
in the neck last Wednesday by 
Mr Daniel Aguilar Trevino, 
who was captured at the scene 
of the crime. Mr Aguilar said 
that Mr Fernando Rodriguez 
Gonzdlez, an aide to Mr Mufloz, 
had offered him about $15,000 
(£9,500) to kill Mr Rrnz Mas- 
sieu. 

Mr Jorge Rodriguez Gonz- 
alez, the brother of Fernando, 
admitted his involvement in 
the crime on Friday, and has 
directly implicated Mr Munoz 
in the attack, according to tes- 
timony released by the attor- 
ney-general’s office. 


Is Wnamtl* 

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c/.o. i-ormaers scores or lAioans, in rugnt. 
Mainland Sites Perish in the Florida Straits 

For the Cubans, 



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SJBMSMS] 

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l. iKWfiW 
fr.msttaSKt**. 
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Those 
whore; 
U.S. to 


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The Headlines 

with the facts, figures and analysis you’ll find only in 

CUBANEWS 


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FINANCIAL TUVUrc Tl rP?rvA v 
I UESDA\ OCTOBER 4 1994 


NEWS: IMF/WORLD BANK IN MADRID 


Gatt says Uruguay 
Round worth $500bn 


Moscow faces the unknown as opposition grows to its loan requirements 

Russia fails to achieve its mission 



By Peter Norman in Madrid 

The General 
Agreement on 
Tariffs and 
Trade (Gatt) 
has upgraded 
its forecasts for 
the economic 
benefits of the Uruguay Round 
of trade liberalisation agree* 
ments, Mr Peter Sutherland. 
Gatt director general, said yes- 
terday. 

Mr Sutherland, who was In 
Madrid for the annual meet- 
ings of the International Mone- 
tary Fund and World Bank, 
said that global income in 2005 
might be more than $500bn 
(£3l6.4bn) higher than it would 
have been without the market 
opening measures agreed in 
the Uruguay Round. That com- 
pares with earlier Gatt esti- 
mates of a $235bn income gain 

He said the upgrading was 
the result or work on a new 
economic model that sought to 
capture some of the competi- 
tion enhancing effects of trade 
liberalisation and the opportu- 
nities that it would offer for 
spreading fixed costs over 
larger markets. 

Even so, the estimates of 
benefits from the Uruguay 
Round might be on the low 
side, because they did not take 
account of such lasting benefi- 
cial effects as increased invest- 
ment, accelerated economic 
growth and a healthier climate 
for research and development 
and the development of new 
products. 

Mr Sutherland said the Gatt 
secretariat estimated that, over 
time, the merchandise trade 
volume of the 25 industrialised 
countries of the Organisation 
for Economic Co-operation and 
Development would be 
between 7 per cent and 8 per 
cent above what it would have 
been without the Uruguay 
Round. Developing countries 
are expected to secure a 
greater expansion of trade with 
Gatt's most conservative esti- 
mates showing a 14 per cent 
expansion in their trade. 

The Gatt secretary general 
said he was now more optimis- 
tic than before about the out- 
look for ratification of the Uru- 
guay Round and the eventual 
creation of the World Trade 
Organisation, the successor to 



Mr Peter Sutherland, Gatt director general, revealing his new 
forecast In Madrid yesterday for Uruguay Round global Income 


Gatt, by the be ginning of next 
year. 

Altogether 27 governments 
have signed and ratified the 
WTO agreement and around 50 
governments have said they 
expect to have completed 
domestic ratification proce- 
dures by the time of the WTO 
implementation conference in 
December. He was encouraged 
about the progress of ratifica- 
tion in the US where, he said. 
Congress had clarified its pro- 
cedural intentions in a positive 
manner. 

However, Mr Kenneth 
Clarke, the UK chancellor, 
warned in his speech to the 
joint IMF-World Bank develop- 
ment committee that some of 
the beneficial effects of the 
Uruguay Round could be 
undone through “backdoor pro- 
tectionism’'. Attempts to 
impose labour standards by 
trade sanctions were not, for 
example, the solution to the 
problem of establishing human 
rights at the work place. 

Reviewing industrial country 
policies towards the third 
world, the UK chancellor said 
that it was necessary to have 
more effective action on debt, 
more effective and leaner inter- 
national organisations, a 
sharper focus on results and 


World population over BO by 2030 



World Bank 
urges m ixed 
pension policy 


By Tom Bums in Madrid 

A World Bank report 
yesterday urged governments 
to adopt pension policies 
where the burden for provid- 
ing security for an increas- 
ingly ageing global population 
(see graph above) is shared by 
the public and private sectors, 
mixing mandatory and volun- 
tary schemes. 

Warning that old-age secu- 
rity systems are in trouble 
worldwide, the report also 
called on governments to lift 
constraints on foreign invest- 
ments by national pension 
funds in order to diversify risk 
and gain higher returns. 

The report stressed the “age- 
ing problem" had spread 
quickly to developing coun- 
tries where the impact of 
declining fertility and 
increased longevity has 
allowed populations to age fas- 
ter than in traditional indus- 
trial societies. 

It took more than 100 years 
for Belgium to register a dou- 
bling, from 9 per cent to 18 per 
cent, of its over-Ms popula- 
tion. The same transition will 
take just 34 years in China, 
according to present forecasts 
and 22 In Venezuela. In 1990 
almost half a billion people, 
slightly more than 9 per cent 
of the world’s population, 
were over 60 years old and by 
2030 the number will have tri- 
pled to !.4bn. 

The report argues against 
“single pillar" pension 
schemes in which publicly 
managed fundsJSnanced out of 
payroll taxes on a pay-as- 
you-go basis, provide earnings- 
related benefits to the aged. It 


says they neither protect pen- 
sions savings nor adequately 
redistribute them. 

The high contribution rate, 
a feature common to “single 
pillar” systems, is often seen 
as a tax to be evaded and not 
as a price for services 
received. Such schemes tend to 
distort local economies and 
reduce growth, mainly in 
countries with limited tax 
enforcement powers, imperfect 
labour markets and large 
informal sectors. 

The World Bank suggests a 
“multi-pillar” system in which 
there would be a publicly man- 
aged and tax-financed “pillar” 
that would have the limited 
object of alleviating old-age 
poverty, possibly using means- 
tested programmes; a second 
mandatory “pillar", based 
either on personal savings 
accounts or occupational 
plans, that would be fully 
funded and privately man- 
aged; and a third voluntary 
"pillar" for those wishing 
additional protection. 

The advantage for the age- 
ing of the three-pronged 
approach is that it woold con- 
centrate the redistributive fea- 
tures of a public pension 
scheme on the first "pillar” , 
allocate its savings role to the 
second and allow for extra 
savings through the third. 

The “multi-pillar" system 
would improve the insurance 
feature of national pension 
schemes by diversifying their 

risk- ^ „ 

Averting the Old Age Crisis. A 
World Bank Policy Research 
Report The World Bank. Bax 
7247-8619, Philadelphia, PA 
191798619, US. 


more determined action on 
population growth. He said 
there was a need to improve 
the design and implementation 
of policies and programmes to 
provide more effective assis- 
tance on the ground. 


By John Uoyd In Moscow 

Russia has failed to achieve a 
significant part of what it hoped to get 
from the International Monetary Fund 
in Madrid - but the biggest disappoint- 
ments may still lie ahead. 

In makin g an argument for substan- 
tially increasing both IMF borrowing 
and postponing debt payments, Russia 
has run up against both the resentment 
of the third world countries - which 
have seen Russia being made a special 
case by the IMF and the World Bank 
while they languish - and the scepti- 
cism of powerful members of the Group 
of Seven. 

The G7 now insists on greater com- 
mitment to, and evidence of, radical 
reform on Russia's part before it 
approves extra expenditure. 

Russia had wanted an increase in its 
ability to borrow; a standby facility 
enlarged from $4bn (£2.5bn) to more 
than JSbn, and access to a third tranche 
of the systemic transformation facility, 
under which it has already borrowed 
S3bn in two equal parts. 

It has been rebuffed on the second of 
these - as it seems to have been on an 
as yet unpublicised plan put forward by 
Mr Alexander Sbokhin. the deputy 
prime minister for the economy, to “re- 
adjust" the ?80bn debt burden which 
will be due for discussion after the 
detailed negotiations with the IMF later 

this mnnth 

The push for extra funds already 
appears to have claimed a victim. 
According to Russian media reports, Mr 


Konstantin Kagalovsky, the Russian 
executive director of the IMF, has 
resigned (effective January 1 next year) 
- possibly to be replaced by Mr Dmitri 
Tulin, presently a vice-chairman of the 
Russian central bank. 

Mr Kagalovsky, whose tenure at the 
bank has been under attack from 
within the Russian government for 
some time, was the strongest advocate 
of an expanded lending programme. He 


cope with the expenses of the harvest 
and the provisioning of the northern 
territories. 

This laxity is coming home to roost. 
Already September’s inflation is reck- 
oned to have come out at around S per 
cent, double that of August's (the year's 
lowest). If the rouble continues to fall 
(it dropped a further 10 points yester- 
day) it will put more pressure on the 
inflation rate and the Russian central 


The IMF has been pressing the Russian 
government to attempt to reach an inflation rate 
of 1 per cent a month by the end of next year, 
while Russian ministers and officials have been 
arguing that 3 per cent is more realistic 


appears to have paid the price for its 
not coming through. However, Russia's 
biggest test is yet to come. The debate 
in Madrid is about how much could be 
on often negotiations between Russian 
and IMF officials later this month will 
determine how much will be on offer. 

Just as the IMF delegates were gath- 
ering in Madrid. Russian reform was 
fraying. The rouble plunged; and at the 
same Hme it became clear - in part 
because Mr Yegor Gaidar, the former 
prime minister, clarified it - that the 
government had for the past six months 
been much more lax in issuing credits 
than they had wished to be known. In 
July and August, for example, they had 
issued some Rbsl3,00bn of credits to 


bank would be unable to stop it without 
wasting its slender reserves (of around 
S4.5bn). 

In recent talks, the IMF has been 
pressing the Russian government to 
attempt to reach an inflation rate of I 
per cent a month by the end of next 
year or the beginning of 1996, while 
Russian ministers and officials have 
been arguing for what is in their view a 
mare realistic 3 per cent. 

Further, the IMF will certainly insist 
on a more interventionist role in the 
budget in return for a standby facility 
of S4-S5bn - specifying, for example, 
cuts in particular subsidies such as 
those to the cool industry or to agricul- 
ture. rather than acquiescing in simple 


across-the-board sequestrations which 
have left millions of workers without 
pay and cut down haphazardly on 
investment: the useful and the useless 
alike. 

For the past year. Russia has had a 
reform which if not pain-free, has cer- 
tainly been less painful than expected. 
Official unemployment has remained 
low: the real standard of living has, on 
most figures, gone up and inflation has 
steadily come down - even as the bud- 
get deficit was seen to stay within the 
IMF limi ts of under 10 per cent of GNP. 

Now, that miraculous time appears to 
be over - and the rouble exchange rate 
is the most vivid outward sign of it. 

Either real cuts are made in the 
structure of subsidies and industrial 
production is reshaped - or, say IMF 
officials, new borrowing will be at risk. 
Mr Ernesto Hernandez-Cata. deputy 
bead of the Europe II department which 
deals with the former communist states 
and who is the most experienced negoti- 
ator with the Russian government, said 
in Madrid over the weekend: “We con- 
sider a more radical approach deserves 
the maximum consideration on our 
part." 

This means that a less radical 
approach will attract minimum consid- 
eration - perhaps none. 

The message from Madrid is that the 
world cares less about Russia and is 
less well disposed towards it than many 
in its government had thought. Is it 
ready to heed that message and tighten 
the belt again? Or can it no longer do 
so? 



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FINANCIAL TIMES TUESDAY OCTOBER 4 1994 

NEWS: INTERNATIONAL 


Taiwan index 


Port row goes right to HK jugular 


hits second 


high in 

By Laura Tyson in Taipei 

The Taiwan stock exchange 
index hit a second Four-year 
high within two trading days 
yesterday, in anticipation of 
government support for share 
prices to boost the ruling par- 
ty's prospects In December’s 
elections. 

On December 3, voters will 
choose a provincial governor 
and mayors lor Taipei, the cap- 
ital. and the southern port city 
of Kaohsiung. Previously these 
were appointed posts. They 
will also elect the provincial 
assembly and councils for each 
of the two cities. 

Gauging by historical prece- 
dent. political imperatives, 
remarks by senior officials and 
monetary factors, stock market 
analysts believe the index 
could top 8,000 before the year 
ends. 

Yesterday's close was 
7,183.75 points on moderate 
turnover of T$64.l6bn 
(£1.56bn). 

The governing Kuomin tang’s 
grip on power has slipped in 
successive elections since 
democrat! sat ion began with 
the lifting of martial Law in 
1987. 

The Democratic Progressive 
party, the leading opposition 
party, now controls one-third 
of Taiwan's counties and holds 
nearly a third of seats in the 
Legislative Yuan, the country’s 
primary law-making body. 

In recent years the policies 
of the KMT have moved so 
closely into line with those of 
the opposition as to be nearly 
indistinguishable. KMT leader- 
ship has all but publicly 
declared Taiwanese indepen- 
dence from China, long the 
defining issue of the opposi- 
tion, in an attempt to win 
votes. 

The ruling party is expected 
to win polls for the provincial 
governorship, largely a figure- 
head post, and thought likely 
to retain control of the Kaohs- 


2 days 

Taiwan 

Wek^ited Index 

7500 -• - 

7.000 
6500 

6.000 
9500 
6500 
4.500 
4500 
3500 

Oct 33 1994 Oct 

Source: FT Graphite 

iung mayor's office. But it is 
widely seen as a fait accompli 
that the influential position of 
Taipei mayor will go to Mr 
Chen Shui-bien. the lawyer- 
turned- legislator of the DPP 
party. Mr Chen launched his 
political career defending dissi- 
dents arrested in a 1979 crack- 
down on opposition. 

“Winning a mayoral seat 
would give the DPP a degree of 
legitimacy it did not have 
before,” Mr Peter Kura, head of 
Asia-Pacific research for Bar- 
ing Securities (Hong Kong), 
said. “This would be the first 
time the DPP has attained an 
administrative position of real 
significance.” 

'Hie stock market rallied 
sharply leading up to and after 
island-wide county elections in 
November 1993. 

The KMT retained control of 
most counties, but the DPP 
captured 42 per cent of the pop- 
ular vote, its best showing. 

The three leading commer- 
cial banks led yesterday's 
gains. The banks are seen as 
bellwether stocks, and often 
their rise marks the beginning 
of a rally. “A lot of people were 
caught napping last year, so 
when the banks start to move 
the Gear factor sets in," a stock 
analyst at a UK securities 
house said. 

See world stock markets 



Desperately needed ninth terminal is feared dead, Louise Lucas writes 


Hong Kong port traffic 

20 feet equivalent units (m per month) 


Throughput 



1992 93 94 

Sourea: Demta Bray Aaaocte te s 


T he Hong Kong govern- 
ment is to accelerate 
development of the colo- 
ny's 10th and ilth container 
terminals, given fears that the 
desperately needed ninth ter- 
minal is effectively dead. 

Container Terminal 9 (CT9) 
is already 18 months behind 
schedule. Progress has been 
mothballed by politics, with 
China refusing to approve the 
project (which straddles the 
1997 handover, and therefore 
requires endorsement from 
Beijing) unless Jardines is 
ejected from the consortium 
developing the terminal 
China rffliiws that Jardines' 
Inclusion in the consortium 
was a pay-off for supporting 
Governor Chris Patten's 
democracy reforms: Hong 
Kong says that it operates a 
level playing field for all its 
contracts, and that to suggest 
otherwise is to damage the col- 
ony's international business 
reputation. 

The stalemate over the ter- 
minal, allied to the lack of 
practical alternatives for 
extending the colony’s port, 
will spark huge problems of 
congestion and bring a 
knock-on effect to the econ- 
omy, analysts say. 

like the airport, also run- 
ning at capacity and also the 
subject of a Sino-British dead- 


lock. the port row goes straight 
for the colony’s jugular. Hong 
Kong, the eighth biggest trad- 
ing economy, operates the big- 
gest port in the world. Some 90 
per cent of Hong Kong's trade 
passes through it 

Annual increases in tlugugh- 
put equal the total' .wmial 
throughput at the UK’s oiggest 
port. Felixstowe: about 1.5m 
containers. 

Port operations contribute 
about 20 per cent of the colo- 
ny’s GDP and employ, in the 
widest definition of port-re- 
lated activities, some 350,000 
people, or 12-15 per cent of the 
workforce. While year-on-year 
growth in throughput stands 
at about 28 per cent for the 
year so far. capacity levels 
were breached back in May. 
Government figures put the 
cost of a two-year delay on CT9 
at HK$20bn (£1.6bn; in the 
decade following 1997. This is 
at the conservative end of esti- 
mates, which range as high as 
HK$200bn. 

Current trends point to an 
even bigger role for the colo- 
ny's port. High economic 
growth in C hina Will S timula te 
both export industries and 
imports; greater industrialisa- 
tion in the mainland will mean 
more goods requiring contai- 
nerisation; and China 's re-en- 
try into the General Agree- 


ment on Tariffs and Trade or 
its successor will promote 
two-way trade. 

Forging ahead with CTio 
and CTL1 to absorb demand 
will do little to solve the prob- 
lems caused by the absence of 
progress on CT9, and will fail 
to meet the immediate con- 
cerns of shippers and terminal 
operators. 

The time lag is contrary to 
Hong Kong^s traditional just- 
in-time philosophy whereby 
new terminals were coming on 
line as soon as the existing 
ones reached capacity. 

This is the first time, says 
Mr Tony Clark, secretary of 


95 96 .97 98 

Trot now completed by this data 

the Port Development Board, 
that Hong Kong will fail to 
meet its targets. Moreover, it 
can no longer rely on mid- 
stream business to carry 
things on. 

With the Hong Kong port 
handling around 600,000 TEUs 
(20ft equivalent units) a 
month, a year-on-year growth 
next year of 15 per cent would 
mean an extra 90,000 TEUs, or 
a third of total mid-stream 
business. 

Mr De nnis Bray, a consul- 
tant and former civil servant, 
notes that the key victim will 
be C hina trade: or, more specif- 
ically, south China trade. 


much of which is Hong Kong- 
funded. 

"I think we are In for some 
really serious problems next 
summer ," he says. “Once ter- 
minal and mid-stream opera- 
tors see people queueing, they 
will jack up their prices, and 
only the expensive shipments 
will be able to afford it. not the 
cheap goods from China. 

“But before that happens, 
there will be serious conges- 
tion, with ships banging 
around the harbour at anchor, 
rather like a Third World 
port" 

The ports being developed in 
China are not yet capable of 
handling the extra capacity. 
Nor does China yet have the 
trading infrastructure, in 
terms of processing and bank- 
ing services, to allow big ship- 
ments to by-pass Hong Kong: 
and most such ships are loath 
to make two stops. 

“If we get a typhoon next 
summer, when we cannot han- 
dle any boxes at all for a cou- 
ple of days and the jams on the 
roads are so colossal, then I 
guess there wfli be some crisis 
action about providing more 
land [for gristing terminals to 
expand 1. 

“It's just a pitj r they cannot 
do this earlier, because there is 
going to be one almighty 
mess,” Mr Bray said. 


Tobacco crop profits fall in third world 


By Alison Maitland 

Tobacco farmers in developing 
countries could be better off growing 
crops such as maize, according to a 
report by Panos, the independent Lon- 
don-based research institute. 

The report challenges claims by the 
tobacco industry that the crop is profit- 
able for the third world. It says tobacco 
prices have fallen by 50 per cent in real 
terms over the last decade, assuming 
annual inflation of 4 per cent. 

Last year, prices fell by about a third 
because of over-supply. They have 
recovered this year, bat the United 
Nations Food and Agriculture Organi- 
sation says global stocks are high, at 


about 85 per cent of »nnn«l output, and 
expects prices to remain depressed. 

At the same time, farmers face 
sharply increased prices for fertilisers 
and pesticides. “Falling prices plus ris- 
ing costs suggest tobacco growing is a 
poor prospect for the South’s farmers,” 
says the report, published to coincide 
with an international conference in 
Paris next week on tobacco and health. 

Over 40 developing countries export 
tobacco, but In only two - Malawi and 
Zimbabwe - does tobacco account for 
more than U. per cent of foreign earn- 
ings, tbe report says. “The role of 
tobacco exports in the economies of 
developing countries needs to be kept 
in proportion." 


According to the International 
Tobacco Growers' Association, no sus- 
tainable alternative crops would 
achieve the same level of earnings for 
most tobacco farmers. 

The Panos report says such claims 
are increasingly being disputed and the 
search for alternatives has been given 
a boost by the dramatic fall in the 
auction price of tobacco in Zimbabwe 
and Malawi last year. 

In Zimbabwe, maize had become 
more profitable in terms of money 
invested and cost less to Insure than 
tobacco. In Bangladesh, potatoes and 
cotton gave formers bigger net profits 
than tobacco. 

The report argues that the health 


and environmental costs of tobacco 
production should also be taken into 
account The World Health Organisa- 
tion says that 7m people win die in 
developing countries from smoking- 
related diseases every year by 2025 if 
current growth in smoking continues. 

Tobacco crops cause a serious loss of 
trees, which are cut down for fuel to 
cure the tobacco, and occupy land for 
longer periods than alternatives such 
as maize. “In semi-arid areas, where 
tobacco thrives, the loss of trees can 
make land more vulnerable to desertifi- 
cation and unfit for agriculture.” 
Tobacco: The Smoke Blows South, £1.95, 
available from The Panos Institute, 9 
White Lion Street, London Nl 9PD. 


UN report ready on Iraqi arms 


Rabin predicts treaty with 
Jordan by end of this year 


By Mark Nicholson in Cairo 

Mr Rolf Ekeus. the United 
Nations envoy, arrived in 
Baghdad yesterday to assess 
the readiness of systems 
installed for the long-term 
monitoring of Iraqi weapons 
programmes - a central condi- 
tion for the eventual lifting of 
the oil embargo maintained 
against Iraq since its 1990 inva- 
sion of Kuwait 

Mr Ekeus declined to say on 
his arrival when the monitor- 
ing systems would be fully 
operational, information he is 
due to convey in a report to 
the UN Security Council on 
October 10. 

But UN officials in New York 
said they expected Mr Ekeus to 
declare that systems for moni- 
toring possible missile, chemi- 
cal. nuclear aud biological 


weapons production to be “pro- 
visionally operational" within 
a few weeks, at which point a 
“test period" of the monitoring 
could begin. 

According to diplomats at 
the UN, such a report would 
then seriously test the unanim- 
ity of the UN Security Council 
on whether to offer Iraq a defi- 
nite timetable for compliance 
with long-term monitoring of 
Its weapons progra mm es. 

France, Russia and China 
have already made it clear 
that, if Mr Ekeus’ report is pos- 
itive, they would would then 
argue that a “probation 
period" of six months should 
immediately begin to test Iraqi 
compliance with long-term 
monitoring - after which the 
Security Council should dis- 
cuss lifting the oil embargo. 
The US and Britain, however. 


have made it equally clear that 
they would strongly oppose 
setting any such a definite 
deadline. 

UN inspectors have now 
installed an array of monitor- 
ing devices and prepared 
detailed blueprints of factories 
and manufacturing operations 
which could produce weapons 
banned under the Gulf war 
ceasefire resolutions. UN offi- 
cials said devices to monitor 
missile production and testing, 
including cameras at several 
sites, were fully in place, that 
surveillance methods at poten- 
tial chemical weapons produc- 
tion sites were “just starting 
up" and that means for survey- 
ing possible biological weapons 
production were soon to be 
installed. 

Iraqi officials insist that they 
have fully met all Gulf war 


ceasefire conditions and that 
the Security Council should 
respond by offering at least 
some easing of the embargo 
once the UN monitoring pro- 
gramme begins any test period. 
Officials warned last week that 
unless Mr Ekeus could offer 
some such concessions, Iraq 
would “explore other ways of 
dealing with the Security 
Council”. 

Whatever Mr Ekeus reports, 
however, there is unanimity in 
the Security Council that no 
easing of the embargo ran take 
place until and unless Iraq for- 
mally recognises both the sov- 
ereignty of Kuwait and the 
legitimacy of UN-demarcated 
borders between Iraq and its 
southern neighbour. “Until 
they have done this, nothing 
else will happen." said a west- 
ern diplomat 


By a correspondent 
in Jerusalem 

Israel's Prime Minister Yitzhak 
Rabin yesterday predicted a 
full Israel-Jordan peace treaty 
by the end of the year, and 
urged the electorate to back 
his readiness to trade land for 
peace with Syria. 

In a speech at the opening of 
the winter session of the Israeli 
Knesset, Mr Rabin gave the 
first detailed public exposition 
of his position on a possible 
accord with Syria, offering a 
“very limited" initial with- 
drawal from the Golan 
Heights, to be followed by a 
three-year trial period of nor- 
malised relations, and then a 


more substantial pullout Sig- 
nificantly, he did not rule out a 
complete Israeli withdrawal 
from the Golan. 

Indicating that the 13.000 
Jewish residents of the Golan 
had now outlasted their useful- 
ness, the prime minister 
declared that sending Jews to 
settle the Heights after their 
capture in the 1967 Arab-Israel 
war had been “the right act at 
the right time, in the right 
place”. But now, he said, there 
were signs that in return for 
the Golan. Syria was ready for 
peace. “I want to ask you. 
Mends on the Golan, what 
should we do? Shouldn't we 
try?” 

Mr Rabin emphasised that 


in contrast with Jordan, where 
he was hopeful of a peace 
treaty by the year’s end, nego- 
tiations with Damascus were 
still in their earliest phases, 
with big gaps between the two 
sides' positions. 

The prime minister was fol- 
lowed at the rostrum by Mr 
Benjamin Netanyahu, leader of 
the main opposition Likud 
party, who accused the govern- 
ment of abandoning cherished 
Zionist values by contemplat- 
ing a “selection" process for 
would-be immigrants from the 
former Soviet Union, to weed 
out the elderly and sick. 
Incensed, Mr Rabin denied the 
claim, demanded an apology 
and stalked out of the hall. 


Berber question returns to haunt troubled Algeria 

Kidnapping of a singer has threatened to drag a nationalist element into the violence, writes Francis Ghiles 


The Berber protest continues 




ALGIERS 

*:^y*Co!lo 

TM-Ouzou Jl}®* 


Kabytia 


S4tn 


ALGERIA 




Constantine 
. Batna 




°>Oi I 





TUNISIA 


0 

MSes 

100 | 

0 

Km 

160 1 


Berber mountain 
heartlands 


DemcnsOams IfefO among the 100,000 In Tizt-Ourou on 
Sunday seeking the whose of activist singer Lounea 
Matoub who was kidnapped by a radical /stemfc group 


The language issue 

Q Ancestors of the inrSgenous peoples of 
North Africa, the Berbers were In Algeria 
centuries before the area became a Homan 
province In 106 BC, to be totawed by the Arab 
conquest of the lete 7th century, the Ottoman 
takover in the mid- 16th and French 
colonisation In the mW-19th. Algerian 
independence was won In 1962. 

□ Algeria’s official language is now Arab 
(about 75 per cent of the 26m population 
speak It), and. although French remains widely 
used, 20-25 per cent of the country’s 
population stfll consider Berber to be their ftst 
language, French the second and Arab only the 
third. 

□ The Algerian authorities deny Ihb Is a 
serious difficulty because Berber is not a 
written language," writes Peter Mansfield in his 
book The Arabs, "As the minister of 
information and culture, Mr Ahmad Taleb, 
remarked In 1972: 'It la wrong to say that 
Algeria Is made up of Arabs and Berbers. -The 
Algerian poopte a an Arab- Berber people 
whose aiture b Arab." 


T he recent kidnapping in 
Algeria of the Berber 
singer Lounes Matoub 
has again raised the issue that 
has haunted mortem Algeria - 
the Berber question, or. to be 
more precise, the Knbyle ques- 
tion. 

Matoub is a militant of the 
Berber Cultural Movement 
(MCB) which calls for Berber 
to be treated as a "national" 
language in Algeria, on a par 
with Arabic, and for it to be 
taught in all schools. 

As provocative as he is popu- 
lar. Matoub recently claimed 
he was "neither an Arab nor a 
Moslem" and argued tiiat the 
Kabylia Berber heartland, a 
mountainous region 100 miles 
cast of Algiers, should be 
granted autonomous political 
status. 

His latest record, Kenza. is 
dedicated to the daughter of 
Tahar Djaout. a Kabyle writer 
and polemicist who was mur- 
dered by supporters of radical 
Islam in June last year. 
Matoub is suspected of being 

held by a similar group. The 
singer's publicly expressed 
love of whisky' lias turned him 
into what Tahar Djaout was 
until his death, the man reli- 
gious zealots love to hate. 

On Sunday more than 100,000 
people took part in a peaceful 
demonstration in the Berber 
capital of Tizi Ouzou marked 
by calls and threats for the 
safe return of Matoub. 

The MCB plans simultaneous 
protests tomorrow and on 
Thursday in four cities, includ- 
ing Algiers and Tizi Ouzou. 

The original inhabitants of 
North Africa were Berberbut 
the process of Arabisation, the 


adoption of Arabic language 
and culture, has. over 13 centu- 
ries, left only a third of the 
Maghreb’s 60m people with 
Berber as their mother tongue. 
Between 20 and 25 per cent of 
Algeria's 26m people speak 
Berber, two-thirds of them 
coming from Kabyita. 

The Kabyles played a key 
role in Algeria's modern his- 
tory. one quite out of propor- 
tion to their numbers. 

Between the two world wars, 
emigrants from Kabylia formed 
the vast majority of Moslem 
Algerian labourers in France 
where they founded the first 
Algerian nationalist move- 


ment. L'Etoile Nord Afri caine. 

As trades unionists, and with 
the help of French Communist 
party members, they became 
acquainted with modern ideol- 
ogies and methods of resis- 
tance. The Etoile and its post- 
war successor, the Party Popu- 
late Algerien, provided the 
fount of modem Algerian poli- 
tics. The idea of independence 
for what had been for a cen- 
tury’ three French departe- 
ments came from their ranks. 

During the eight bloody 
years of tbe war of indepen- 
dence which started in 1954, 
the two Berber mountainous 
heartlands. Kabylia and the 


Aurte mountains to the south, 
witnessed some of the worst 
fighting between French troops 
and the armed supporters of 
the Front de Liberation 
National (FLN). 

The leading ideologue of the 
FLN, Abane Ramdane. a 
Kabyle, was murdered byggfeafi; 
of his peers in Morocco in lipt 
- an act which symbolised thw 
events which were to take 
place at independence in 1962 
when those FLN leaders who 
had spent most of the war 
years in Morocco and Tunisia 
usurped power from those who 
had fought in the bush. This 
“betrayal", as it is now seen by 


many, opened a wound which 
has yet to be healed. 

Despite the fact that Krixn 
Belkacem, who led the talks at 
which France agreed to Alge- 
rian independence, was a 
Kabyle, the new rulers of 
Algeria, President Ahmed Ben 
Bella and - after he was ousted 
by a military coup in 1965 - 
Colonel Houari Boumediene, 
clamped down on the freedoms 
their countrymen had paid 
such a heavy price to win. All 
expression of Berber culture 
were forbidden and fast Arabi- 
sation imposed. 

The MCB was born after 
riots in Tizi Ouzou in 1980 


forced the new president. Colo- 
nel Chadli Bendjedid, to grant 
a greater measure of freedom. 
Singers such as Matoub, who 
had adapted old Kabyle songs 
to a more modern musical 
form, had already become pop- 
ular. Music became a key 
vehicle for the expression of a 
culture and language whose 
alphabet is the old Phoe nician 
script but has not be com- 
monly written for centuries. 

Like most of their country- 
men. the Kabyles are not of 
one mind. The lines that frac- 
ture Algerian society run 
through Kabylia as they do 
through every social group and 
region. After riots in 1988 
broke the power of the FLN, 
two parties boasting a distinct 
“Kabyle” identity emerged. 
The Rassemblement pour la 
Culture et la Democracie 
fRCD) traced its roots to the 
MCB while the Front des 
Forces Socialistes (FFS) rose 
from the clandestine? forced 
on it since its foundation in 
1963. 

In the first round of the elec- 
tions in December 1991. the 
FFS did much better than the 
RCD. The two leaders reacted 
very differently to the annul- 
ment of the eledaon in January 
1992 and tbe de facto military 
coup that accompanied it. 
Despite being deeply opposed 
to the ideology of the Islamic 
Salvation Front (FIS), which 
looked set to win the election, 
the FFS leader Mr Hocine Ait 
Ahmed opposed the suspension 
and argued that democracy 
could only be won on the 
ground. 

The RCD leader, Mr Said 
Sadi, whose links with certain 


military commanders was an 
open secret, backed the coup. 
On learning of the 475 per cent 
share of the vote the FIS had 
picked up in the first round, 
against the RCD's meagre 25 
per cent, he confessed to not 
understanding the country he 
lived in. For a while he was a 
firm advocate of “eradicating” 

fundamentalism. 

The Christian schools set up 
in Kabylia by the French in the 
late 19th century and, later on, 
emigration to France, gave 
Kabyle Berbers a training in 
the ways of the modern world 
and gave rise to a more literate 
people than any other social 
group in Algeria. 

Many Kabyle Berbers still 
support the FIS, one of whose 
most renowned military com- 
manders, Mohamedi Said, is 
Kabyle. The man who was 
responsible for setting the FIS 
on a solid financial footing, 
until he "deserted” the move- 
ment for the ranks of the 
nomenklatura in June 1991, 
Ahmed Merani. is Kabyle. One 
of the no-go areas which the 
army has lost control of in 
recent months is the moun- 
tains between the ports of Jijel 
and Collo, part of the so-called 
“Cornkhe Kabyle”. 

Be they “Arab" or “Berber", 
most Algerians feel insulted by 
Kabyle Berbers claiming they 
are “not Moslem". They are 
also fearful that such state- 
ments are conducive to con- 
frontation rather than dia- 
logue, a form of politics 
desperately lacking in Algeria. 
Attempts by the FIS and the 
military to “cleanse" the coun- 
try of each other have already 
cost 28,000 lives. 1 


Nigeria 

increases 

prices 

sharply 

Food, fuel and transport prices 
rose sharply In Nigeria over 
the weekend, stoking inflation 
already T unning at more than 
100 per cent a year, Reuter 
reports from Lagos. 

The increases toojfftgpst peo- 
ple by surprise afT’areaking 
with past practice, the military 
government gave no warning 
or the customary explanations 
that it had to slash subsidies 
on fuel 

Past increases have triggered 
protests and strikes in Nigeria, 
which is a leading oil producer 
and has domestic prices that 
are among the world's lowest 

By yesterday there was still 
no official announcement that 
prices bad been raised. A 
spokeswoman for state-owned 
Nigerian National Petroleum 
Corporation said: “We have no 
official statement on the mat- 
ter." She declined to comment 
further, saying that no senior 
officials were available. 

The price of a litre of petrol 
rocketed more than four times 
to 15 naira (43p) from 325 naira 
on Sunday. The price of diesel 
rose to 14 naira from 3.0 naira 
and kerosene, the poor man's 
fuel went up to 12 naira from 
2.75. 

Analysts said the govern- 
ment might be keeping silent 
because it was testing people's 
reaction, having taken over the 
leadership of tbe unions that 
were most likely to have 
fought the rise. General Sani 
Abacha, the military ruler, 
sacked leaders of the oil work- 
ers unions and the labour fed- 
eration in August to eud two 
months of strikes and protests 
demanding the restoration of 
democracy. 

Gen Abacha also appears to 
have broken the political oppo- 
sition. many of whose leaders 
are in detention. 

“The last time fuel prices 
were increased the government 
was brought down,” said a 
western diplomat “It is by no 
means certain that tbe same 
will happen now.” 

"Today, the trade unions are 
under the jackboots and can't 
react, at least not immedi- 
ately,” said a senior executive 
of an independent oil market- 
ing company. 

Fares in different parts ol 
the country have shot up by as 
much as 200 per cent as trans- 
port operators pass the 
increased fuel charges on to 
commuters. 

“I charged passengers 700 
naira from Gboko [central 
Nigeria] to Lagos yesterday. 
Today. I am asking for 2,000," 
Mr Bala Alii, an intercity taxi 
driver, said. 

Food costs have also risen, 
pushing up an inflation rate 
already running well above 100 
per cent each year. 

“How are people to survive 
under these circumstances?" 
asked a housewife at Ketu mar- 
ket near Lagos after paying 50 
naira for a tuber of yam which 
on Friday cost 30 naira. Market 
traders said prices had been 
raised to cover increased trans- 
port costs. 

Nigeria, with a per capita 
income of less than £210. is one 
of the poorest nations in the 
world despite its big crude oil 
production. 

Tbe country has been in tur- 
moil since a previous military 
government annulled presiden- 
tial elections last year believed 
to have been won by Mr Mosh- 
ood Abiola, a business tycoon. 
Mr Abiola is In detention 
awaiting trail for proclaiming 
himself president in defiance of 
the military. 


Rwandan 
camps ‘calm 
but tense’ 

Rwandan refugee camps in 
north-east Tanzania were 
“calm but tense" yesterday and 
the United Nations refugee 
agency called for a swift end to 
lawlessness in one camp in 
Zaire which had kept aid work- 
ers out for a fourth day, Renter 
reports from Kigali. 

Three days’ violence rocked 
the Ngara camps last week: 
International aid workers said 
they were worried for their 
lives and those of refugees 

they were trying to help. 

The camps in Tanzania and 
Zaire are increasingly con- 
trolled by militiamen mid 
troops of the former Hutu-dom- 
inated government defeated in 
July by the mainly-Tutsi 
Rwanda Patriotic Front 

Some 800,000 Rwandan relit 
gees are thought to be in tbe 
Coma area, with half a rniliip 0 
more in north-west Tanzania* 
in addition to 2m people dis- 
placed inside Rwanda by three , 
months of civil war and massa- 
eras. . 

One aid official said the 
Ngara camps were becoming , 
unmana geable; some aid agen- 
cies had reported an increasing 
number of Rwandans entering 
the camps with guns. 


( 



FINANCIAL TIMES TUESDAY OCTOBER 4 1994 


NEWS: WORLD TRADE 


Protection sought for local industry 

Russia plans more 
tax on western films 


By John Thornhill fo Moscow 

Russia is threatening to 
impose additional duties on 
imported western films and 
videos to help protect the coun- 
try’s stricken Elm industry and 
deter video piracy. The move is 
likely to cause consternation 

among western film producers, 
although they are hopeful the 
decision may be reconsidered, 

Mr • Yuri Vasyuchkov, a 
senior official at the state cin- 
ema committee, yesterday said 
a new tax, equivalent to 350 
minimum monthly salaries 
($2,700), would be Imposed on 
imported films this month. The 
proceeds of the uew tax would 
be redistributed to Russian 
film studios. 

“Film distributors will now 
have to pay fees to screen for- 
eign films in Russia. To some 
extent this will provide help to 
our cash-strapped film stu- 
dios,” he said. 

However, some award-win- 
ning films, children’s features, 
non-commercial documentaries 
and films produced in associa- 
tion with Russian companies 
would be exempt from the new 
tax, Mr Vasyuchkov said. 

The proposal has already 


aroused the ire of western film 
producers and distributors, 
who claim the tax would dou- 
ble the cost of distribution. “It 
is an absolutely ridiculous situ- 
ation and we hope that they 
will soon see sense,” said one 
film studio representative yes- 
terday. Others suggested the 
move would result in greater 
piracy of films. 

Cinema audiences 
are only 10 per cent 
of the levels they 
were a decade ago 

The once-proud Russian ffira 
industry, which was accorded 
great importance in the Soviet 
era as one of the chief instru- 
ments of propaganda, is exper- 
iencing a drastic crisis of confi- 
dence. Cinema audiences are 
estimated to have plummeted 
to only 10 per cent of the levels 
they were a decade ago. 

Most of the film studios at 
Mosfilm, the Soviet equivalent 
of Hollywood, now stand idle 
or are being used by indepen- 
dent producers to make adver- 
tisements or pop music videos. 


WORLD TRADE NEWS DIGEST 


Nine groups seek 
KL airport job 

Malaysia is considering tenders from nine consortia for one of 
the key contracts at the new Kuala Lumpur international 
airport being built on a greenfield site south of Kuala Lumpur. 
The M$2bn ($780m) contract for the main terminal and bag- 
gage handling system is the largest single works package at 
the airport Companies from South Korea. Japan, Germany. 
France, the US and Saudi Arabia are among those in the 
various consortia. 

Malaysian officials say no British companies are involved. 
At one stage an AngloJapanese consortium which included 
Balfour Beatty, Trafalgar House and GEC had been managing 
the airport project and seemed likely to win a substantial 
amount of the construction work. But the consortium was 
disbanded after Malaysia, angered by critical reports about its 
leaders in the British press, imposed a ban this year on giving 
government contracts to British companies. The ban was lifted 
last month. The new airport, with a total price tag of M$9bn- 
M$l2bn, is at present south-east Asia's biggest infrastructure 
projecL iucran Cooke, Kuala Lumpur 

Airbus foresees big demand 

Airbus Industrie, the European aircraft-making consortium, 
yesterday forecast that demand from airlines would exceed 
13,000 aircraft by the year 2011 and that it would win about 40 
per cent of the orders. The forecast', in the company's monthly 
newsletter, said demand would be strongest from North Amer- 
ican and Asian airlines and just over half of the orders would 
come from the renewal of existing fleets. 

"Of the 8,500- airliners in service at the end of 1991, 83 per 
cent should be replaced by the year 2011,” the company said. 
Combined with traffic growth, it airlines would need 13,400 
new aircraft in the 20-year period from 1992. The assumptions 
are based on average ann ual airline traffic growth of 5.4 per 
cent, with the strongest annual increase, of about 7.4 per cent, 
coming in the Asia-Pacific region. 

The consortium, which groups Aerospatiale of France, Deut- 
sche Aerospace of Germany, British Aerospace and Casa of 
S p ain , said an increasing proportion of orders would be for 
large wide-bodied aircraft. “Airlines will want aircraft which 
can handle more than 500 passengers, to cut costs and boost 
efficiency.” said the company- John Ridding, Paris 

Japanese plea on textiles 

Japanese textile associations have asked the Ministry of Inter- 
national Trade and Industry to curb a flood of cheap textile 
imports battering the domestic industry. The Japan Spinners’ 
Association and Japan Cotton and Staple Fibre Weavers’ Asso- 
ciation asked Miti to cut imports under the Multi-Fibre 
Arrangement (MFA), an international agreement which lets 
nations impose restrictions if surging imports cause confusion 
in the market Japan is working out detailed guidelines for the 
application of the MFA. Both associations asked for a curb on 
imports of poplin and broad textiles from China and Indonesia, 
used to ™akg sheets and shirts, while the spinners also asked 
for restraint in 20 -count cotton yam imports from China. 
Indonesia and South Korea. The yam is used to make poplin 
and broad cloth. „ . _ . 

Last week, China’s commercial counsellor in Tokyo was 
quoted as saying that China might retaliate if Japan imposed 
unilateral restrictions on textile imports. Reuter, Tokyo 

Citroen price cuts in Japan 

CitrOen’s Japanese import unit, Seibu Automobile Sales, will 
make price cuts of up to 18 per cent on certain models at the 
higher end of the market to try to increase its market share m 
Japan. Prices for the luxury XM model will be cut by YLrin to 
Y4.99m ($50,800) while the Xantia model will be marketed at 
between Y2.99m and Y339m. AFX, Tokyo 

Contracts 

■ Alcatel Submarine Systems, the French-based underwater 
cable and communications company, yesterday said it had 
won a $202m contract to supply a suhnmnne 

tion system which will link 

and Malaysia. The company, a subsidiary of Cable 

itself part of the Alcatel-Alsthom telecoms, engineering and 
transport group - said the order was part of the Asia Pacific 
Cable Network, which groups Asian telecoms operators. These 

include KDD of Japan, and telecoms 

Kong Malaysia. Thailand, Singapore, Taiwan, Indonesia and 

the Philippines. John Ridding, Parts . .. .. 

■ Cable & Wireless PLC has siped a amtejrt to a^stm toe 
manaeement of the Lebanese telecommunications sector. C&W 

Sandal details, but said the management second- 
ment for an initial period of three years would be ftrnded by 

If atio-n S-P- " 

« Snmb Lid it would ship the phones, which use 

Delhiand Madras. Reuter. New Delhi 


Only four films are currently 
in production compared with 
more than 50 a year in Mos- 
film’s giory days. 

The growth of other forms of 
entertainment, such as home 
videos, has also eroded the cin- 
ema’s appeal, as has the 
squeeze on household incomes 
because of the upheavals in the 
Russian economy. 

As in eastern Europe, west- 
ern companies operating in 
Russia have trouble defending 
intellectual copyrights. Piracy 
of film, music, computer and 
book rights is widespread. 

In one recent example. Miss 
Barbara Cartland, the British 
author of prim romantic nov- 
els, was incensed to discover 
that Russian editions of her 
books contained erotic draw- 
ings. 

Piracy is rife In the film 
industry. Street kiosks sell 
pirated copies of western films 
and regional and cable televi- 
sion companies frequently 
show copied western films . 
Industry estimates suggest 
about 64m blank video cas- 
settes were officially imported 
into Russia last year, compared 
with only 7,500 pre-recorded 
cassettes. 


China expects higher crude oil imports 


By Tony Walker in Befflng 

China expects to be importing 100m 
tonnes of crude oil annually by early 
next century, to sustain its continued 
rapid economic expansion. 

Mr Li Boxi, a senior official of the 
State Development Research Centre, 
forecast an explosion in demand for 
crude imports if China failed to bring 
on stream big new fields. “The situation 
can hardly change for the better if no 
new big oil fields are tapped,” he was 
quoted as saying by the official China 
Daily newspaper. 

Mr Li expects China's crude imports 
to reach 50m tonnes by the end of the 
century and 100m tonnes by the year 


2010. China's planned annual average 
economic growth rate is 8 per cent to 
the year 2000. 

China, which averaged 13 per cent 
economic growth for the past two years, 
became a net importer of crude last 
year, but Chinese officials are cagey 
about the volume. 

Mr Wang Tao, president of the China 
National Petroleum Corporation 
(CNPC), said the "export volume of 
crude oil was larger than imports" last 
year. He did not give details. But China 
has been preparing tor a closer oil trad- 
ing relationship with Gulf states. Mr Li 
Lanqing, a vice premier, visited the 
Gulf last year to discuss the possibility 
Of long-term arran gements. 


China imported 15.65m tonnes of 
crude in 1993 and 12.8m tonnes of 
refined products. Output reached 
143.7m tonnes from both onshore and 
offshore fields but China is struggling 
to maintain these production levels. 

Mr Wang predicted that China's out- 
put would rise this year, but the growth 
would not be sufficient to meet rising 
demand. 

Most of China’s oilfields are mature 
and require substantial investment to 
maintain production levels. 

China is continuing to open onshore 
and offshore fields to foreign explorers, 
but results have been disappointing. 
Hopes are pinned on the Tarim basin 
region in the country's far west, but 


exploration and development is at an 
early stage. 

Oil officials say China should cast its 
net wider in the search for oil. 

Last month China announced plans 
to invest YnlOObn in its outdated petro- 
chemical sector by 2000, with much of 
the funds coming from abroad, includ- 
ing equity participation. It is negotia- 
ting investment deals with several big 
oil producers and refiners, including 
Aramco, Saudi Arabia’s state oil com- 
pany, to establish joint venture refiner- 
ies. China's need for additional refining 
capacity is underscored by the fact that 
with 20 per cent of the world's popula- 
tion. it has just 3.7 per cent of world 
capacity for crude oil processing. 


EU to renew Andean Pact trade benefits 


By Raymond Colitt in Quito 

The European Union has 
promised to renew economic 
assistance a nd trade benefits to 
the Andean Pact trade group 
and endorsed the economic 
reform and drug fighting 
efforts of its member countries. 

EU representatives of the 
Andean-European Commission, 
which met in Quito last week, 
said the preferential tariff sys- 
tem offered to the four other 
members of the pact - Colom- 
bia. Ecuador, Bolivia and Peru 
- was likely to be renewed and 
expanded to include Vene- 
zuela. 

The special tariff regime, 


which exempts most exports to 
Europe from duties, was first 
granted to the four countries 
four years ago to help these 
countries in their fight against 
drug production and traffick- 
ing. Venezuela is being 
included because it is part of 
the Andean Pact and faces sim- 
ilar drug problems, according 
to Mr Juan Pratt, the head of 
the EU delegation. The final 
decision by the European 
Council is expected before the 
end of the year. 

Despite open access to the 
European market, Andean Pact 
exports to the EU have not 
increased or diversified over 
the past four years. A trade 


surplus of Ecul.3bn ($i.6bn) in 
1990 turned into a deficit for 
the pact in 1993. 

However, as trade with 
Europe has declined, trade 
within the pact has grown sub- 
stantially. Mr Mario Reyes 
Chavez, head of the Andean 
Pact Delegation, says: "Given 
our limited export potential, it 
is obvious that the Andean 
Pact members first turned 
towards each other for trade. 
But it is time for us to seri- 
ously look towards other trade 
blocks.” 

The full re-integration of 
Peru and a final agreement 
over the common external tar- 
riff still obstructs the path 


towards a common customs 
union, initially scheduled to go 
into effect earlier this year. 
Trade analysts believe it will 
be difficult for Peru and 
Bolivia to conform to the four- 
tiered tariff structure agreed 
by the otlier members. 

Yet both Andean and Euro- 
pean representatives acknowl- 
edged that the key to boosting 
trade between the two blocs 
goes beyond offering tariff 
reductions. Says Mr Pratt, “An 
integral part of EU efforts in 
stimulating Andean exports is 
providing technical and finan- 
cial assistance.” Several “Euro 
Centres” throughout the 
region are to promote exports 


by assisting small and medi- 
um-scale entrepreneurs, pro- 
viding information on ventures 
or exploring investment and 
trade opportunities in Europe. 

Despite the European 
union's pledge to renew trade 
benefits and technical assis- 
tance. Ecuador emerged from 
the meeting with none of its 
trade worries resolved. EU 
restrictions on Latin American 
bananas, which affect Ecuador 
as the world's largest exporter, 
were not discussed. As a fur- 
ther blow to its diversification 
efforts, two weeks ago the US 
imposed a 50 per cent tariff on 
the country’s rose growing and 
exporting industry. 



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nig dam lor the monitoring oi targets, ana me mr uiu uuuuung ui waste imumbii*. i 


FINANCIAL TIMES TUESDAY OCTOBER 4 1994 


NEWS: UK 


US changes policy over Sinn Fein 


By George Graham 
in Washington and 
David Owen in London 

Pressure on London to dear 
the way for preliminary talks 
with Sinn Fein mounted yes- 
terday as the US launched the 
start of ‘'a normal relation- 
ship" with the IRA's political 
wing. 

Mr A1 Gore, the US vice-pres- 
ident, informed Mr Gerry 
Adams, the Sinn Fein presi- 
dent. in a telephone call that 
the US was ending its official 


policy of not meeting with 
Sinn Fein officials. 

A senior administration offi- 
cial said: ‘“The way to read this 
is this is the beginning of a 
relationship with Sinn F6in, a 
party with which we've had no 
official contacts for 25 years." 

Mr Gore's telephone call 
appeared carefully calibrated 
to raise the contact with Mr 
A dams to the highest level pos- 
sible without offending the 
British government by a meet- 
ing at the White House. 

Although Mr Adams has 


been pressing for the last week 
for a more conspicuous meet- 
ing with President Bill Clinton 
or Mr Gore, administration 
officials said he had not made 
any formal request for such a 
meeting. 

Downing Street's response to 
the telephone call was low-key, 
with officials emphasising that 
“the Americans have got to 
decide for themselves" how 
they received Mr Adams. 

The government is analysing 
with great care remarks made 
by the Sinn Fein president dur- 


ing his second visit to the US 
this year. 

London has promised to 
begin dialogue on how to 
admit Sinn Fein to political 
talks on Northern Ireland's 
future within three months of 
a permanent end to IRA vio- 
lence. It Is still not convinced 
that the month-old ceasefire is 
for good. Senior officials said 
yesterday that every day 
which passed “without vio- 
lence. without killing" gave 
grounds for optimism. 

A first meeting will take 


place today at the State 
Department between Mr 
Adams and Mr John Kom- 
blum, deputy assistant secre- 
tary of state for European 
affairs. Mr Komblum will be 
joined by Mr Leon Fuerth. 
national security adviser to Mr 
Gore, and Ms Nancy Soder- 
berg, staff director of the White 
House National Security Coun- 
cil 

In a letter to Mr Adams con- 
firming today's meeting, Mr 
Anthony Lake, Mr Clinton's 
principal national security 


adviser, said the Sinn F4in 
leader’s “role in bringing about 
the IRA ceasefire was a coura- 
geous step forward for peace." 

A senior administration offi- 
cial said the letter had been 
“carefully written'’ so as “not 
to get into wordgames" over 
Mr Adams's refusal to describe 
the ceasefire as “permanent" 

Yesterday's move came as 
Mr Adams prepared for a high- 
profile television debate with 
Mr Ken Maginnis, the Ulster 
Unionist MP for Fermanagh 
and South Tyrone. 


MO growth 
accelerates 
abruptly 



Tony Blair (left) and Gordon Brown in Blackpool Ashley Ash wood 


Blair to counter infighting 


By Philip Coggan, 

Economics Correspondent 

One of the UK government’s 
key indicators of inflation 
surged in September, raising 
fears yesterday that interest 
rates may have to be increased 
again before the end of 1994. 

The annual rate of growth of 
MO. the narrow measure of the 
money supply, jumped to a sea- 
sonally adjusted 7.1 per cent in 
September from 6.3 per cent in 
August, according to figures 
released by the Bank of 
England yesterday. 

MO is seen as a rough guide 
to activity in the high street, 
since greater retail spending 
creates an extra demand for 
cash. The surge In MO may 
indicate that consumer spend- 
ing is still buoyant, although 
the government is keen for the 
recovery to focus on exports 
and Investment. Mr Eddie 
George, the governor of the 
Bank of England, yesterday 
said that he was looking for 
more moderate growth in con- 
sumer spending “to make room 
for expansion In other sectors 
of the economy”. 

Referring to last month's 
Increase of half a percentage 
point in interest rates. Mr 
George added that "it will be 
some time before we can be 
sure that the move we made 
was necessary or sufficient". 

Annual MO growth has con- 
sistently stayed outside the 
government’s 04 per cent mon- 
itoring range and Mr George 
expressed concern about the 


By Nomja Cohen 

The l^ndon Stock Exchange is 
likely to lose its lucrative role 
in equities settlement when 
the new Crest computerised 
settlement system is in place. 

Yesterday the Rank of 
England announced that Swift, 
the international bank pay- 
ments messaging system, and 
a consortium comprising Syn- 
tegra. a BT subsidiary, and 
Thomson Financial Services 
were the two finalists in the 
competition to become the net- 
work provider for Crest. 

The successful bidder will 
carry electronic settlement and 
other messages to ;inrt from 
Crest ami its users. The stuck 
exchange has withdrawn its 
own bid. 

Following the collapse of the 
exchange's Taurus project for 
paperless share settlement, the 
Bank of England took responsi- 
bility for developing a more 
modc-st. less expensive system 
to speed share settlement - 
Crest. The stock exchange. 


pace of its growth in the min- 
utes of his June monetary 
meeting with Mr Kenneth 
Clarke, the chancellor. Since 
then, MO growth had shown 
signs of slowing down, until 
the publication of yesterday's 
figure. 

Analysts pointed out, how- 
ever, that the sudden jump in 
MO last month may have been 
caused by a statistical blip. 
The change in the annual rate 
of growth of notes and coins, 
the main component of MO, 
was relatively modest showing 
a rise from 6.8 per cent in 
August to 7 per cent in Septem- 
ber. 

Mr Simon Briscoe, UK econo- 
mist at S.G. Warburg Securi- 
ties, pointed out that the six 
month annualised growth rate 
of notes-and-coins element 
actually fell - from 7.3 to 7.1 
per cent - between August and 
September. 

What caused the monetary 
aggregate to jump so sharply 
was the other component of 
MO: banks’ operational depos- 
its. This volatile statistic rose 
by 38 per cent between August 
and September, having fallen 
48 per cent between July and 
August. 

On a seasonally adjusted 
basis. MO rose by l per cent 
between August and Septem- 
ber, but unadjusted it fell by 
0.3 per cent. This may indicate 
a problem with the seasonal 
adjustment process, said Mr 
Nick Parsons, chief economist 
in London with Canadian 
Imperial Bank of Commerce. 


which currently has sole 
responsibility for share settle- 
ment. has been seeking a role 
for itself since then but earlier 
this year the bank rejected its 
request to purchase a 30 per 
cent stake in Crest. 

If the stock exchange had 
been successful in its bid to 
become network provider, it 
could have secured a source of 
income to replace its current 
earnings from securities settle- 
ment In the year ended March 
31, these were £55.Sm. roughly 
a quarter of its revenues. 

A key factor in its decision 
to withdraw its bid is thought 
to bo the bank’s insistance that 
it could not rely on its Sequal 
system which confirms individ- 
ual share transactions. . 

Sequal does not have the 
capacity to give and accept 
messages from all interna- 
tional participants in the Lon- 
don market and would have 
required significant invest- 
ment in order to adapt to the 
needs of Crest. 


By PhHIp Stephens and 
Kevin Brown 

Mr Tony Blair will respond 
today to another bout of 
Labour infighting by warning 
its conference in Blackpool. 
Lancashire, that the party 
must press ahead with its mod- 
ernisation programme. 

His debut as party leader at 
the annual conference - pre- 
viewed by aides as “bold and 
uncompromising” - will follow 
a renewed attempt by the lead- 
ers of the main trade unions to 
set the agenda for Labour's 
economic strategy. 

Mr Blair will tell delegates 
that “new ideas, new thinking 
and new Labour" are essential 
for the renewal of Britain. 
Urging party unity to win the 
□ext general election, he will 
add: ’T want you with me in 
our task of renewal. I want you 
with me head and heart". 

During a sometimes irritable 
start to the week-long confer- 
ence, Mr John Edmonds and 
Mr Bill Morris, leaders respec- 
tively of the GMB and the 
TCWU general workers unions, 
led a series of calls for the 
party to fix its proposed mini- 
mum wage at half male 
median earnings. 


By Robert Corzine 

Optimism about the UK's most 
promising frontier oil and gas 
area west of Shetland was 
boosted yesterday when Amer- 
ada Hess, the US oil company, 
reported that it had found oil 
at an exploration well close to 
British Petroleum's Schiehal- 
llon discovery. 

The latest well. 3 kilometres 
south of BP's discovery, con- 
firms that the Schiehallion 
reservoir extends into neigh- 
bouring exploration blocks. 
BP has estimated Schiehal- 
lion's recoverable oil reserves 
at 250m-500m barrels. 

Amerada Hess, whose part- 


The Labour leadership is 
preparing to back a radical 
shake-up of the benefit system 
for the unemployed and low- 
paid alongside the full integra- 
tion of the tax and benefits 
system for the retired. 

Mr Gordon Brown, shadow 
chancellor, and Mr Donald 
Dewar, social security spokes- 
man. Indicated a Labour gov- 
ernment would preserve the 
universal principle for child 


Mr Blair, however, insisted 
that while the principle of a 
national minimum rate for all 
workers was sacrosanct, the 
details of its implementation 
would be fixed by the party's 
Economic Commission. He 
made it clear the system would 
have to be introduced flexibly, 
with exemptions for young 
people, if it was not to damage 
employment 

in a thinly veiled attack on 
the economic policies spelt out 
at the conference by Mr Gor- 
don Brown, the opposition 
chancellor, Mr Edmonds also 
demanded that Labour fix a 
firm target for full employ- 
ment 

The decision by the union 
leaders to flex their political 


ners Include Aran Energy. 
OMV and Murphy Petroleum, 
said It will bold talks with BP 
and its partner. Shell, cm ways 
to “appraise the technical and 
commercial potential of the 
field as quickly as possible". 

Amerada Hess also 
announced that it had bought 
Esso’s 15 per cent share in the 
nearby Clair field - a huge, 
3bn barrel reservoir whose 
complex geology and remote 
location has so far defied 
development 

Tbe latest find at Schiehal- 
lion Is expected to encourage 
other oil companies with acre- 
age in the area to accelerate 
exploration programmes. 


benefit and the state pension. 

But the leadership is keep- 
ing open the option - raised in 
its social justice commission’s 
report - of extending the taxa- 
tion of universal benefits. 

It is understood that many 
of the commission’s recom- 
mendations focus on ways to 
remove poverty traps which 
discourage the unemployed 
from taking part-time or low- 
paid jobs. 


muscle over pay and employ- 
ment coincided with signs of 
renewed disquiet on the left of 
the party over Mr Blair's insis- 
tence that the party's tax plans 
will not hit middle-income 
earners. 

Mr John Prescott, the deputy 
leader, is thought to be con- 
cerned that the present stance 
could leave the party trapped 
by a pre-election cut in income 
tax rates by the government 
In those circumstances Labour 
might be forced to abandon 
either its pledge not to raise 
taxes on middle-income earn- 
ers or to drop key spending 
pledges. 

Mr Brown used his confer- 
ence appearance to launch a 
fierce attack on the “tax privi- 


Last week 10 companies said 
they were looking at the possi- 
bility of an integrated develop- 
ment scheme which might 
improve the economic viability 
of a number of west of Shet- 
land projects. 

The deep water and bad 
weather conditions in the area 
and the absence of established 
infrastructure, such as pipe- 
lines, makes development of 
the oil and gas resources rela- 
tively risky. The economics of 
some projects could also be 
undermined by the relatively 
low quality of the oil fonnd so 
far, and the prospect that it 
would sell at a discount to the 
benchmark Brent Blend. 


leges” which he said subsidised 
“boardroom privilege" . Reaf- 
firming that a Labour govern- 
ment would clamp down on 
executive share options and 
tighten up residency rules for 
the rich, he said Labour would 
“rewrite the tax rules for the 
undeserving rich” 

He forecast: “The real divide 
at the next election will be 
between unfair taxation under 
the Tories and, under Labour, 
fair taxation based on tbe pro- 
gressive principle." 

But the party leadership suf- 
fered another setback when 
the annual poll for its national 
executive committee saw the 
election of two leftwing MPs - 
Ms Diane Abbott and Mr Den- 
nis Skinner. Mr Blair retains a 
commanding majority on the 
policymaking body but two of 
his strongest supporters - Ms 
Marjorie Mowlam and Mr 
Chris Smith - failed to win a 
place. 

In what may be the most 
important speech of his politi- 
cal life, Mr Blair will tell the 
party that the ditching of tradi- 
tional policies does not mark a 
rejection of its core values. He 
will set the party's central 
ambition as the spread of 
opportunity and social justice. 


Wood Mackenzie, the Edin- 
burgh-based consultants, said 
long-term development of the 
west of Shetland oilfields may 
justify the construction of 
pipelines. But it has predicted 
a sharp increase in the use of 
shuttle tankers to take oil 
from the floating production 
vessels likely to be used in the 
first phases of production to 
shore terminals, a develop- 
ment which could raise envi- 
ronmental concerns. 

• Chevron yesterday 
announced that Ninian has 
become the third North Sea 
oilfield to produce more than 
Ibn barrels. The others are 
Forties and Brent 


Final bidders for 
Crest selected 


Amerada Hess finds oil at the frontier 


Food price 
wars gather 

momentum 


By Ned Buckley 

Two supermarket chains 
joined the latest skirmish in 
the food price wars yesterday 
as a report from Verdict, the 
research group, said retailers 
faced a disappointing Christ- 
mas and years of slow growth. 

Safeway, the superstore 
chain owned by Argyll, the 
UK’s third- Largest food retail- 
ing group, launched a £7m 
advertising campaign called 
Lig htening the Load to high- 
light services such as bag-pack- 
ing and carry-out services, 
wide aisles, baby-changing 
facilities and its refund and 
replace guarantee scheme. 

The campaign is designed to 
support Safeway's new Price 
Watch initiative - a guarantee 
to customers that they can buy 
products at prices competitive 
with those offered by its main 
rivals such as Sains bury and 
Tesco. Independent pricing 
research suggests that custom- 
ers see Safeways as expensive. 

Shares in Argyll fell 5p to 
270p, and Asda shares closed 
down 3Y«p at 62Vlp. Shares in 
Sainsbury, however, rose 2p to 
402p on news of its £205m 
investment in the US super- 
market chain Giant Food. 

Last month Safeways intro- 
duced a range of 100 basic own- 
label goods at very low prices, 
called Safeway Savers - simi- 
lar to the Value range 
launched last year by Tesco, 
the UK's second-largest food 
retailer. 

Also yesterday, Asda, the 
fourth-largest grocer; retailer, 
announced a No Nonsense 


Britain in brief 



MPs bring 
forward gas 
investigation 

The Commons trade and 
Industry committee is to bring 
forward an investigation into 
the government’s plans to 
deregulate the gas market 
amid MPs’ concerns over the 
role of the regulator. 

Ms Clare Spottlswoode, 
Ofgas director-general, is lob- 
bying ministers to meet the 
deadline for deregulation, due 
to be phased in from 1996, by 
including a new gas bill in tbe 
forthcoming parliamentary 
session. 

The all-party Commons com- 
mittee is to launch its investi- 
gation into the gas market 
immediately after the party 
conferences come to a close at 
the end of next week. It plans 
to publish a report by the end 
of the year. 


Judge to rule on 
Gooda Names 

A High Court judge will today 
deliver judgment in the case 
brought by more than 3,000 
Lloyd's Names against the 
Gooda Walker insurance syndi- 
cates. It is widely expected that 
the judge will rule In favour of 
the Names, who are suing 
Gooda Walker, a members' 
agency and managing agency 
in the insurance market, for 
negligence. They are claiming 
£629m In the largest civil 
action ever heard before an 
English court 


price freeze on 7,000 grocery 
and non-food items until at 
least January. 

Safeway’s and Asda's moves 
follow the nationwide launch 
last week of a New Deal pric- 
ing initiative from Tesco. 

Tested initially in north-west 
England, the campaign 
involves price cuts on 100 own- 
label and branded goods, sup- 
ported by a £lxn advertising 
campaign. 

Fierce price competition 
between supermarkets shows 
little sign of abating. It began 
almost 18 months ago with the 
Price Check campaign 
launched by Gateway - 
renamed Somerfield - in 
response to the spread of dis- 
count retailers and the increas- 
ing saturation of the grocery 
market. Shoprite, the discount 
retailer which operates mainly 
in Scotland, yesterday issued 
its second profits warning in 
four months. 

In its annual five-year retail- 
ing forecast. Retailing 1998, 
Verdict predicts that price 
competition will remain 
"intense" between food 
retailers for the foreseeable 
foture. 

It also warns that retail trad- 
ing will “get worse before it 
gets better” and that 
annual retail sales growth will 
remain below the almost 6 per 
cent recorded in 1993. 

Verdict on Retailing 1998. 
Verdict, 112 High Holbom, Lon- 
don WCiV 6JS. £950 


Sainsbury buys stake In Giant, 
Page 19 

Shoprite warning, Page 28 


Investors ‘can price’ 
nuclear risks 

Investors would be able to 
pat a price on nuclear risks if 
the government decided to pri- 
vatise the UK nuclear power 
industry, according to the US 
financial advisers to Nuclear 
Electric, the state-owned util- 
ity. 

Morgan Stanley, tbe Wall 
Street investment firm says in 
a report that a privatised 
Nuclear Electric would he 
compared to the highly rated 
low-cost US nuclear utilities, 
thanks to the strong 
Improvements in performance 
the company has recently 
achieved. 

Morgan Stanley are advising 
Nuclear Electric during the 
current government review of 
nuclear power. 

• Prof Stephen Littlechild, 
electricity industry regulator, 
is expected later this week to 
deliver a blow to Nuclear Elec- 
tric, the state power generator, 
by asking the government to 
consider splitting it up. 


Hwang bros in talks 
on London site 

Hong Kong property investors 
George and Victor Hwang are 
in discussions which could 
lead to their involvement In 
controversial plans to turn 
County Hall in London, once 
home to the Greater London 
Council, Into a hotel and lei- 
sure complex. 

The Hwang brothers, who 
bought Battersea Power Sta- 
tion, the London landmark, 
last year, are talking to Mr 
Takashi Shirayama, the Japa- 
nese investor whose company’s 
£60m offer for the main river- 
side building was accepted by 
the government two years ago. 

A spokesman for Shirayama 
said yesterday that the com- 
pany had no intention of sell- 
ing its interest 


A true collectors item. 
The only coin watch 
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CORUM 

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The Coin watch by Corum. handcrafted from a genuine gold coin. Water resistant. 
I ‘or a brochure, write to : Corum. 2301 La Chaux-dc-Fonds, Switzerland. 


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MUR OUR ADVICE 
MOST PEOPLE GD ON 
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The Emerging 
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provides specialist 
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advice that 
can 
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business on the 
road to 
success call 
Patrick Wilson on 
071 37S SQQO. 


NatWest Markets 

Corpetsit Bcnfcns 


Nut Hca Marten Corporate Finance Limited A Member of the SFA 

IIUBEHSiaS! 


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FOR THOSE 

SEEKING MORE THAN ONE DIMENSION 

TO TIME... 


“A watch is just a watch, so long as it tells the time.” 
It’s the kind of statement that m a k e s us all the 
more determined to safeguard one of life's irre- 
placeable pleasures — the multi-dimensional rinr«» 
of complicated watches. 

For more than 150 years we have been makin g time- 
pieces for men and women who see beyond ordi- 
nary rime. Einstein owned a watch made by us fig. 1 , 
so did Tchaikovsky, V&fcgner, Marie Curie and 
Charlotte Bronte. Each of them - whether scientist, 
musician or writer - had the rare gift: of being able 
to exploit time as a creative element in their work. 

Today we are still recognized as the only watch- 
makers whose timepieces adequately convey a sense 
of outstanding personal achievement. We can rise to 
your greatest occasion with a total of 33 horological 
complications - far beyond the capabilities of any 
other watchmaker. Our Calibre 89, the most compli- 
cated portable timepiece ever built fig. 2, expresses 
the full scope of rime: astronomical rime - from a 
star chart geared to the apparent movement of the 
heavens, to the times of sunrise and sunset; seasonal 
rime, sidereal time and the equation of rime fig. 3; 
long rime in the 400-year cycle of the Gregorian 
calendar; short rime with a split-seconds chrono- 
graph; the sound of time in a Grand Strike, chiming 
the hours and quarters, in passing, on a Westminster 
carillon; spiritual time in the date of Easter; and time 
that escapes gravity in the tourbillon escapement. 

If you find the Calibre 89 a little inconvenient for 

« 1 1 1 v « . 1 


the more essential complications in a number of 
wrisrwarches. You can be assured that each represents 
the finest watchmaking in the world. 

You may find your most treasured possession in the 
handsome tonneau-shaped, perpetual-calendar watch 
fig. 4. The unique combination of a fly-back dates- 
hand showing the progression of the month, and a 
minute-repeater, is a refinement that took us about 
four years to develop. 

You will appreciate that there are no half measures 
in complicated watc hmaking . We are building preci- 
sion timekeeping instruments that you will expect to 
perform faithfully for a century or more. In our 
self-winding, perpetual-calendar wrisrwarches fig. 5, 
our own design and superlative craftsmanship ensure 
that the calendar mechanism absorbs an infinitesimal 
amount of power as it smoothly changes the day, 
date and month, records the quarters of the day and 
the leap-year cycle. The moon-phase in our perpetual 
calendars is extremely precise, taking 122 years and 
45 days to accumulate the hardly discernible variation 
of a single day. 

Our perperual-calendar and chronograph combination 
fig. 6 finds particular favour among collectors who 

enjoy the finer points 
of mechanical watch- 
making. Through 
the sapphire-crystal 
caseback, you can 
admire the exqui- 

_■ I I c_- L 


.W- '■■T 


of our movements and bring into play the precisely 
coordinated actions of the column-wheel, levers and 
gears fig. 7. 

Impeccable workmanship is taken for granted by 
those who wear our watches. But if you choose one 
of the halfdozen or so slim, selfwinding, perpetual- 
calendar repeaters fig. 8 that we complete each year, 
you can expea much more. We have encapsulated 
in our most sophisticated wristwatch the ancient and 
authentic sound of time. Celebrate a moment - 
any moment - by making the mechanism ring the 
hours, quarters and minutes with the pure, clear 
resonance that only we have been able to achieve 
in a minute-repeater. 

Those who consider a watch is just a watch, so 
long as it tells the rime, will be gratified to learn that 
in this elegant wristwatch fig. 9, rime is told both 
by a minute-repeater and by an observatory-rated 
chronometer. In it moves the most ingenious com- 
pensation device known to horological engineering. 
The rotating tourbillon cage literally absolves the 
watch’s regulator from the laws of gravity - remov- 
ing one of the last obstacles to the final frontier 
of mechanical precision. 

But if you seek that extra dimension to rime, to 
mark your achievement, to inspire your creativity or 
simply to enjoy sublime watchmaking, you will 
almost certainly wear one of our timepieces one day. 
You will then come to recognize the touch of the 
world's finest watchmakers fig. 10, and know that 

_i i i:_i _i_ i n 



uni -BiiiHpvimi ,115 pm m ami nut'll ,im jm aid dub 'sioSjbi to Sumojiuoiu am joj aiap 8u( 

















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BUSINESS OPPORTUNITIES 

READERS ARE RECOMMENDED TO SEEK APPROPRIATE PROFESSIONAL ADVICE BEFORE ENTERING INTO COMMITMENTS 


Franchise 
Opportunity 

Recover die missing 
! millions in Europe’s VAT. 
market - and keep up to 
1 0% for vourself 


Million? of dollar? are wasted every year because Value 
Added Tax is not nxdaiined on European business trips. 

To complete our international reclamation network, we are 
offering Master Licences to financial services professionals 
with strong marketing skills. 

The European VA.T. Redaim Bureau is an established 
consortium of professional European accountancy firms. 
Find out how you could guarantee a profitable return firm 
being port of this exciting new opportunity, by contacting 
Richard Stevens on the numbers below. 

Tel :+44 71 251 4434 the eniopeaa J ^*'JP 

Fax : +44 71 60 S 3555 VAX redaim bureau 

inukumil firea! w.vqikni A O- Ounoij Auvuukl 10 <Txmot>A«K Sxurc. 

te .44(0171 -1U A|U hx. -U(0UI UW II" 

Mrfflhrn H hr I'K Xn <V..yp nl Ok Imi-nuboul o< pkaunnK Aoc^n wu Rrynttml 

i»mn Inniucuf'.larMtri 

\<rawnti u Lnr.Und ji»I Vfjiri. 

BiBig F ully Furnished Offices 
SB il United Kingdom 

■ "A v* 


Selling vour Business? 

“ v 


Wc have the skills and experience to achieve the beat price for your 
business and structure the deal to achieve maximum tax efficiency. 
If you arc considering a sate and yoar turnover exceeds £lm , 
we would like to talk to you. 

Our charges are based largely an results, so you have little to lose. 
For a confidential discussion without commitment please contact 
Lance Blackstone or Gary Morley at: 


BlflckstOOe IHiickslnne l rank? Corporate finance 

FnnlvC 26-34 01(1 Street. London LClV 9HL 
I I cIIIIYj Tll: 0"l 250 3300 Fax: 071 25n 1402 

Aa(fr+i\e'Si f/V .ft .'art try < .1 t -».t t 


INVESTMENT BANK "ZERICH" (MOSCOW) 

INVITES FOR JOINT TRANSACTIONS IN RUSSIA, INCL: 

CAPITAL RAISING 
BUY - AND SELL - PRIVATIZATION 
ASSISTANCE WITH MERGERS 
PROPERTY PURCHASE BY ORDER 
DEBT COLLECTION 

PHONE: (7-095) 287 8291, 287-8385 
FAX: 287-854)6 


BIRMINGHAM CITY FOOTBALL CLUB 

Invitation to join the Board of Directors 
Arc you a wealthy individual who would like to join the Board of 
Directors of one of the biggest Football Clubs m the country? 
Would you like to benefit from all the fantastic privileges of being 
a Football Club Director? If the answer is yes, this is a wonderful 
opportunity for you. To become a Board Director at BCFC 
contact in private, Karren Brady, Managing Director, 

St. Andrews Road, Birmingham B9 4NH. 


SvcrcUriil service? 
Photocopier, lax, W.P. 
PeiMtrul telephone answering 


trjLI^aifUK torn Mini 
Io*ba finnkigtusi 


Ityfct&mw 

ftltmSlf 


• Conference facilities 
■ Flexible lease terms 

* Immediately available 

Pnn^xxl ffcov 
tarawtet [.reds 
Bframctun xTC 


Tel: 071 872 5500 


EXPANDING INTO SOUTH AFRICA??? 

GIVE YOURSELF THE COMPETITIVE EDGE' 

Accurate business decisions demand accurate & 
timely /quick information. 

HH CONSULTING can provide you with the information 
you need on any company, group or industry in South 
Africa. 

Plume Da ir Hrilzliausen in South Africa on 
27-21-913-5708 at any time or Fax 27- 21-511 -0543 for more 
information. 


MontreuxdVevey 

Your Place of Business. 

ftaMsoci ttaw* 
pmtalvil* 

► TaawW «**»*» 

p- PooMPtiw«p«flWd 

■dcoogtsted . I _ | 

XfWctwCB ./ gggP» h 
p. UoevoWitwtort / 1 5221 M 
BtlW«a / H 

► Secany»rS«aj 1 tf 

and (rates* • j (j 

For a cop, rf cur / p' 

Ondocuy hoirni L If 

Tsmic Cunoa". »rae w cafl : 

MV±d\_ Goher. Ecncormc Cocnwfbr 
PO. Box 149C>. OMOMoauan I 
f^inr 1 1; JA<v- 13 H.RkUJ lAfcl SO 65 


SUGAR CANE GRADE "A" 

' SUGAR CANE GRADE *E* 
MILKPOWDER 267c 

pneei ftrUc *iV baron S3 in * SZ3 i MT 
pores pds *E" bnm S3* & S21S 3 MT 
BnRpuwler S IT35 » mb 

For information 
TcL 003140548639 
Fax. 0031 40 543914 

MEDO 

INTERNATIONAL TRADE 
Hondsbcig 18 
5506 EE VELDHOVEN 
NETHERLANDS 


PROPERTY 

COMPANIES 

REQUIRED 

Wc are seeking to acquire the 
shares of a Private Property 
Investment Company or 
Companies. 

Value £3m up to £20m 

Agents Retained. Good Fees Paid 
PORTFOLIOS ALSO CONSIDERED 
Contact Graham J Martimbk; FRIC5 

Telephone: 061 436 7070 


&MUFACTURERS! 

IMPORTERS 

- Distributors!- 

ssa 

Ssw 

TURNOVER FOSSIWi 


IfA W BMW UUSMCH DEPT] 
IMM. HOME MAIL ORDER 
DEAL HOME HOUSE 

• Hag Mom Carting* 
PMrtxvautfi PEI SIX 


ICctltu UKXmu, Design Directory 
' Jw««cr Publishing UK HI «tR]3 


MANAGING DIRECTOR 

Recently Retired 

Mid 5Cfc with over 25 y tan experienc e of 
sjaxsrfuSy improving tbe pof u nn m oc of a 
wide variety of manufacturing businesses 
with iflicrnatiooal markets, seeks 
Otgnuradxs who make nwningfiil use 
of Us tflkm A experience on an awgrrooTt 
and/or non executive director basis. All 
p rop o sa ls consakted in confnlenoe. Locatkm 
nopuUem. 

Contact Kirkwood Advertising 
TcL 0534 390803 Fax (1584 89 1 264 

IRISH MAGAZINES] 
Dublin based 
Magazine Pubteber seeks a 
merger or acquisition from 
UK/Europe to enable 
development in both Domestic 
and International markets: 

Enquiries bon Principals only to: 
Box B3466, Financial Times, 

One Son Ibwurk Bridge, 

Loodsu SEI PUG 


Carre* Investment Oppmnullies 

Omo MJ eagm u x i Sufr*we £2ai 

H&kxffbr Vonlmn • SSOWOO 

VMcw Crffe Jl Sadte Msgdna USUIOO 

Uvqnxx Pr»»ras 000000 

GRP Dure .Vhnubcwno opoOOOflOO 

Snlw HaWg <n Spin BL5.0UJ 

LaJaFrfM-w OUOO 

Pmjea Mjruc«rws S ftcfcagr I WOO 
Co*d hrnpatrat; m PXm* Win IS0J000 

Ml detoUa sad jdl w aa la mwilUy report 
vwt CJpM Rom • w»a (ma ISMb. p». 
is. Mwkhwwnnr ai a i iiXq* 
( VCR ] ■*— MaHrh»i*l ■ lnil l di 
V« n^. / tft pop] j 7o m l.cwnifi 


RETIRED CHAIRMAN/ 
CHIEF EXECUTIVE 

of listed PLC. mature oneigetlc 
stable, seeks cJullengmg part tone 
position of responsibility. 
Equity stake considered. 

Write Box F97HS. Finaadal Tunes. One 
Soultiwufc OtUgp, London SEIVHL 

INTERNATIONAL 
SECinMTIES TRADING 

Experienced Propriewry Trading ream 
seek association with or equity interest 
in, London Stock Exch a nge Member. 
Please repty in confidence to; 

Box B3463, Fioandaf Times. 

One SoutbwBrtc Bridge, Lretdon SEt 9HL. 


COMMERCIAL MORTGAGE 
REQUIRED 

£540000 iff FOR 18 MONTHS. 70S 
OF VALUATION. SECURED WITH 1ST 
CHARGE OVER NEW. P/B BLOCK OF 
FLATS. PR/NO PALS ONLY PLEASE 

wriM Bax N&SMM. Flnnml TIokb. Ok 
S oatfewarlr Bridge. Loudon. SEI 9HL 



Appear In the financial Tones 
on Tuesdays. Fridays and 
Saturdays. 

For further information 
or to advertise in this section 
please contact 

Karl Loynton on +44 71 873 4780 
or Melanie Miles +44 71 8733308 


HWAHOALTIMB j 


LONG ESTABLISHED auccMtiUl Nadond 
Press mal order aggn l aallun seeks over- 
produeilarVktspkA atockaldearanee me* of 
branded products allied to OIY and 
Gwriening. Polsnta lor large wham sales, 
□alalia In confidence to Sox B3467, 
Financial Times, One Southwartc Bridge. 
London SEI SHL 

BRITISH/CZECH TRADING COMPANY 
beead in Prague wi act as BpMW Mw 
or purcheskig agents tor Wostsrn firms or 
individuals. Wa have good contacts 
ttvoughoix Central and Eadam Europe and 
In many parts of ore tenner Soviet Utdon. 
Fax in on M2 2 324 000. 

EPOXY, POLYURETHANE. RESIN 
Systems for flooring, surface roa tl nq s. 
adharivas, ptasdc metals in the mahtanance 
and dvf engheeffig BehJa, lor sale wider 
«n ML Standard systems or to yow om 
qiedSesikn. BCCLM, Wedwtby. W Ywta, 
LS23 7BZ. Tel: 0937 843413 

YOUNG DECORATIVE LIGHTING CO. 
seels up to OM vemwe capital lor ewang 
axpandon project. Principals only please 
Write to Bear £0360. Ftnandel Times. One 
SouOwrarir Bridge. London SEI 9W. 

COMMERCIAL FINANCE Venture C**N 
evairoie from £2504)00 upwards. Sanstte 
Ratos. Sanstete Fees. Broker enquiries 
wstaJite Angta American Ventures Ltd. 
ret (D934) 201385, Fax (0BS*t 201377 

AQENCY/REPRESENTATION SOUGHT. 
Enaewenaur w*i 21 ynKapatanoshMag. 
InxVExp Wssle and rod seeks sxelusive 
egoncy. 1500 aej I t shoMnxxnbOcB aval 
Fruc 07t 976 59Z7 or writs do 48a Cbwttn 
81, London SWtvaP. UK. 

CONTINGENCY/EXPANSION CAPITAL 
rerMrad. lor Innovadve City Caere protect, 
(Glasgow}. Minimum Investment StOOk, 
Attractive Retumfeecured. Tel: 042 898 
1822 04Hl) 

DO YOU WISH TO EXPAND your 
product manutaouring or servtoe ro kttand. 
WWi company Mgr ests tf in davetoptng 
new business. For more details 
Fax: 081 531 8124. 

REPUTABLE MANUFACTURER required to 
produce ana market a sett contact lens 
remover (parent pendngt. Principals only. 
Far No. 071 7339488 

PROPERTY BARGAINS TnaMH res. 
up to 75* off v.p. valuations. AD areas. 
0532 370808. 

C100K sought to develop glider prototype. 
Largo potential market Hampshire. John 
Edgloy. PnonefFAX 0264-773133. 


AUCTIONS 

NEXT AUCTIONS 

of life assu r a nc e policies for 
investment wifi be held 
on 6 October bi York 
and 28 October in Londoo- 
Tcicphone: 

H. E. Foster & Cron fir Id 
071 -60S 1941 for catalogue 

flggulakaUr, Personal la ramcm Aadnriir 

BUSINESSES 

WAN TED 

/Food Distribution/^ 
Wholesaling 
Company' Required 

A substantial privately owned 
Company involved in the 
distribution, Storage and 
wholesaling of frozen food seeks 
to acquire similar or compatible 
companies in the U.K. 

Au '•Piles treated wtfft eoafidendaBtj 
to B<uB3458. Financial Times, 

. One Senukwarlt Bridge, 

V London SEI 9TTL J 


BUSINESSES WANTED 


This annovneermnt appears as a manor of record only 

LIVINGSTONE FISHER PLC 

under the same independent ownership and 
management team, is changing its name to: 


LIVINGSTONE GUARANTEE 


THE ACQUISITION ft DISPOSAL SPECIALISTS 

For information about our services on unquoted 
acquisitions, disposals and management buy-outs, 
please contact Barrie Pearson, Executive Chairman on 
071 388 4242, at Acre House, 11-15 William Road. 
London NW1 3ER. 

A Member ol FlMBRA 


BUSINESS WANTED 

AUTOMOTIVE COMPONENTS 

Our client, belonging to an international group, wishes 
to acquire oompanies for cash which: 

• are manufacturers and/or distributors 

• may have owner managers looking to retire 

• are located in England & Wales 

• have turnover up to £10 million 

• are not necessarily profitable 

Vendors and their advisers should telephone either 
Samantha Penn or Marcus Moir on 071 388 4242 in 
absolute confidence. Your identity will not be revealed 
to our efient without your permission. 

Livingstone Guarantee pte 
Acre House, 11-15 William Road, London NW1 3ER 


U VI N G S T 0 N E GUARANTEE! 


THE ACQUIS/7I0W B DISPOSAL SPECIALISTS 
A Member o! FlMBRA 


BUSINESS WANTED 

BUILDING PRODUCTS 
MATERIALS & SYSTEMS 

Materials and/or products used during construction 
or eventual occupation of a building. 

Our client, a listed UK group, seeks to acquire for cash 
companies or groups which supply the above and: 

• are preferably manufacturers 

• have an export capability 

• have a management team looking to continue 

• are based in England. Scotland or Wales 

• have a turnover from £4 million to £40 million and 
are profitable 

Vendors and their advisers should telephone either 
Patrick Groarke or Jeremy Fumiss on 071 388 4242 in 
absolute confidence. Your identity will not be revealed 
to our client without your permission. 

Livingstons Guarantee pic 
Acre House. 11-15 William Road, London NW1 3ER 


UVfiN’G STONE GUARANTEE! 


THE ACQUISITION A DISPOSAL SPECIALISTS 
A Member ol FlMBRA 


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financial times Tuesday October 4 1994 


II 


PEOPLE 


Greene King brews new roles for 
chairman and chief executive 


Greene King, the East Anglian 
brewer, has split the roles of 
chairman and chief executive. 
Simon Redman, who has held 
both posts since 1990, has 
become interim nonexecutive 
chairman until a successor is 
appointed early 1995. He will 
then leave the company. 

Tim Bridge, right, managing 
director since 1990 and 
descended from the King fam- 
ily, has become chief execu- 
tive. ‘The board believes the 
preferred structure is a non-ex- 
ecutive chairman and chief 
executive," Bridge said. 

The jobs have been split 
before. Most recently, Redman 
was chief executive and 
Bridge's father John was chair- 
man until 1990. “There is no 
strategic change for the 
group," Bridge added. 

Redman will have more than 
two years left of his three-year 
contract when he leaves next 
year. He earned £118.000 in sal- 
ary and pension last year and 
his departure terms will be set 
later. 

Under Redman’s stewardship 


Greene King has grown 
steadily but has also suffered a 
couple of setbacks. Most nota- 
bly, its hostile takeover bid for 
Morland. the Thames Valley 



brewer, failed in 1992. Greene 
King sold its 28.8 per cent 
stake in Morland last month 
for £28.7m but incurred several 
million pounds in costs for the 


abortive bid. 

Bridge said derisions such as 
the Morland bid had been 
made by the whole board and 
were not a factor in yesterday’s 
management chang es. 

The company is looking for a 
non-executive chairman with 
“a known profile in the City 
and financial press." hut it has 
"an open mind" whether the 
successful candidate comes 
from manufacturing or retail- 
ing. 

Bridge, 45, joined Greene 
King in 1970 gfrd has held a 
variety of posts. No other 
Bridges are currently in the 
company, although members of 
various families connected to 
the founders hold some 15 per 
cent of the equity. 

The Redmans have been 
linked to the group since 1961 
when Greene King bought 
Wells and Winch, the Biggles- 
wade brewer. Simon's cousin 
Tim relinquished executive 
duties earlier this year but will 
remain a Greene King non-ex- 
ecutive director for three 
years. 


Leutwiler 

joins 

Warburg 

Fritz Leutwiler, 70, a former 
chairman of the Bank for Inter- 
national Settlements and the 
Swiss National Bank, has been 
appointed an adviser to S G 
Warburg, Britain’s biggest 
merchant banking group. 

Leutwiler, who is a vice 
chair man of Nestle and chair- 
man of Leutwiler & Partners, 
is one of two new advisers to 
Warburg. Professor Helmut 
Sihler, 64, a former chief execu- 
tive of Henkel and ex-president 
of the Federation of the Ger- 
man Chemical Industry, has 
also been appointed a member 
of Warburg's growing list of 
advisers. 

■ Sr Alist air Grant, chairman 
of the Argyll group since 1988. 
is appointed a non-executive 
director of SCOTTISH & NEW- 
CASTLE. 

■ Sir Clive Whitmore, former 
permanent under-secretary of 
state at the Home Office, and 
Fiona Harrison, chief execu- 
tive of Coats ViyeDa’s fashion 
retail division, join the board 
of BOOTS as non-executive 
directors. 


Marsh bounces back and 
finds home with Toyota 


It has not taken long for motor 
trade veteran Alan Marsh to 
bounce back out of his early 
retirement from Inchcape in 
May. 

Marsh. 57, with 35 years 
experience of the car retailing 
scene, is becoming the first 
non-Japanese board member of 
Toyota Motor Europe Market- 
ing and Engineering (TMME), 
the Brussels-based entity 
which controls most of the Jap- 
anese car giant's European 
activities, except actual car 
making. 

As vice-chairman of the 
TMME board. Marsh will be in 


direct charge of Toyota’s Euro- 
pean marketing activities. 

That makes ft almost busi- 
ness as usual for Marsh. He is 
a past chairman of Toyota (GB) 
and had been r unning Inch* 
rape’s Toyota vehicle distribu- 
tion businesses world-wide 
until the Inchcape board 
streamlining. 

The appointment is an indi- 
cation of Japan’s largest car 
maker's co mmitment to place 
the running of major regional 
operations in the hands of non- 
Japanese managers. He is 
unlikely to be the last Euro- 
pean board appointment 


Michael Walsh* 44, who has 
helped build Ogilvy & Mather 
UK into Britain’s second big- 
gest advertising agency, has 
been made chief executive of 
0&M*s European operations. 

Harry Reid, 49, who has 
been the London-based chair- 
man of the group's European 
operations since 1990, is tak- 
ing up a new role as chief 
operating officer Qf O&M 
Worl dwide, a subsidiary of 
WFP. He will continue to be 
based in London. 


Walsh, who has been with 
O&M for 11 years, will work 
with Refiner Thedens, 45, vice 
chairman of Europe since 
1992, to jointly run all Ogil- 
vy’s European operations, 
encompassing the region’s 
fourth largest agency network 
and its largest direct market- 
ing network. Thedens, heavily 
involved in building np the 
latter part of Ogilvy’s busi- 
ness, adds responsibility for 
all key financial and personnel 
issues in his new role. 


Coopers 
partner to 
EDS 

After 23 years with Coppers & 
Lybrand, John Pendlebury has 
made the geographical and 
cnltural leap to Electronic 
Data Systems, where he will 
be leading the US company’s 
400-strong European consult- 
ing practice. 

Now 50. he has been a man- 
aging partner at Coopers for 
the past few years. He will be 
based in Brussels with an 
office in the company’s UK 
headquarters at Stockley Park, 
west London. 

Pendlebury expects to spend 
much of his time on the road 
working with clients and seek- 
ing out talented individuals 
a nd companies to help fulfill 
ambitions plans for the consul- 
tancy division. 

EDS says Pendlebury will 
"direct an aggressive cam- 
paign dramatically expanding 
the company’s management 
consulting presence and m ar - 
bet share throughout Europe". 

EDS also mentions "aggres- 
sive hiring," although an 
unaggressive Pendlebury said 
yesterday he hoped other con- 
sultancies would not take 
fright at such language. 

An engineer with a first 
degree and doctorate from 
Cambridge University, Pendle- 
bnry’s first job was with 
English Electric, now absorbed 
into GEC. 

He worked for Kodak - 
learning accountancy at night 
school - before joining Coo- 
pers in the early 1970s. He 
worked for Coopers in the US, 
middle east and Russia. 

EDS, the computing services 
arm of General Motors of the 
US, appealed to Pendlebury 
because of its global presence 
and strong technology base. 

He will take the lead in 
shaping the consultancy 
around the themes of business 
process re-engineering, change 
management and strategic 

planning 

■ David Thorpe has been 
appointed manag ing director of 
EDS’ public sector division, 
with overall responsibility for 
developing the company’s busi- 
ness with central government 
and government agencies. 

He joins EDS from the board 
of Bull Information Systems 
UK, where he was managing 
director of Bull's largest oper- 
ating unit, the systems inter- 
graticm and services division. 


FINANCIAL TIMES 


FT EXPORTER 



FT EXPORTER: Autumn Issue - October 5th 

The latest issue of the FT EXPORTER, Europe's leading export review will appear with the 
Financial Times throughout the UK and the Continent, on October 5th. Packed with advice, 
information and case studies the FT Exporter is a "must read" for all current or potential exporters. 

To receive further information, please contact 


Derek van Tienen 

Tel: +44 (0) 71 873 4882 


or 


Sally Beynon 

Fax: +44 (0)71 873 4610 


BUSINESSES FOR SALE 


Marr Engineering Limited 

(In Administrative Receivership) 


The Joint Administrative Receivers offer for sale 
the business and assets of the above company on 
a going concern basis. 

The company manufactures a range of industrial 
batch and. process washing machines and low 
temperature ovens, providing installation, repair 
and maintenance services. 

■ Specialised and standard products. 

■ Modem computer aided design department 

■ Current turnover approx £2.8m per annum. 

■ Freehold premises in central Leeds. 

■ Leasehold premises in West Midlands. 

■ 37 employees based in Leeds and 8 in the 
Midlands. 

For further information please contact 
J J Cleave or A O'Keefe 
Arthur Andersen, Bank House, 

9 Charlotte Street, Manchester Ml 4EU. 

Tel: 061 200 0277. Fax: 061 200 0343. 


Arthur 

Andersen 

Arthur Andersen & Go SC 


Very Profitable Service In 




with a National network of branches throughout the UK and operations 
in five EC countries. Founderfownar wishes to retire within two yean 
and seeks a purchaser. Long record of ErrelTmt pre-tax profits now in 
excess of £420,000 pa. Unquoted pic. Only 16 employees. Freehold Head 
Office NW London, no borrowings. Net assets around £500,000 the 
majority of which are liquid. Unlimited further development UK, EC, 
Eastern Europe, and USA with active new owners could increase profits 
to exceed £14)00.000 pa within three yean £3.600,000 tout compria. 

Fan for brief into 061 421 13*4. PRINCIPALS ONLT . NO AGENCIES. 


CLEANING COMPANY FOR SALE 

£120.000 TURNOVER PA.. WITH HIGH RETAINED 
PROFIT. AUDITED ACCOUNTS AVAILABLE. 

Write: Bax No. B3462, Financial Times, One Southwark 
Bridge, London. SE1 9HL 


OFFICE EQUIPMENT 


REVOLUTIONARY SECURITY PRODUCTS BUSINESS 
Own exclusive product/sub-manufactuie/trade distribution. 
Our revolutionary wireless alarm system and solar siren is 
showing exceptional sales potential home and abroad. 
This is a disposal of a non-core company activity. 
Contact: Mr John Holland/Mr Fred Mackrfll on 0200 452350 


DISABLED EQUIPMENT 
MANUFACTURER 

Small Company turnover £400.000 
Established Branded Products 
Sales both UK and Overseas 
Wide Diverse customer base 
Frta ri n g staff retained 
Write to: Box B3465. Financial Times, 
j Ok Southwark Bridge, London SE1 9HL 


EMPLOYMENT AGENCY 

Well-established and thriving 1 London based. 
Specialist fields. Existing management Sales, this year, £3M+. 
Profits, Pre-tax £200,0004. Quick side wanted. Owners retiring. 
Price, minimum, £650,000 cash (exclusive). No-eam-outs. No 
deferred payments. PrindpaJs with good references only. No Agents. 
Write to Box B34 1 7, Fbamool Times, One Soutlnwt Bridge, London SEJ 9HL 

CONERRIGAL AN FHALCARRAIGH TEORANTA 

(In Voluntary Liquidation) 

Workwear Apparel Manufacturing Facility For Sale 

OtTers invited for Woikwcsr Apparel Manufacturing FaciHty which is for sale as a 
single production unit The plant is located in Falcnragh. Co Donegal, Ireland and 
has access locally to a highly skilled workforce. For timber particulars apply «r. 

Mr Martin Coggins, A-GA. Liquidator, East Sc. Company 
62-65 John Street. Sligo, Ireland 
Tel: 010 353 714 2736 


BUSINESS OPPORTUNITY LOG 
Um bum oonykxe and op » d«e dsaii ok 


•Coapaaksb Treat* 
•Asdai ^ 

P re da t ed by experienced pretarinmb with 
seriema busmen people to mud 
HaaAedi of Cos. and cwsass in ead lame. 
Tei: 071-353 9003 Roc 071-355 500* 


ARCHITECTURAL 

METALWORK 

WeQ established company in 
Yorkshire, dealing with aD major 
contractors, turnover around 
£1.000.000. full order book . 
experienced staff. 
Genuine investment with 
expansion capability. 

Write In Box B34I9, Financial 
Times, One Southwark Bridge, 
London SEI 9HL 


OFFICE FURNITURE 


We have - direct from the manufacturer - new high quality 
executive and system ranges - conference and receptions. 
Large choice of veneers, melamine and/or laminate finishes 


with discount of up to 40% from R.R.P. 


London Showroom tor viewing: 

Ariel House, 76 Charlotte Street, London W1 
Tel: 0374 741439 
Full camcad and planning services. 


LINEABURO LTD Tel: 0992 50331 3 


BUSINESSES WANTED 


BUSINESSES WANTED 


Arthur Andcrecn «• mrtbeateed by the tartihiui ct Oiarftmi Accouatann fai 
England and Wale* to carry on investment bostness. 


Our clients are successful periodical publishers and 
have substantial funds available to acquire 
publishing companies or Individual titles. 
Of particular interest are Business Publications 
and Controlled Circulation titles either profitable or 
non-profitable. 

Interested parties should reply * confidence to: Ct^Taytor 

2 Bloomsbury Street 
London WC1B3ST 


Multi function Leisure 
Complex University Cm 
Sov ia- W e sre Etigmra 

• Freehold • Detached Island 1 Site 

“ Proven stable turnover 
• Fully Sited 

■ Extended Honrs - Fully Licensed 

• far excess 20% return on purchase 

price of £3 millioo- 

Writa for fail details toBoxB3439, 
Financial Times, Oat Southwert 
Bridge. London SEI 9BL 


FOR SALE 
North East based Mail Order dotting 
company with established customer 
base. Profitable turnover exceeding 
700K and suitable for e xpan si o n. Owner 
emigrating. 

For further d et a il s please caniaa 
BaxB3*J7, Financial Tima. 

One SoaAwari Bridge. London, SEI 9HL 




r FOR SALE 

A rare opportunity to acquire a 
uniquely beautiful holiday park, 
00 much sought after Lleyn 
Peninsular. North Wale?- Has 
exclusive corporate clientele, and 
is operating profitably. Highly 
desirable business opportunity for 
professional/ executive at»d family 
who apprcdalc a l* v ' n E- 

Principals only. Writ* la ■** R32OT. 

„ ClhMltl 



BUSINESS FOR SALE 
Manufacturing & Servicing 
of High Capita] Value 
Printing Machines. 

Midlands Based. 
Turnover circa £3m. 

Well established, experienced 
mana gement ream. Budding 
coukl be included in the sale. 
Non-core part of a larger group. 
Write fix 

Box B3459. Ffaundoi Timm. 

One SouUnrat Bridge. London SEI 9HL 


forsai3T\ 

computer supplies 

STATIONERS 

Established 18 Years. 

Central London. 

Long sanding, quality 
customer base. 

T/O £1.4®. 20ft up on previous 
year. Good level of profitability. 
Strong cash positive balance sheet. 




Wrfee lo Box 8)430. Roodd Tara, Oac 
Southwark Bridge. Undofl SEI 9HL 


RESINOUS FLOOR 
& WALL COATING 
MANUFACTURER 

TURNOVER £lm 
Well Established 
Products & Customers. 

Enquiries; 

Box BWtt, Fhmnrial Thrua, 
One SaathmHr Bridge. 
Loedon SEI 9HL 


International UK based 
specialist electrical 
component manufacturer 
is looking to acquire a 
profitable £1 -£5m turnover 
manufacturing company. 
Areas of interest electro/ 
mechanical components, small 
electronic assemblies and 
transducers. 

Principals only required (o: 

Box B3351. Financial Tun, Ore 
Soattwork Bridge. Landoa SEI 9HL 


Food Importer 
and/or Processor 

Turnover between £2m and 
£20m, wanted for acquisition 
by a substantial private group 
with existing food interests. 

Please reply bi confidence to 
BaxB346I . Financial Times, One 
Southwark Bridge, London SEI 9HL 


BUSINESS SERVICES 


International 
Phone Calls 
For Less! 


USA only 24p per min 
Australia 40p per min 
No VAT 

Ask about our low rates 
to other countries. 


Call USA 1-206-284-8600 
Fax USA 1-206-282-6666 

419 Second Awe. W. Swfe. WA 981 19 USA 


CALL USA 
ONLY 17p/min 

First 30 mins FREE 
Dial Int. Telecom 
Tel: 081 490 5014 
Fax: 081 568 2830 



ARE YOU CONSIDERING THE SALE OF YOUR BUSINESS? 
Investigations ■ Stocktaking - Manned Guarding 

Capitol Group pic is a fully listed company committed to the acquisition of 
suitable businesses in the above related sectors. 

If you are the Owne; Director or Agent of such a company 
with a minimum annual turnover of £25Dk we would very much 
Ike to hear from you. 

For a confidential tfscussion and further details, please telephone 
0737-373977 and 3sk for Cliff Cavender, Finance Director. 

Alternatively, write with brief details about your company 
in the strictest confidence to: The Finance Director, Capitol Group pte, 

82 SL John Street, EC1M 4JN. 

- OUR PREJtftBfCE 15 70 RETAIN OWNERS AND DIRECTORS FOR AT LEAST A 2 YEAR PERIOD 


CONTRACTS & TENDERS 


HARLEY STREET BUSINESS 
ADDRESS Fi4y seniefcd olfecu, business 
address. bo aiJuju iii. d secretarial mvfceo 
plus Iras message taxing. For funner 
daress phono 071 S37G505 l 


BUSINESSES 

WANTED 


/ 


100+ LIVE BUSINESSES FOR SALE 
and sales assets bnnfflhtiy 071 202 1 1« 
FsieOTI 70634U 


SUCCESSFUL DIRECT 
MAILING COMPANY 

Wishes to expand- 
Accpiisition - Merger 

Please Write in tire fitst instance to: 
Box No. B3464, 

Financial Tunes, 

One Southwark Bridge. 
LmdonSE19HL 


BELL DAVIES 

Customs duty and International trade Consultancy 
Contact: Alun Davies, Patti Ness, John Carlin or Gordon Harrison 
L Northumberland Avenue, Trafalgar Square, 
London WC2N 5BW 
Tel: 071-872 5762 Fax: 071-753 2831 
For doty savings, duty planning, customs reviews and investigations 


All Ad wjtiaima n bookings arr snbjccl p ocr acian Terms and CcuditkxB. copies 

of whi± are available by writing » 

Tbe AtivertMuwat Prwfaaico Direaor. 

The Fhuocial Times, One Soottwk Bridge, LondosSE! 9HL 
Tefc +44 71 STS 3000 Fax: *4471 873 3064 


o 


PETROBRAS 

PETROLED BRUUBU 8A. 


PUBLIC ANNOUNCEMENT 
NR S70.9.413.94 

CHARTERING OF NAVAL MEANS FOR 
CARAVELA 

PETROBRAS - PETR6LEO BRASILEIRO S.A. 
announces that the International Bid for chartering of 
naval means and rendering technical services for 
laying submarine pipelines in Caravela field, Santos 
Basin, South of Brazil, is cancelled. 

Further information is available at: 

PETROLEO BRASILEIRO SA 
Rua General Canaberro, 500 - 9 andar 
Maracana - Rio de Janeiro - RJ 
CEP: 20271.201 

PHONE: 055-021 -566541 1 . FAX: 055-021 -56651 25 




ing data for toe monitoring or Birgers, ana me ior roe uaituuug ui mm* i*um£jijb. “**&»«& >•« 









12 


FINANCIAL- TIMES TUESDAY OCTOBER 4 1994 


★ 


TECHNOLOGY 



“Quiet please, performance in progress; 


“A numtn.uiona! client oh ours needed local currency fundin 


China." says Shirley Ho, Corporate Banking CBS. "Often the 
simplest solution is the best. But obtaining Chinese Renminbi at 


shot! notice is not always ease. \Yc located a Chiru 


nose company in 


need of L .S. doiLirs and qmekly secured iocx! funding for our client 


so tnev could continue erowine their business in China.' 




I nternational Business 
Machines aims to “shatter 
Windows” with the 
launch next week (Octo- 
ber ll) of Warp, a completely 
overhauled version of OS/2, its 
personal computer operating 
system software. 

Microsoft's Windows domi- 
nates the world market for PC 
operating systems - the soft- 
ware that controls the basic 
functions of a computer. An 
estimated 60m PCs have Win- 
dows installed, while IBM's 
OS/2 comes a distant second 
with about 6m copies in use. 

Warp may, however, prove to 
be a potent challenger to the 
Microsoft industry standard. 
“There is no question, Warp is 
technologically superior to 
Windows." says Karl Wong, of 
Dataquest, a US market 
research firm. 

While the current versions of 
Windows are 16-bit operating 
systems - they process data in 
16-bit chunks - OS/2 is a 32-blt 
operating system that can take 
full advantage of the power of 
the latest microprocessors, he 
points out For PC users, this 
means applications will run 
faster, fetching data from a 
disk drive will take fewer sec- 
onds. and video on a PC screen 
will be sharper. 

Another advantage of Warp 
is that it will fit comfortably 
into 4MB of memory, the stan- 
dard configuration of most PCs 


IBM is taking on the might of 
Microsoft, write Louise Kehoe 
and Geof Wheelwright 

Breaking 

windows 


BRbMusy 


sold today, says Wong. 

With the introduction of 
Warp. IBM is seizing a rare 
opportunity to try to upstage 
the software market leader. 
Microsoft was to have 
launched! a 32-bit version of 
Windows, popularly known as 
by its code name Chicago, 
towards the end of last year 
but the launch has been 
repeatedly postponed and the 
company now says that the 
software, renamed Windows 96. 
will not appear until early next 
year. 

"Arrive in Chicago earlier 
than expected," say IBM adver- 
tisements for OS/2. "There is 
no need to wait in a holding 
pattern for a 32-bit operating 


system." IBM’s wisecracks may 
raise some laughs among com- 
puter buffs, but the biggest 
challenge facing Big Blue as it 
tries to break the Windows 
hold on the PC market is that 
[axalharity may have more 
appeal to the average PC user 
than technological superiority. 

An April survey of 10.500 PC 
users conducted by Computer 
Intelligence Infocorp, a market 
research group, found that 23 
per cent had never heard of 
OS/2, although the first version 
was introduced seven years 
ago. Only 4 per cent did not 
know of Microsoft's Windows. 

IBM plans a $50m f£31.6m) 
advertising campaign for OS/2 
over the next three months, 


and the company is using 
many of its senior executives 
to seek converts to the product 
worldwide. Still, operating sys- 
tem software is a hard sell 

In an attempt to give Warp 
broader appeal, IBM is packag- 
ing the new version of OS/2 
with a bundle of applications 
designed to lure new custom- 
ers. Topping the list is a set or 
programs that will give instant 
access to the Internet, the 
global computer network. 

"The information superhigh- 
way is the hottest topic among 
PC users today, yet many peo- 
ple really have no idea what it 
is or how to get on it,” says 
Wally Casey, IBM personal 
software products director of 


marketing. There are a million 
new users logging on to the 
Internet every month, but 
about 400,000 give up because 
it is too hard to use, he says. 

IBM plans to tap into the 
excitement surrounding the 
Internet by providing easy-to- 
use software for a wide range 
of Internet software. The pack- 
age will turn the average PC 
user into a fully-fledged "Net 
surfer". 

“We aim to make OS/2 syn- 
onymous with the information 
superhighway." says Casey. 
Warp users will get immediate 
access to the Internet via the 
Advantis network in the US 
and other IBM networks world- 
wide. Alter 10 free hours of 


access, 40 hours of use a month 
will cost about $25. 

"The IBM information high- 
way wifi, have ‘on-ramps’ [local 
access] available in major met- 
ropolitan centres worldwide,” 
says Casey. IBM already has 
telephone lines established in 
11 countries to handle the 10m 
users it counts on signing up 
in the next year. 

Building on another market 
trend, IBM will include multi- 
media software that enables 
users of PCs with the relevant 
add-on circuit boards to watch 


TV on the PC screen, host a 
video conference, or display 
photographs stored on disk 
using Kodak's new PhotoCD 
technology. For less ambitious 
PC users, a suite of office appli- 
cations is included with Warp 
as well as some games. 

The US list price for Warp is 
expected to be $80. but retail 
discounts will probably bring it 
below $50. And existing OS/2 
users can expect to get an 
upgrade for $25 or less. Micro- 
soft's Chicago is also expected 
to come packed with extra pro- 
grams, including Internet soft- 
ware, although the company 
has yet to provide details or 
prices. 

OS/2 still faces tough hur- 
dles. The biggest may be the 
wide perception that there are 
few third-party applications 
such as games and office pro- 
grams to run on the IBM oper- 
ating system. Finding OS/2 
applications is usually a chal- 
lenge. 

Although OS/2 can run appli- 
cations designed for Windows 
and MS-Dos, IBM wants to 
encourage third-party software 
developers to create “native" 
OS/2 programs and will pay 
retailers to set aside shelf 
space for OS/2 programs. 


Most PC buyers, however, 
are unlikely to replace the 
Windows operating system 
software that comes on almost 
every new PC. Part of IBM's 
attack is therefore aimed at PC 
manufacturers. Microsoft's 
recent antitrust consent 
decree, which forces the com- 
pany to offer new terms to PC 

manufacturers that pre- install 

Windows software on their 
products, may give IBM the 
opening it needs. “We are pre- 
pared to win this battle by sell- 
ing software packages one at a 
time, but we hope to get it pre- 
loaded before people buy their 
PCs," says Casey. 

Yet few ,PC makers appear 
willing to-risk switching from 
the popular Microsoft software: 
only CompuAdd, a small US 
PC company, has announced 
plans to install Warp on its 
PCs. 

IBM is expected, however, to 
announce next week that its 
own PC division will put its 
weight behind OS/2 by loading 
the software on to its products 
along with a copy of Microsoft 
Windows. This will be the acid 
test for Warp. Faced with the 
option to boot up Windows or 
Warp, which one will PC users 
choose? 


E uropean computer users are 

expected to be in the vanguard of 
IBM’s attack on Microsoft and the 
Windows operating software. 
Traditionally, European customers 
have lagged two years or more behind 
their US contemporaries, but Hermann 
Lambert! head of IBM's personal 
software division in Europe, says this 
situation has already been reversed for 
OS/2, the early version of Waip. 

In 1992, about 500,000 copies of OS/2 
were sold in Europe; in 1993 annual 
sales were running at more than lm 
and this year Mr Lambert! expects to 
sell more than 2.5m. US customers are 
expected to buy slightly more than 2m 
copies in 1994. 

There seem to be two principal 
reasons for this. First, while US 


Europe to lead Warp attack 

Sales of early version have beaten US levels, says Alan Cane 


computer users have tended to adopt 
each new generation of software in 
turn, Europeans seem to move in 
jumps. Lambert! argues that users in 
countries such as Spain and Portugal 
where the PC revolution has been 
slower to develop than elsewhere in 
Europe, are moving from a first 
generation PC to the latest Intel 486 or 
Pentium based system in one step, and 
are read; for advanced operating 
software. 

Second. Europe is ahead of the US in 
some of the key networking 


technologies, including the digital 
telephony standard Integrated Services 
Digital Network, and is well-equipped 
to make use of an advanced 
network-based operating system. 

Lambert! exports that the tools built 
into Warp to gain access to the Internet 
will appeal particularly to European 
users. Only about 8-9m European users 
regularly dial into the Internet 
compared with 15m or so in the US. but 
interest has been growing rapidly. 

The software wfll have a number of 
built-in features including simple word 


processing; database and spreadsheet 
software for people who make use of 
only a few of the facilities available in 
proprietary packages. Lambert! says 
that nobody should give up a program 
which suits Hwm in favour of a Warp 
version, but many users would welcome 
a simple, built-in alternative. 

Warp anticipates the demise of the 
keyboard and mouse by handling 
speech and pen-based input, but it may 
be a few years before there is much call 
for these features. Warp's list price in 
the UK will be £70. 


DAVID 

T HOMA S 

PRIZE 

David Thomas was a Financial Times journalist killed on assignment in 
Kuwait in April 1991. Before joining the FT he had worked for. among 
others, the Trades Union Congress. 

His life was characterised by original and radical thinking coupled with a 
search for new subjects and orthodoxies to challenge. 

In his memory a prize has been established to provide an annual study/ 
travel gram to enable the recipient to take a career break to explore a theme 
in the fields of industrial policy, third world development or the environment 


The theme for the 1995 prize, worth not less than £3,000, is: 
DOES FREE TRADE THREATEN THE ENVIRONMENT? 


Applicants, aged under 35, of any nationality, should submit up to 1000 
words in English on this subject, together with a brief c.v. and a proposal 
outlining how the award would be used to explore this theme further. 

The award winner will be required to write a 1500 to 2000 word essay at the 
end of the study period. The essay will be considered for publication in the FT. 


Co-operation at 
the highest level 

A pioneeering European- Russian mission is 
focusing on the astronauts, says Miranda Eadie 


T he Soyuz TM-20 due to 
blast off just before 
midnight last night 
from the Baikonur Cosmod- 
rome In Waralctictaw is the 
first mission to carry astro- 
nauts from the European 
Space Agency alongside Rus- 
sian cosmonauts. 

The spacecraft, carrying 
one ESA astronaut and two 
Russians, is heading for Rus- 
sia's Mir space station - a 
permanently manned opera- 
tional base orbiting 400km 
above the Earth. 

The 30-day mission not 
only heralds a new era in 
international space co-opera- 
tion, it is also the longest 
space flight by a western 
European astronaut. 

“This mission is paving the 
way to the International 
Space Station [a much-dis- 
puted project not yet under 
way] when European astro- 
nauts win live and work in - 
space alongside Americans, 
Canadian.^ Japanese and Rus- 
sians," says Jean-Marie 
Luton, ESA's director gen- 
eral. u 

Research during the 
Eurotnir 94 mission will focus 
on the effects of microgra vi ty 
- the very low gravity envi- 
ronment of an orbiting space- 
craft - on the the human 
body, information that will 
be needed if permanent 
manned orbiting facilities 
and Interplanetary space 
flights are to take place. 

Profound changes take 
place in the human body dor- 


£ 

: i y .***. V \ 


European Space Agency 

Heavenly bodies: Mr station project wfll focus on human physiology 


mg space flights. Astronauts' 
faces quickly become swollen 
because of the movement of 
body Quids from lower parts 
-of the body -towards the head. 
Disorientation is common. 
With longer exposure to 
microgravity, muscles te£d to 
weaken without gravitational 
forces to work againstii and 
bones lose minerals. At least 
SO per emit of astronauts suf- 
fer from space sickness. 

It was once thought that 
osteoporosis (a disorder char- 
acterised by increased fragil- 
ity of the bones) was con- 
trolled by hormonal 
reactions, yet in space it was 
found to be affected by disuse 
atrophy - the lack of mechan- 
ical forces acting on the bone 
structure. 


"Ultimately it is believed 
that once a mechanism has 
been understood, a means to 
compensate for It can then be 
found," says Heinz Oser, the 
senior life scientist in the 
ESA microgravity pro- 
gramme. 

The length ofithe Euromir 
94 mission will gllow many of 
the more subtle changes in 
the human body to be moni- 
tored over a longer period of 
time, increasing the validity 
of tiie results. Studies of the 
muscle system in particular 
will benefit Other investiga- 
tions will focus on the cardio- 
vascular, neuro- sensory and 
skeletal systems. Sleep pat- 
terns, radiation effects and 
the body's immune system 
will also being studied. 


Beyond the usual. 



NEW YORK. LONDON. 


PARIS. FRANKFURT. ZURICH. GENEVA. SINGAPORE. HONG KONG. TOKYO 


CLOSING DATE JANUARY 6 1995 


Applications to: 

Robin Pauley, Managing Editor 
The Financial Times (L) 
Number One Southwark Bridge 
London SE1 9HL 








FINANCIAL TIMES TUESDAY OCTOBER 4 1994 4 


Further clarity on 
pension rights 


BUSINESS AND THE LAW 


A European 

/l\ IJ A Court of Justice 

sSpjL last week decided 

six cases involving 
/ application of 

S ^ Rome treaty’s 
European pay rules 

COURT (Article 119) to 

■ occupational pen- 

sion rights. The judgments com- 
plete a series of decisions explain- 
ing the IKK) Barber ruling on sex 
discrimination in pensions. 

The historical context of the 
judgments is that the ECJ first 
held that the equal pay rule could 
be enforced by employees against 
a private sector employer in the 
Defrenne case in 1976. The court 
limited that judgment's retroac- 
tive effect In 1986 it went on to 
rule in Bilka that the right of 
access to an occupational pension 
scheme was subject to the equal 
pay principle. But it did not limit 
this ruling’s retroactive effect 
Then, on May 17 1990. the ECJ 
confirmed in Barber that contract- 
ed-out occupational pension 
schemes were subject to the equal 
pay principle. Accordingly, retire- 
ment age discrimination was pro- 
hibited. But the Court limited its 
ruling to the future, save for prior 
claims by employees or those 
claiming under them. 

In three cases decided at the end 
of 1993 the ECJ clarified the scope 
and effect in time of Barber. In 
Ten Oever, it held the equal pay 
principle applied only to benefits 
payable in respect of employment 
periods served after May 17 1990, 
except for prior claims. It also said 
survivors’ pension rights were 
covered by the Barber rules. 

In Morroni, the Court said that 
the Barber principles were not 
limited to UK contracted-out pen- 
sions but covered occupational 
pension schemes outside the 
social security system and not 
benefiting from public finance. 

In Neath, the ECJ ruled that the 
use of actuarial factors differing 
according to sex in funded 
defined-benefit pension schemes 
fell outside the equal pay rule. 

The six cases decided last week 
fell into two groups. The first con- 
cerned primarily the pension 
rights of fuQ-time employees, their 
dependants and successors against 
pension scheme trustees. These 
cases confirmed the principles 
established in the three 1993 rul- 
ings but also dealt with outstand- 
ing issues on pension trusts, 
equalisation methods and related 


questions. The Court ruled; 

• Employees and their depen- 
dants may enforce their rights to 
sex equality against trustees of an 
occupational pension scheme. 

• Where national law limits the 
power of action of employers or 
trustees in a way inconsistent 
with the equal pay principle, they 
are bound to use all the moanc 
available under domestic law to 
eliminate sex discrimination, 
including recourse to the courts to 
seek amendment of the pension 
scheme or trust deed (themselves 
governed by national law). 

• For periods of service after 
equalisation of pension rights, the 
retirement age of women may be 
increased to that of men. Mitiga- 
tion of lost benefits for women is 
not allowed. For periods of 
employment post Barber but 
before equalisation, the disadvan- 
taged sex must be given the samp 
benefits as the advantaged. For 
periods before Barber, the benefits 
enjoyed by the favoured sex must 
not be retroactively reduced. 

• Single sex schemes are outside 
the equal pay rule. 

• The same principles apply to a 
civil service occupational scheme 
which may not discriminate 
against married men. 

Cases 0200/91 Coloroll, 0408192 
Avdel Systems, 07193 Borne and 
028193 Shell ECJ FC, September 
28 1991 

The second group concerns the 
right of access of married women 
and part-time workers (most of 
whom are women; to occupational 
pension schemes. 

These cases confirmed the 
Court's earlier decisions dating 
back to 1976. They also established 
that neither the limitation in time 
of the effect of Barber nor the par- 
allel provision in Protocol 2 on 
Article 119 of the Rome treaty 
(added by the Maastricht treaty) 
affects the rights of employees to 
enforce the equal pay rules in the 
context of access to pensions. 

However, the ECJ confirmed 
that national limitation rules 
apply to claims made by employ- 
ees and that, when the schemes 
are contributory, part-time 
employees must make backdated 
contributions. 

Cases 057/93 Vroege and Ol2S{ 
93 Fisscher, ECJ FC September 28 
1994. 

BRICK COURT CHAMBERS. 

BRUSSELS. 


T wo years ago the English 
criminal justice system 
was in crisis following a 
series of high-profile mis- 
carriages of justice. Now, say senior 
judges and lawyers, there is a crisis 
In our civil courts which threatens 
the future of civO justice. The sys- 
tem is dogged with the twin evils of 
expense and delay, and the situa- 
tion is deteriorating. 

Widespread concern about the 
problem has already prompted 
action. Last year the Bar and the 
Law Society produced a joint report 
on the future of civil justice which 
found in England it was trapped in 
a Dickensian time warp. 

It found the use of new technol- 
ogy in the civil courts was virtually 
negligible. Court procedures were 
technical, inflexible, riddled with 
rules and often incomprehensible to 
litigants. The language of the law 
was littered with archaic and irrele- 
vant jargon. Delay was widespread, 
leading to ever-increasing costs and 
frustrating the efficient conduct of 
commerce and industry. 

The report made a number of sug- 
gestions for radical change, includ- 
ing restructuring the High Court 
with the creation of more speci- 
alised courts such as the commer- 
cial court, widespread introduction 
of new technology, simplified proce- 
dures. and greater use of alternative 
dispute resolution. 

In addition, Lord Woolf, the law 
lord, has been asked by Lord 
Mackay. Lord Chancellor, to look 
again at the civil justice system and 
in particular at harmonising the 
rules governing procedures in the 
High Court and county courts. 

Lord Woolf has already floated a 
number of ideas, such as making a 
new breed of procedural judges 
responsible for case management 
and cost control. Alternatively, he 
has suggested cases could be han- 
dled by teams of Judges working 
together. His final report is not 
expected for two years. 

Both the work of Lord Woolf and 
the ideas of the Bar/Law Society 
report hold the promise of a 
brighter future. But without a com- 
mitment from the government to 
modernise the civil justice system, 
that brighter future may never 
materialise. It is thin uncertainty 
about the government’s commit- 
ment that is causing such concern 
among senior judges and lawyers. 

At the Bar’s annual conference in 
London last weekend, Mr Robert 
Seabrook QC, chairman of the Bar, 
welcomed the appointmrait of Lord 
Woolf but then questioned the sta- 
tus of his review. What commit- 
ment had the government given to 
it? What was his agenda? What 
resources had he been given? And 
what research was he doing? 

It seemed clear already, Mr Sea- 
brook said, that no new resources 
would be made available by the gov- 
ernment to implement any recam- 


Trapped in a 

time warp 

Robert Rice on problems in 
England’s civil justice system 



Sir Nicholas Lyell (left), Lord Woolf and Sir Thomas Bingham 


mendations. This, he said, was a 
very short-sighted approach. 

Sir Thomas Bingham, Master of 
the Rolls, suggested that there were 
three thing s which needed to be 
done to tackle “the serious ills of 
expense and delay". 

'hie first was the introduction of 
a computerised case management 
system giving judges greater con- 
trol over the various stages of litiga- 
tion and a greater chance of control- 
ling costs. 

The second was the introduction 
of strict time limits on oral argu- 
ment in court and a corresponding 
increase in the Issues dealt with by 
written submissions. It was almost 
150 years since the US Supreme 
Court had of necessity first adopted 
time limits on oral argument, he 
mid- In England the number of civil 
appeals showed a marked upward 
trend, and the backlog of appeals 
increased year by year. Sir Thomas 
said he was hopeful of an increase 
in the number of Appeal Court 
judges, but this on its own was 
unlikely to contain, let alone 
reduce, the waiting times for get- 
ting appeals heard. Time limits on 
oral argument, could help. 


influenced by Europe and by both 
the European Court of Justice in 
Luxembourg and the European 
Court of Human Rights in Stras- 
bourg. In addition, Brussels had 
express law-making powers. 

Sir Nicholas said there had been a 
huge increase in the amount of dis- 
closure of evidence and information 
in civil cases, resulting in longer 
trials. The legal profession had also 
increased in size. There were now 
8,000 practising barristers in 
England and Wales, an increase of 
25 per cent over the last five years. 
The solicitors’ profession hod also 
grown from 34,000 practising solici- 
tors in 1980 to almost 60,000 in 1994. 

Cases were now taking longer and 
there were more of them. Taking 
just applications for judicial review 
as an example, he said their num- 
ber had risen from 160 in 1974 to 
1,500 in 1987 to 2,8 00 in 1993. 


L egal Aid had also grown 

dramatically. For the first 
20 years of the legal aid 
scheme the total cost of 
legal aid never exceeded £10m a 
year. By 1980 the cost had risen to 
£100m, by 1990 to £lbn, and it was 
still rising. Five years ago 2.3m peo- 
ple were helped by legal aid. Last 
year that figure had risen to 3.5m 
people. At the same time the aver- 
age cost of each individual action 
had also risen. Five years ago each 
action cost £204. Today the cost was 
£350. 

Sir Nicholas said he was in favour 
of judges taking a more active role 
in case management and he saw the 
benefits of time limits on oral argu- 
ment That system worked well at 
both the European Court of Justice 
and the Strasbourg H uman Rights 
Court But at the end of the day, he 
said, resources were finite and so 
they had to be put to the best 
use. 

He said he sometimes wondered 
whether, adapting Parkinson's law, 
the volume of litigation expanded to 
earn the money which was avail- 
able for it There might also be an 
element of truth in the view that 
simplifying procedures and making 
courts more accessible had only 
encouraged more litigation. 

The measure of the task facing 
Lord Woolf is now clearer. The gov- 
ernment will support initiatives to 
cut expense and delay in the civil 
justice system provided they do not 
require extra resources. To the 
extent that proposals, such as com- 
puterised case management systems 
and court-annexed ADR, require 
extra resources, the money to fond 
them will have to be found through 
efficiency savings elsewhere. 

There are those who believe a 
modem civil justice system cannot 
be achieved without the commit- 
ment of further resources. If they 
are right, the crisis facing the 
civil justice system looks set to 
continue. 


His third suggestion was for the 
greater use of alternative dispute 
resolution. At present there was lit- 
tle evidence of ADR being used in 
Britain despite its success else- 
where in cutting the time and 
expense of business disputes. This 
neglect of ADR was surprising since 
England had been a world leader in 
the analogous field of arbitration, 
he said. 

Sir Thomas was unsure of the 
resource implications of his propos- 
als. If judges were going to spend 
more time reading documents and 
less time in court, there might be a 
need for more Judges. But. he said, 
whatever the net cost to the govern- 
ment, he was sure the "net result 
will be a great saving of cost and 
time to the litigant”. 

It was left to Sir Nicholas Lyell 
QC, the attorney general to put the 
government position. The crisis 
feced by the civil courts was the 
result of a number of trends, he 
said. The volume of laws had 
increased dramatically. Thirty 
years ago there were only two ways 
of malting laws - through Parlia- 
ment or the courts. Today both the 
courts and parliament were deeply 


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One of oldest 
firms in 

New York closes 

O ne of New York’s oldest law 
firms. Lord Day & Lord 
Barrett Smith, had Its 
partnership formally dissolved last 
Friday. Most of the lawyers 
working In the Lord Day 
commercial, litigation and tax 
groups have transferred two blocks 
from Broadway to Park Avenue, to 
work for Morgan Lewis & Bocklus. 
The Lord Day intake will bring the 
number of lawyers at Morgan 
worldwide to 800. 


Insurance cover 

C ommercial litigators and 

senior barristers attending a 
recent litigation seminar In 
London favoured changing court 
rules to force defendants to disclose 
their insurance cover at the start of 
a trial. The lawyers believe that, by 
making defendants put their cards 
on the table at the outset, time and 
money could be saved in not 
pursuing people without resources. 
This would bring the UK into line 
with practice in Canada and 
the US. 

The change would require 
legislation, because under English 
law there is a fiduciary duty on the 
insured not to disclose details of 
cover until there has been a finding 
of liability. 

The move is opposed by insurers, 
which t hink plaintiffs would sue 
only those with “deep pockets". 

But Mr Justice Otton said he was in 
favour, provided the trial judge, 
who decides damages in the UK. 
was not told whether the defendant 
had cover. 

Bar appointment 

P aul Hoddlnott, former British 
Naval Attache in Washington 
DC, this week will be 
confirmed as the next executive 
director of the International Bar 
Association. Mr Hoddinott will take 
over on January 1 from Madeleine 
May, who leaves the IBA after 15 
years. ■ 



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Oct. \ 

I fuTn»stiin 9 *^^ 0 \ogv \ 

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54% of Chief Exeutlves In Europe's largest 

companies read the FT* 


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Electricity Generating Authority of Thailand 
US.S195, 000,000 
Floating Rate Notes due 2005 

Petroleum Authority of Thailand 
U.S.$145, 000,000 
Floating Rate Notes due 2005 

In aoctodancc with the terms and conditions of the above notes, notice is 
hereby given that for the 6 month intend period from 30 September 1994 lo 
30 March 1995 tlBl daysJ, the notes sill carry an interest rate of 5|?b 
per annum. 

The interest payable on the next payment date, 30 March 1995. will be 
U.S.S7.305.99 per U.S.S250.000 oornmaJ amount and U5.S146.12 per 
U.S.55,000 nominal amount. 


Reference Agent: 


Bank 


ivdaie |ftn.na|}iiin- |Htiiu»t,ui|, 










14 

SAVINGS 


FINANCIAL TIMES TUESDAY OCTOBER 4 1994 


OH CURRENT Bf UJ'*C DISTANCE RATES BEFORE AW PROMOTIONS OR DISCOUNTS SUBJECT TO STATUS AMD CURRENT ENEROIS TERMS AND COHDJTJOHS DETAILS CORRECT AT TIME OF GOUM TO PRESS. 



A 50 p LONG DISTANCE CALL 
WILL NEVER BE THE SAME AGAIN. 


it’ll be cheaper. 

Any business phone call over 35 
miles will cost at least 10% less than 
the national rate. And that’s guaranteed. 

But how can we offer such a cheap 
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What we’ve done is put our fibre 
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carrying pictures and information as 
well as sound. 

So you’ll be getting one of the 


most advanced systems in the world and 
you’ll be getting it for less, because we 
pass the savings on to you. 

We’ll also pass on to you, and you 
only, information about your company's 
telephone efficiency - in the form of a free 
monthly Management Report. It’ll give 

HP 


vital information, like how quickly your 
company answers calls, and how many 
callers hang up before you get to them. 

Just about the only thing we don’t 
do is dial the numbers for you. For 
more information just call us on 0800 


162 162. ENERGISE YOUR PHONE. 


ENERC1S 



1 1 


In 




FINANCIAL TIMES tt recr* a _ 

TUES OAY OCTOBER 4 1994 


15 


ARTS 


■> 




The Menin Road’, 1919, by Paul Nash: were Picasso, Matisse or Duchamps painting anything better? 


Avant-garde images of devastation 

At the Barbican William Packer finds War Art set in its proper international and modernist context 


B ritain has been alone in distin- 
guishing War Art in this cen- 
tury as a particular genre. This 
judgment has had its critical 
effects. The two world wars 
were of course the natural subject of art, 
for they touched the lives of artists no less 
than those of everyone else. But in coming 
round, uniquely, in the later years of the 
first war, to the idea that art should be 
officially commissioned as document and 
memorial, sustaining that policy through 
the second war and lodging’ most of the 
products wi thin a single institution, the 
Imperial War Museum, we set in place a 
number of idees fixes, or prejudices. 

Throughout Europe, artists of all kinds 
were drawn into the first world war. Yet 
so far as Britain was concerned, the work 
that came out of it was subsequently 
transmuted into a kind of official art that 
led us to believe it peculiar to ourselves. 
And ironically the more avant-garde it 
was, the more were we inclined to take it 
as anything but. For here was art related 


directly to a general, shared and awful 
experience that, safely institutionalised in 
popular and public terms, sat quite apart 
from the rest of modern and therefore dif- 
ficult art Thus set out of its proper inter- 
national and modernist context, such art 
has too long been neglected at its true 
critical leveL 

The premise of the r emar kable exhibi- 
tion that Richard Cork has put together is 
the realisation that art, great art and War 
Art at that, was generated in every nation 
touched by the first world war. What it 
does for the British art erf the war is imme- 
diately to rescue it from its unwarranted 
parochialism, to test and recognise it as 
the r emarkab le achievement it really is. 
And to look here, again, for example, at 
Stanley Spencer's famili ar but still 
extraordinary and moving painting of 
“Travoys" (mule-drawn stretchers) bring- 
ing wounded into a Macedonian dressing- 
station, or at Paul Nash’s vast and desolat- 
ing painting of “The Menin Road", is sud- 
denly to realise that nothing more serious, 


more radical, nothing indeed better in any 
sense, was being done anywhere else at 
that time. Picasso? Matisse? Duchamp? 
Not at all. 

But this is no mere exercise in the reha- 
bilitation of British art The context serves 
all alike, and none more so than the Ger- 
mans. The only difference is that with 
their avant-garde credentials already well 
intact, such artists as Dix and Be ckmann. 
Rathe KoQwitz, Grosz and Kirchner, can 
more readily be taken as the great artists 
they are. even though represented by com- 
paratively incidental work. Do David 
Jones's illustrations to his own epic poem 
of the war. In Parenthesis”, have a right 
to stand on equal terms with such things? 
Of course they do. 

in all such compilations, the minor or 
the forgotten figures, or those more famil- 
iar but cast in a fresh light are the more 
immediately intriguing. The show begins 
with a section on the war in anticipation, 
with images from such as Balia and Carra 
of Futurist excitement at the prospect of a 


great mechanical cleansing and renewal, 
made the more dire in knowledge of the 
reality to come. The corrective comes in 
terms of prescient foreboding and anxiety, 
with Ludwig Meidners apocalyptic expres- 
sionist visions of ruin and devastation, 
and de Chirico, of all people, giving an 
extra twist to the idea of what War Art 
might be with a haunted image of a sail- 
ors’ barracks. 

So the show proceeds through its several 
sections, from the outbreak of war and its 
accompanying patriotic enthusiasms, 
through deadlock and disillusionment to 
the dreadful end . and to aftermath and 
remembrance. And we follow the artists in 
this from their initial fervour and commit- 
ment to resignation, anger and despair. 
Through it all, the polemical and the docu- 
mentary walk hand in hand, with the 
polemical turning to bitter satire and 
irony as time goes on. And as always with 
such things, while the polemical might 
carry the greater immediate emotional 
force, it is the cooler observation, that 


mi ght inform or complement it, that hangs 

OJJ in the mind 

The exhibition's epigraph is taken from 
a letter which Paul Nash wrote from Pas- 
schendaele in 1917: “it is unspeakable, god- 
less, hopeless. 1 am no longer an artist . . . 
(but) a messenger ... to those who want 
the war to go on for ever. Feeble, inarticu- 
late, will be my message, but it wifi have a 
bitter truth, and may it bum their lousy 
souls." Yet his own "Menin Road” or 
“Mule Track” remain the more resonant 
as images than his overtly ironical “We 
are making a better world”, for all that the 
imagery of devastation is much the same. 
For they leave us room to come to our own 
conclusions. Henry Lamb’s large canvas, 
“Advanced Dressing Station on the 
Struma”, his manifest masterpiece, with 
its resting stretcher-bearers smoking and 
chatting beneath the trees, says it aU. 

A Bitter Truth: Avant-garde Art and tire 
Great War; Barbican Art Gallery, Barbi- 
can Centre EC2, until December 11. 


A fter months of critical vilification 
for a clutch of misconceived pro- 
jects, the Young Vic’s artistic 
stock stands in pressing need of a 
fillip. Tim Supple's production of John 
Byrne's greatest theatrical hits goes part 
of the way to that end. 

Byrne's semi -autobiographical trilogy 
follows bis surrogate Phil McCann, first 
seen in The Slob Boys as a callous 19 year 
old in 1SS7, harbouring fierce ambitions 
towards the Glasgow School of Art while 
enduring the workaday grind (literally) in 
the slab room of a carpet factory. He and 
his drain-pipe trousered comrade, Spanky, 
play often savage tricks on the slab room 
runt Hector, pinch sticky buns from the 
tea lady's trolley, lust after the statuesque 
Lucille, give lip to all and sundry, and just 
occasionally pulverise paint pigments for 
use by the carpet designers outside whose 
desks they covet 

The Slab Boys remains a marv el o f 
switchback language and moods. Byrne 
routinely brings several different vernacu- 
lars together within a single sentence to 
create linguistic crossbreeds with the head 
of one idiom, claws of a second and wings 


Theatre/Ian Shuttleworth 


The Slab Boys Trilogy 


of a third. Phil and Spanky’s exchanges 
are sharp as a tack and, just as they career 
between the vocabulary of teddy boys and 
mock public school banter, so the emo- 
tional register can switch instantly from 
superficial mirth to its darker underside 
and back again without missing a beat 
The ability to deal with personal tragedies 
and everyday oppressions without subordi- 
nating tee comedy of the script to this 
darker vein, or vice versa, is one of 
Byrne's greatest strengths, and the first 
play of the trilogy is its most ebullient 
manifestation. 

Its follow up, Cubin' a Rug, is set at tee 
factory’s staff dance on the evening imme- 
diately following the action of The Slab 
Boys. Its attempt to locate itself in a differ- 
ent style from the earlier play are, frankly, 
too laboured. The first act, set in parallel 
women's and men’s cloakrooms before the 


"staffie” begins, seems little more than a 
45 minute prologue; the frequent asides of 
characters’ inner thoughts to the audience 
feel uncomfortably Godberesque. The ver- 
bal and emotional sensitivity are still in 
evidence, but if seen on Us own this play 
would be robbed of more than half its 
strength. 

StiU life - taking place in a cemetery, 
its two acts ten and 15 years after the 
other plays - is another kettle of fish 
again. It sees Byrne giving in either to the 
impulse to effect a lengthy and compre- 
hensive closure to the trilogy, or to vicari- 
ous wish-fulfilment in re-writing his own 
past, or both. He so immerses himself in 
the play's heart-to-heart dialogues, in 
finally laying bare the characters of Phil, 
the struggling artist, and Spanky, the rock 
muso, that he goes on a good 20 minutes 
too long. Despite this over enthusiasm, the 


play contains moments of brilliantly 
understated emotion, and seemingly 
casual recapitulations of earlier motifs. 
StiU Life has the feel of a coda, but does 
possess the dramatic strength to stand on 
its own. 

Supple Is direction is sure footed and 
unobtrusive. He serves the scripts admira- 
bly, none of the potentially awkward mood 
collisions come a cropper. As Phil, Paul 
Higgins feelingly conveys bote the charac- 
ter’s manic larking around and tee defen- 
siveness in which it is rooted; more cru- 
cially, he does not overplay the element of 
“author's proxy” in Phil until it emerges 
naturally in the final play. As much atten- 
tion is given to Spanky who, in Stuart 
McQuarrie's portrayal, is astute enough to 
keep up with Phil but never quite gets 
ahead of the game. Katy Murphy, the acer- 
bic Miss Toner in Byrne’s 1988 television 


serial Tutti Frutti, brings the same 
down-to-earth suss to her performance as 
Lucfile. 

Byrne’s own set designs are naturally 
adroit His costume designs are more ques- 
tionable, obviously the author knows what 
he wants, but the women's costumes in 
particular often look less concerned with 
authenticity or evocation of a particular 
style than pandering to contemporary 
notions of flash. At any rate, whether or 
not the plays look right, they indisputably 
look good. 

Supple presumably hopes that audiences 
will opt to see the entire trilogy (either on 
separate nights or over 11 mercifully 
ungruelling hours on a Saturday) rather 
than settle for one play (which, in all can- 
dour, would have to be The Slab Boys). It 
remains to be seen whether his calculation 
will pay off. In any event, the knives 
which had been drawn in tee Young Vic's 
direction are likely to be sheathed again 
for a while. 

At the Young Vic until November 12 
(071 928 6363) 


Opera 

Outbreak of 
symbolism 
in Leeds 
Trovatore’ 


N ot for Leeds a French grand 
opera of the kind acted out in 
Paris. While the Bastille made 
the loss of its music director a 
drama on an international scale. Opera 
North's general director slipped away qui- 
etly. Ian Ritchie had barely had time to 
settle in before his departure was being 
announced for a new job in Scotland with- 
out any reasons given - a case of British 
understatement. 

What this will mean for tee company' is 
not yet dear. Whatever Ritchie had time 
to plan, it will not have been enough to 
stamp any personal mark on Opera 
Norte's repertoire or house production 
style. His name is still listed in the pro- 
gramme, bat only for a few more weeks. 
The job advertisement has already been 
placed for his successor, wbo will take 
over with at least one of the company's 
assets securely in place: the 1994/5 season 
looks typically adventurous. 

Amid a variety of obsenre operas, 
Verdi's U irovaiore might look the odd one 
out, but for a company with the limited 
resources of Opera North it is as much a 
challenge as any. Finding a cost of four 
singers who can deliver Verdi's vocal 
parts to the standards teat audiences now 
expect from recordings is difficult enough 
for international opera-booses, let alone a 
regional company with empty coffers. 

Having a theatre the size of tec Grand 
at Leeds makes life easier, but the quartet 
that Opera North has assembled for this 
new production passes muster, and often 
more. Edmon d Barham h»s been making 
his way solidly up through the centra] 
tenor roles or the repertoire and Manrico 
marks a new rung on his ascent, stylishly- 
phrased in the aria, clarion strong in the 
following cabaletta (high B's rather than 
C’s. if I am not mistaken). His is not an 
Italian voice, bat then nor were the 
others. 

K aterina Kndriavchehko has a 
backwardly-placed soprano, 
which lacks open. Italianate col- 
ours, but her Leonora offered a 
decent compromise between the lyrical 
and dramatic sides of role. Ettore Kim's 
baritone is tightly-controlled with a fast 
vibrato, at its best when the Conte di 
Luna was being strong and forthright 
None of teem found much time for act- 
ing - a luxury in this opera at tee best of 
times, though one might have expected 
Opera North, with its reputation for inte- 
grated dramatic performances, to reassess 
the priorities. Sally Burgess’s post-Freud- 
ian Azucena, wrestling with the demons 
in her conscience, came nearest to a 
newly thought-out portrayal. Her mezzo's 
centre of gravity lies a little high for the 
part, but has searing top notes as compen- 
sation. Clive Bayley related Ferrando's 
narration vividly. 

At the expense of some mxidiomatic lit- 
eralness in his reading of the score (Leo- 
nora’s soaring lines at the end of Part 2 
neatly-clipped, with no sense of grandeur) 
Paul Daniel gave Verdi his essential 
demon-driven urgency. Brilliant wind 
sounds pierced tee orchestral ensemble, 
just as melodramatic shafts of lighting 
periodically burst forth from Inga 
Levant’s gloomy production. Night and 
fire - two of the opera's main motifs - 
were never far away. 

Indeed, tee production suffered a nasty 
outbreak of symbolism early on: swords 
of vengeance staked in the ground, a harp 
for tee troubadour, a huge photo of two 
infant brothers which Azucena hauled 
around the stage. Later it contented itself 
wfth supplying a potent background of a 
community savagely at war with itself - 
or was that also meant to be symbolic of a 
company that seems to be in the wars 
backstage itself at the moment? 

Richard Fairman 

At the Grand Theatre. Leeds, until Octo- 
ber 14; then Sheffield, Nottingham and 
Manchester 


International 

Arts 

Guide! 


a .** 1 


■ AMSTERDAM 

Conce rtgebouw Tonight Wout 
Oosterkamp sings Schumann Lieder. 
Wed: Hartmut Haen chert conducts 
Netherlands Philharmonic Orchestra 
in works by Wagenaar, Beethoven 
and Brahms, with piano soloist Kann 
Lechner. Fri: Konstantin Scherbakov 
piano recital. Sat afternoon: Radio 
Philharmonic Orchestra in Mahler’s 
Seventh Symphony. Sat evening: 
Netherlands Handel Union sings 
Verdi. Sat (Kteine Zaal): Kyoto 
Takezawa violin recital. Sun: Alfred 
Brendel plays Beethoven piano 
sonatas (020-671 8345) 
MuzSektheater Tonight, Thurs, Sim 
afternoon: Graeme Jenkins conducts 
JOrgen Flimm's production of Le 
nozze di Figaro (repeated Oct 14. 

18. 20. 23, 26 and 30). Fri. Sat and 
next Mon: Karen Appel and Min 
Tanaka in dance theatre piece 
entitled Can we dance a 
landscape?. Oct 12. 13, 15: Parsons 
Dance Co (020-825 5455) 

■ ANTWERP 

de Vlaamse Opera Tonight Thurs. 


Sat and next Tues: Sttvio Varviso 
conducts Guy Joosten's production 
of Don Giovanni, wfth cast headed 
by Jeffrey Black, Hinevi Martinperto 
and Patricia Raoette. The production 
win also have five performances in 
Ghent starting Oct 18 (03-233 6685) 

■ BRUSSELS 

Palais des Beaux Arts Murray 
Perahia gives a piano recital tonight 
Antoni Wit conducts Polish National 
Radio Symphony Orchestra 
tomorrow in a LutoslawskI 
programme, with soprano Phyllis 
Bryn-Julson. Krzysztof Penderecki 
conducts a programme of his own 
choral music on Fri, and Jan Krenz 
conducts Polish orchestral music on 
Sat (02-507 8200) 

Monnate Antonio Pappano conducts 
Achirn Flayer's new production of 
Tristan und Isolde tomorrow and 
Sun (also Oct 13, 18, 22). The cast 
is headed by Ronald Hamilton and 
Anne Evans (02-218 1211) 

Theatre National Tony Kushneris 
play Angels in America (first part 
Millenium Approaches) runs daHy 
except Mon till Oct 19 (02-217 0303) 

■ CHICAGO 

MUSIC 

Chicago Symphony In tonight's 
concert, Daniel Barenboim conducts 
works by Schoenberg and Brahms, 
with violin soloist Maxim Vengerov. 
On Thurs, Fri and Sat, Barenboim 
conducts Bruckner’s Eighth 
Symphony (312-435 6666) 

Lyric Opera This week’s 
performances are The Rake’s 
Progress tonight and Thurs, and 
Boris Godunov tomorrow and SaL 
The Stravinsky Is a new production 


conducted by Dennis Russell Dawes 
and staged by Graham Vick, wftii a 
cast headed by Jerry Hadley, Ruth 
Ann Swenson and Samuel Ramey 
(runs tilt Oct 28). The Musotgsty is 
conducted by Bruno Bartotetti and 
staged by Stein Winge, with Ramey 
and Vladimir Mato tin alternating In 
the title role (till Oct 14). Giordano's 
Fedora opens on Oct 15 wfth Mirella 
Freni and Placido Domingo (312-332 
2244) 


THEATRE 

• Angels in America: the national 
touring production of Tony 
Kushner’s two-part epic is directed 
by Michael Mayer, with Jonathan 
Hadary as Roy Kotin (Royal George 
312-988 9000) 

• A Clockwork Orange: the 
American premiere of the stage 
version of Anthony Burgess' novel 
(Steppenwotf 312-335 1650) 

• Laughter on the 23rd Floor. Neil 
Simon’s newest comedy about the 
golden days of live TV comedy (Briar 
Street 312-348 4000) 

• Later Life: A.FL Gurney's lovely, 
ruminative play about finding 
romance after the age of 40 
(Northllght 312-327 5588) 

• The Who’s Tommy: the touring 
version of tee hit Broadway musical 
about the pinball wizard who 
becomes a media sensation. Opens 
on Thurs, tifl Oct 30 (Auditorium 
312-902 1500) 

■ GENEVA 

Grand Th&tre A new ballet 
production, including a new work by 
Oscar Araiz and a new version of 
John Neumeier’s Spring and Fail, 
opens next Mon. Peter Schreier 


gives a song recital on Oct 13 
(022-31 1 2311) 

Victoria HaH Andras Schiff plays 
Bach’s The Weil-Tempered Clavier 
Books 1 and 2 next Mon and Wed 
(022-310 9193) 

Com6dle The Royal Shakespeare 
Company opens a week of 
performances next Mon of 
Christopher Hampton's stage 
adaptation of Les Liaisons 
dangereuses, directed by Michael 
Attenborough (022-320 5001) 

■ THE HAGUE 

Dr Anton PMtipszsal Tomorrow: 
members of the Hague Philharmonic 
play chamber music by Bach and 
Mendelssohn. Fri. Sab GQnther 
Herbig conducts Hague 
Philharmonic Orchestra in the eighth 
symphonies of Schubert and 
Shostakovich. Sun: Randy Newman 
(070-360 9810) 

■ VIENNA 

• Leonard Slatidn conducts the 
Vienna Symphony Orchestra 
tomorrow and Thurs at tee 
Musikvereffi, in a programme of 
Mendelssohn, Vaughan Williams and 
Berlioz (viola soloist Nobuko Imai). 
Mara Zampieri gives a song recital 
on Fri and next Mon, and Okko 
Kamu conducts the Helsinki 
Philharmonic Orchestra on Sat and 
Sun (505 8190). Sandor Vegh 
conducts the Camerata Academics 
In a programme of Viennese classics 
next Mon at the Konzerthaus (712 
1211 ) 

• The Staatsoper is closed for 
technical alterations tffl Dec 14. A 
State Opera Ballet production, 
based on Lenar's Merry Widow and 


choreographed by Ronald Hynd, is 
in repertory at the VoDcsopar (51444 
2959/51444 2969/513 1513) 

■ WASHINGTON 

MUSIC 

• Claus Peter Ror conducts the 
National Symphony Orchestra at 
Kennedy Center Concert Hall on 
Thurs, Fri and SaL The programme 
consists of Beethoven's Fourth 
Piano Concerto (Yefim Bronfman) 
and Tchaikovsky's Sixth Symphony. 
The Iceland Sinfonietta gives a 
concert at Terrace Theatre on Thurs 
(202-467 4600) 

• David Zfnman conducts the 
Baltimore Symphony Orchestra on 
Fri, Sat and Sun afternoon at 
Baltimore's Joseph Meyerhoff 
Symphony HalL The programme 
consists of Copland's B Salon 
Mexico, Stravinsky’s Firebird suite 
and Rakhmaninov’s Second 
Symphony (410-783 8000) 


THEATRE 

• Flying' Wesb this play about 
courage and frontier justice in late 
19th century America, produced by 
New Jersey’s acclaimed Crossroads 
Theatre, runs till Sun at Eisenhower 
Theater (202-467 4600) 

• The Ftise and Fall of Little Voice: 
Jim Cartwright's play, about a young 
girl with an ability to mimic pop 
female vocalists, has had Its run at 
Studio Theater extended till Oct 18 
(202-332 3300) 

• The Cherry Orchard: Chekhov’s 
drama is directed by Irene Lewis at 
Center Stage. Till Oct 30 (410-332 
0033) 

0 Henry IV: an adaptation of Parts 

1 and II of Shakespeare's history 


plays is a Shakespeare Theater 
production at the Lansburgh, 
directed by Michael Kahn. 

Till Nov 6 (202-393 2700) 

• The Sweet Revenge of Louisa 
May: a musical fashioned from the 
stories of Louisa May AlcotL At 
Oiney Theater till Oct 23 (301-924 
3400) 

■ ZURICH 

Opemhaus The main event this 
week is the first night on Sat of Ruth 
Berghaus' new production of Katya 
Kabanova. Ralf Weikert conducts a 
cast headed by Ana Pusar. Peter 
Straka and Cornelia KaJIlsch 
(repeated Oct 11. 14, 19, 21, 26. 29, 
Nov 3 and 5). Repertory also 
includes La Cenerentota, it barbiere 
di Shriglia and La belle Helene 
(01-262 0909) 

Tonhalle James Galway plays 
Mercadarrte's Flute Concerto in 
tomorrow’s concert by tire Tonhalle 
Orchestra, which also includes 
works by Weber and Rakhmanlnov. 
Galway plays in a chamber music 
recital on Thurs, and gives tee world 
premiere of George Nicholson's new 
Flute Concerto on Fri. The Zurich 
Chamber Orchestra gives a concert 
next Mon, with works by Salieri, 
Mozart, Cimarosa and Haydn 
(01-261 1600) 

Schauspieihaus The season has 
just opened with two new 
productions: Chekhov’s Three 
Sisters directed by Dieter Giesing, 
and Buchner's Dantons Tod directed 
by Uwe Eric Laufenberg, both Of 
which continue in repertory for the 
rest of tee month (01-221 2283) 


ARTS GLIDE 

Monday: Berlin, New Yorfc and 
Parte. 

Tuesday: Austria, Belgium. 
Netherlands. Switzerland, Chi- 
cago, Washington. 
Wednesday: France, Ger- 
many, Scandinavia. 

Thursday: Italy, Spain, Athens, 
London, Prague. 

Friday: Exhibitions Guide. 

European Cable and 
Satellite Business TV 

(Central European Time) 
MONDAY TO FRIDAY 
NBC/Super Channel: FT Busi- 
ness Today 1330; FT Business 
Tonight 1730, 2230 


MONDAY 

NBC/Super Channel: 
Reports 1230. 


FT 


TUESDAY 

Euronews: FT Reports 0745, 
1315, 1545, 1815, 2345 

WEDNESDAY 

NBC/Super Channel: FT 
Reports 1230 

FRIDAY 

NBC/Super Channel: FT 
Reports 1230 

Sky News: FT Reports 0230, 
2030 

SUNDAY 

NBC/Super Channel: FT 
Reports 2230 

Sky News FT Reports 0430, 
1730: 




mg data lor the monitoring oi largeis, ana mo mr uiu iiunuung ui w«u: imirokiub- 




16 


FINANCIAL T1M3ES TUESDAY OCTOBER 4 1994 


★ 



His and her politics: President Alberto Fujimori and his estranged wife Ms Susana Eflguchl 

Poll where parties 
count for nothing 


P resident Alberto Fuji- 
mori of Peru is expec- 
ted to declare within a 
few days his candidacy 
in next year’s presidential elec- 
tions. 

His chances of a second term 
look good. Mr Fujimori - who 
in 1990 took over a country 
devastated by economic mis- 
management and terrorism - 
now heads the fastest-growing 
economy In Latin America. 

Growth is expected to reach 
9 per cent this year. Annual 
inflation Is likely to fall below 
20 per cent from 7,500 per cent 
in 1990. The guerrilla move- 
ments which then seemed on 
the verge of taking over the 
state now look broken. 

With this record behind him, 
Mr Fujimori is popular polls 
suggest that 65 per cent of 
Peruvians think he is doing a 
good job. He is also popular 
among businessmen - privati- 
sation is moving ahead and the 
economy, including its mining 
sector, has been thrown open 
to foreign investment 
Closer to home, things are 
trickier. He is so unpopular 
with his estranged wife, Ms 
Susana HiguchL that she is 
threatening to sabotage her 
husband's expected attempt at 
re-election in next April's elec- 
tions. Alleging widespread cor- 
ruption in the Fujimori regime, 
she has decided to run for pres- 
ident too. 

Backed by a newly-created 
“Harmony Twenty-First Cen- 
tury" movement, she must 
first win a ruling from a consti- 
tutional court to overturn a 
legal bar - created by the Fuji- 
mori -dominated Congress - 
that bans relatives of the head 
of state from standing for the 
presidency. 

She is just one of the chal- 
lengers to Mr Fujimori, who 
has changed the constitution 
to allow for his re-election. 

Last month, the 74-year-old 
former UN secretary-general. 
Mr Javier Perez de Cuellar, 
announced his intention to 
seek office. Mr Alejandro 
Toledo, a respected economist, 
is also running as head of a 
new “independent movement 
of professionals and techno- 
crats". calling itself “Peru Pos- 
sible". With a host of lesser- 
known figures, there are 
already 15 declared candidates, 
and by the October 11 deadline 
there could be as many as 24 
presidential hopefuls. 

Mr PCrez de Cuellar and Mr 
Toledo have both spent many 
years outside Peru, the former 
as a career diplomat the latter 
as a consultant and visiting 
professor at eminent universi- 
ties. Ms Higuchi is an engineer 
who founded and ran a suc- 
cessful construction company, 


until becoming first lady. 

All three have features in 
Common: none has any experi- 
ence of government and none 
is associated with any political 
party. They even steer clear of 
the word “party" in describing 
the groups that support them. 

Lack of political experience 
Is almost a sine qua non for 
electoral success In today's 
Peru. The biggest drawback is 
to be dubbed a “traditional pol- 
itician”. It was such politicians 

Who. cu lmin ating in the 
1985-1990 presidency of Mr 
Alan Garcia, succeeded in 
bringing hyperinflation, cor- 
ruption and terrorism. 

Political party structures 
have been hierarchical and 
unresponsive to popular needs. 
Now the parties are making 
efforts to polish their image - 
consulting members over can- 
didacies, bringing in younger 
faces and co-opting women to 
their male-dominated organisa- 
tions. But their standing 
remains low. Four out of five 
Peruvians describe themselves 
as independents with no party 
allegiance. 

This development has been 
encouraged by Mr Fujimori. He 
came from nowhere to win the 
1990 elections over the leading 
candidate - author Mario Var- 
gas Llosa - who had allied 
himself with the political par- 
ties thinkin g such a move 
would secure him support 

Since then, through skilful 
manipulation - largely via 
well-managed revelations of 
earlier scandals - Mr Fujimori 
has ensured that the repute- 


Sally Bowen on 
the Peruvian 
president’s 
campaign for 
re-election 

tions of the traditional parties 
have remained low, while 
enhancing his own image and 
that of his military backers. 

Reluctant to transform his 
own makeshift political alli- 
ance into an organised party. 
Mr Fujimori has preferred to 
emphasise the direct link 
between president and people. 
He spends much of his time 
travelling the country, foster- 
ing the impression that he is 
the source of state munifi- 
cence. He has eschewed ideol- 
ogy. and made a virtue out of 
pragmatism, or - as he would 
say - “deeds not words". 

H e has outman- 
oeuvred his politi- 
cal opponents. In 
April 1992, with the 
backing of the army, he 
suspended congress and the 
constitution. Two of the main 
parties refused to take part in 
the congress that he then set 
up with the main task of agree- 
ing a new constitution, leaving 
him a majority which passes 
any law he sends before it 
Mr Fujimori, a self-confessed 
authoritarian, has also concen- 
trated power in Lima. Grass- 
roots movements, whether of 
peasants, workers or shanty- 


town dwellers, have seen their 
influence eroded; in country 
areas recently reclaimed from 
the guerrillas, Mr Fujimori's 
military allies have replaced 
elected civilian governors. 

This, argue his opponents, is 
unhealthy in a country where 
there is little history of democ- 
racy. It has undermined the 
country’s political and judicial 
institutions, they say, leaving 
Peru, with all its ethnic and 
economic divisions, as far 
away as ever from becoming a 
cohesive nation. For these rea- 
sons, Mr Fujimori’s achieve- 
ments remain superficial, they 
believe, offering room for suc- 
cessful opposition. 

Mr P£rez de Cuellar said, 
when launching his candidacy, 
that going through Peru he 
found “vast areas of poverty 
and systematic ill-treatment of 
institutions". He would perfect 
“what had already been 
achieved”, but with “democ- 
racy, genuine stability, devel- 
opment and jobs". 

From Mr Toledo, the opening 
campaign message was; 
“Changes and achievements 
need to be institutionalised. It 
is extremely dangerous to 
leave the country in the hands 
of one person, however capable 
he may be." 

The need for mature institu- 
tions and political parties and 
a decentralisation of power 
may weU be pressing. But 
matched against Mr Fujimori's 
successes on the economy and 
against terrorism, it may prove 
hard to turn that into a cam- 
paign slogan. 



BUSINESS 


LINK 


See what’s really new at 
The Accountants & Financial 
Directors Exhibition. 

Business Links are local centres of business support 
services, run hy business for business and backed by Government 
40 centres are already in operation. 

By the end of 1995. u national network will be in place. 

To find out more, visit us at 

Stand 249. The Accountants & Financial Directors Exhibition, 

The Barbican, London. I8th-20th October 1994. 


Just 

E Brown did his 
best to reach 
the Labour par- 

nous zone yes- 
terday. He did 
not quite man- 
age that inher- 
ently improbable feat The 
shadow chancellor tried, but to 
little avail He sensibly avoided 
the technical terminology, to 
da with growth theory, that 
baffled some of us when he 
delivered bis now celebrated 
lecture to a conference on the 
economy last week. He was 
aware that this time he was 
addressing his party's annual 
conference, and tailored his 
remarks accordingly. 

“Let the nurses." he pro- 
claimed, “nurse." Warming to 
his theme, be added, “Let the 
teachers teach." Encouraged 
by the rising applause he went 
on. “Let the doctors care." 
That is the trouble with the 
English language. It catches 
you out “Let the doctors doct", 
might have carried greater res- 
onance, hut the word “doct”, 
unlike endogenous, has not yet 
been coined. 

Mr Brown will, I trust, for- 
give the above little tease. It 
was irresistible. He was, how- 
ever, making a serious point, 
namely that the Conservatives' 
creation of quangos and “pho- 
ney markets" has led to 
“administrative chaos and 
paper-pushing". Not every 
reader will agree with this, but 
I do. The health service 
reforms may be fine in theory, 
but they have yet to prove 
themselves in practice. Ditto 
the opted-out schools. The 
shadow chancellor also gave 
populist expression to the 
“new Labour" view of how to 
manage the market economy, 
some thing he has spent much 
energy and time on since April 
1992. He did not flinch from the 
awkward passages, such as: “It 
is by liberating people's poten- 
tial that we build the dynamic 


Joe Rogaiy 


a pinch of ethics 


market economy we need." He 
included several jokes of his 
own, most of them about Lord 
Jeffrey Archer. 

Alas, political life is not con- 
ducted according to the rules 
of fairness. Mr Brown's Hercu- 
lean effort was insufficiently 
rewarded. The assembly did 
not rise to its feet There was 
no standing ovation. Tears 
were not wiped from the eyes 
of the faithful. How unjust! 
The shadow chancellor could 
not have worked harder. He is 
a long-practised conference 
tub-thumper, and he did his 
best. What we need to under- 
stand is why the applause, 

while sub stan- 

tial. was no 
more than ade- 
quate to the 
occasion. 

A cold start 
on a Monday 
morning did 
not help, but 
the explanation 
runs deeper 
than that It is, 
frankly, that 
the modernised 
Labour mes- 
sage has not yet 
expressed in terms 


The most radical 
nda Labour will 
d itself able to 
offer includes 
mildly progressive 
taxation plus 
restoration of civic 
democracy 


been 
that 

quicken the heart-beat The 
blood does not course more 
rapidly through the veins on 
hearing it Well mine may but 
2 have peculiar, commenta- 
tor's, veins, veins responsive to 
words like “communitarian” 
and, on good days, even to 
phrases like “industrial regen- 
eration". The pulse rate of the 
Labour party may accelerate 
when the new leader sits down 
this afternoon, but absent a 
tour de force by Mr Tony Blair, 
it has to be said that for most 
delegates this is the most 
soothing, most gentle, least 
contentious of conferences. 
Never mind the posturing of 
some of the trade union lead- 
ers. They are old gentlemen in 
mid-life crisis, easily slapped 
down. In spite of them you 
have to characterise the first 


day of this conference as Dulls- 
ville. squared. 

Reinventing the Left?, pub- 
lished yesterday, tells us why, 
although it does not set out to 
do so. It is a collection of seri- 
ous essays, edited by David 
Miliband, bead of policy in Mr 
Blair’s office. As Mr Miliband 
writes in Iris introduction, 
none of the authors believes In 
revolution, but all espouse 
social and economic reform. 
This may be sensible philoso- 
phy, but it is milk-and-water 
politics. Old socialism, with its 
Marxist infusion and its mar- 
tyrs' blood, is now an anachro- 
nism. When in vogue it was, if 

nothing else, 

rousing. Tou 
were angry 
with it, or 
angered by it, 
as the dele- 
gates were by 
Mr Arthur 
ScargUTs rant- 
ing yesterday. 
The free mar- 
ket and liber- 
tarian thinking 
that rose to 
such ascen- 
dancy during the 1980s releases 
similar, countervailing, pas- 
sions. These are, however, 
cooler, more querulous, times. 
Most voters would agree that 
the unregulated market has its 
failures, and many think that 
the government ought to do 
something about that. Tou 
need not put your knitting 
down to make such an observa- 
tion. It sums up today's main- 
stream thinking - Mr Milib and 
puts it thus: “The Left retains 
its distinctive place in politics 
today not because of its uto- 
pian vision of the future, but 
by virtue, first, of its critique 
of the present in other words 
its analysis of advanced indus- 
trial societies, and second its 
ambition progressively to 
achieve change." 

Where does that take us? 
“While there is an immediate 
argument within politics about 


the sorts of capitalist society - 
regulated and humanised, or 
deregulated and Hobbesian - 
we want to live in, there 
remain ambitions fundamen- 
tally to realign the economic 
and social order," says Mr Mili- 
band. I suspect that the most 
radical agenda that Labour 
will find itself able to offer 
includes mildly progressive 
taxation plus the restoration of 
civic democracy. The latter is 
an enterprise to which many 
thinking Conservatives are 
attracted. 

The recipe can only be 
brought alive by adding a 
pinch of ethics. If people trou- 
ble themselves about the effect 
of markets alone it is because 
they know that the market is 
an abstract. It has no con- 
science. Mr Miliband quotes 
several writers to the effect 
that “unfettered market rule 
will corrode precisely the val- 
ues and institutions on which 
the social order rests". This 
does not mean Tories, whether 
Thatcberite or one-nation, are 
amoral; they are patently not 
that It does mean there is a 
longing for an ethical under- 
pinning, felt on all sides of the 
political spectrum. 

Religion may attract some; 
h umanis t ethics will suffice for 
the rest of the electorate. Mr 
Blair neither hides nor flaunts 
his Christianity, but its exis- 
tence enables him to speak 
convincingly of values and 
principles. His reformist, cen- 
trist. prescriptions for the 
political economy may inevita- 
bly lack blood-and-guts excite- 
ment but if he can touch the 
ethical sensibilities of the 
party faithful, and by exten- 
sion the rest of us. he may yet 
hear prolonged cheering; if he 
convinces the troops that blow 
the principles what he offers is 
victory, there will be an 
extended stamping of feet, 
yells and whistles. 

* Polity Press! Institute for Pub- 
lic Policy Research. 108 Cawley 
Road, Oxford 0X4 1JF 


LETTERS TO THE EDITOR 


Number One Southwark Bridge, London SEX 9HL 

Fax 071 873 5938. Letters transmitted should be clearly typed and not hand written. Please set fax for finest resolution 


Lift veil to reveal 
insider dealers 


No reason 
why options 
not valued 

Prom Mr JN Stevens. 

Sir, We feel let down by the 
Accounting Standards Board. 
It allowed its sub-committee, 
the urgent issues taskforce, to 
judge whether companies are 
justified in not obeying the law 
when reporting total hoard- 
room pay (“Guidelines on 
directors’ option schemes 
issued", September 29). The 
taskforce has concluded that it 
is not practicable to Include to 
estimated boardroom emolu- 
ments a “meaningful" money 
value for directors’ share 
options. Its published reasons 
appear to us contrived and 
one-sided. There is no refer- 
ence to the fact that US compa- 
nies are being required to 
value directors' share options. 

We are concerned that ASB 
should have let the taskforce 
look at this issue. It is a matter 
of integrity. The taskforce has 
16 members. Each of the eight 
largest UK accounting firms 
has a representative. Four 
members, three finance direc- 
tors and a chief executive, 
come from leading UK compa- 
nies. So a majority will proba- 
bly have been involved either 
in signing or In auditing com- 
pany accounts which arguably 
did not comply with the Com- 
panies Act 

Is it right to allow the law to 
be judged by those who may 
not be following it? Why 
should share options not be 
valued along the lines adopted 
by the US? 

J N Stevens, 
honorary secretary, 

UK Shareholders Association, 
Half Tiles. Roseacre Cardens, 
Chilworth. nr Guildford, 

Surrey GU4 8RQ 


Pram Mr Anthony Woodward. 

Sir, In common with similar 
inquiries, the investigation 
into insider dealing in Cons- 
gold shares ran into the inevi- 
table brick wall that it is not 
always possible to identify the 
ultimate beneficiary of the 
organisation buying the shares 
(“S African leak In Consgold 
bid run-up - DTI says majority 
of dealings in call options were 
“wholly abnormal' ”, September 
30). 

There seems to be a simple 
solution to this: make it a 
requirement upon all interme- 
diaries through which finan- 


From MrGNM Mellersh. 

Sir, The circular just sent 
out by Lloyd's debt collectors 
is more remarkable than the 
aspects Mr J Hamilton Stutt 
highlights (Letters, October 1) 
in that it seeks payment of 
“debts" that everyone from the 
chairman of Lloyd's down- 
wards agrees do not exist. 

This bizarre situation arises 
because of the “double count” 
- in essence syndicates writing 
errors and omissions policies 
reserving against possible 
claims from other syndicates 
who themselves reserve 
against such claims not being 
paid. Lloyd's itself has been 
happy to take an overall credit 
for this double count in order 
to satisfy the Department of 
Trade and Industry’s solvency 
requirement for the market as 
a whole, but in spite of 
repeated requests, it continues 


cial instruments are bought/ 
sold that they can only do so if 
they are aware of the true 
owner of the investment and 
that they are empowered to 
reveal his identity, if required. 
There is a reasonable parallel 
to this approach In the proce- 
dures which now have to be 
undertaken by banks in order 
to prevent money laundering. 

If the veil of secrecy could be 
lifted from all shareholdings, 
the incidence of insider dealing 
would fall dramatically. 
Anthony Woodward, 

93 Ashbury Raid 
London SWH 


to refuse to make a similar 
credit available to individual 
Names. The result is that 
many Names able and willing 
to trade on will be unable to do 
so because they decline to 
make further funds available 
to meet what are known as 
“solvency deficits” - which do 
not in feet exist 
The situation will only be 
resolved when the double 
count is unwound by the set- 
tlement one way or the other 
of the many legal actions 
between Names and their 
agents. Who wins and who 
loses is irrelevant Meanwhile, 
Lloyd's appears determined to 
inflict the maximum damage 
on its members - a curious 
way to treat the capital base. 

G N M Mellersh. 

56 Marine Park, 

Nyeioood Lane, 

Bognor Regis P021 2QN 


Balance will 
cut costs of 
housing 

From Mr Soy Swanston. 

Sir, It is a pity Jack Straw, 
Labour’s local government 
spokesman, has resurrected Ms 
party's criticism of deregulated 
rents in the private rented sec- 
tor (“£4bn cost of housing ben- 
efit attacked”, September 26). 
The way to reduce housing 
costs for all is to ensure that 
demand and supply are in bal- 
ance. Personal help for those 
who need it, rather than subsi- 
dies to “bricks and mortar", is 
more efficient and allows occu- 
piers greater scope to choose 
tenure, type or landlord, and 
size and quality of accommoda- 
tion. 

If the needs of those who 
cannot otherwise afford ade- 
quate housing are to be met, 
and if private sector funds are 
to be tapped for this purpose, 
both housing support and rents 
must be high enough to allow 
the private sector to be confi- 
dent about long-term invest- 
ment in rented housing. Recent 
statements by both the chief 
secretary to the Treasury and 
the Labour party have been 
unhelpful to these respects. 

Nonetheless a more funda- 
mental look at the form of 
income support for both home- 
owners and tenants, with the 
aims of reducing the poverty 
trap and achieving a basis of 
support which is tenure-neu- 
tral, is overdue. Such a scheme 
could lead gradually to reduced 
housing costs to the public 
purse and in real terms. 

Roy Swanston, 

Royal Institution of Chartered 
Surveyors, 

12 Great George Street, 
Parliament Square, 

London SW1P 3AD 


Curious way for Lloyd’s to 
treat its capital base 


No need for this ignorance of European institutions 


From Mr A-JJ3irchaU. 

Sir, It was ironic that Robert 
Rice should refer (“Cost of 
Ignorance", September 30) to 
the regular confusion between 
the European Community's 
Court of Justice and the Coun- 
cil of Europe's Court of Human 
Rights, when the previous day 
your front page article, “Pen- 
sions ruling will put costs on 
employers", referred to the 
decision, of the former, as 
**. . . part of a series of judg- 
ments in Strasbourg . . 

The institutions of the Euro- 


pean Community are highly 
active and there is an enor- 
mous amount of information 
available about those activi- 
ties. There is no reason for con- 
fusion or that any of them 
should be “shadowy" bodies. 
News coverage, however, can 
often be poor, even from the 
most reliable of sources. 

Robert Rice was writing 
about the recent human rights 
reference, arising out of the 
Guinness affair. Various 
reports about that, on TV and 
in the newspapers, wrongly 


attributed it to the HU, the EC 
and the European Court of Jus- 
tice. On the day, recently, that 
the proposed paternity-leave 
legislation was under discus- 
sion in Brussels, a radio news 
report conjectured that if a 
compromise could not be 
agreed with the UK, then 
under the Social Chapter, the 
other ll states, might go it 
alone! 

Robert Rice is correct about 
the European Court of Justice. 
It and the other Community 
institutions do enjoy c onsider - 


able “power ... over business" 
as well as other aspects of our 
lives. But as long as significant 
media comment directs our 
attention to matters such as 
the European Commission’s 
interference, with our inalien- 
able right to regulate for our 
selves, the size and shape of 
our courgettes and bananas. I 
fear that we shall continue to 
pay the “cost of ignorance". 
Arthur James B ire hall. 

16 Cheriton Close. 

Queens Walk. 

Ealing . London WS1TR 


Cunous result if deferred tax provided for on discounted basis 


From Mr Tony Wedgwood 
Sir. Lex refers to the possibil- 
ity oT establishing deferred tax 
provision, on a discounted basis 
(“Deferred tax”, September 28). 
The wind is already blowing in 
that direction. In the furore 


over the provisioning aspects 
of FRS7. many people may not 
have noticed its reference to 
the discounting of long-term 
monetary items. It does not 
actually say that it should 
apply to deferred tax, but 


this is the implication. 
However, until deferred tax 
is put on to a more rati onal 
basis, this could lead to the 
rather curious result that 
deferred tax provisions would 
be discounted if they come 


with an acquisition, but not if 
they are internally generated. 
Tony Wedgwood, 
partner, 

KPMG Peat Marwick, 

1-2 Dorset Rise, 

Blackfriars. London EC4Y 


r 





FINANCIAL TIMES TUESDAY 


OCTOBER 4 1994 



lies 


•. , ■ 

• , Will 

ilf 


i 


FINANCIAL TIMES 

TrOTl^ 6 ^; tT 11 Bridge ’ London SE1 9HL 

Tel. 07I-S73 3000 Telac 922186 Fax; 071407 5700 

Tuesday October 4 1994 


SDR wars 
in Madrid 


When an essentially innocuous 
proposal to raise international 
liquidity promotes a near-brawl 
among the world’s most influen- 
tial economic leaders, something 
is clearly amiss. The representa- 
tives of the Group of Seven indus- 
trial countries and the managing 
director of the International Mone- 
tary Fund clashed over the issue 
on Sunday, mainly because each 
had an exaggerated sense of what 
was at stake. Their Inability to 
resolve their differences is regret- 
table. not merely for developing 
countries which would have bene- 
fited from Mr Michel Camdessus's 
proposal, but for the GTs ability 
to adapt to the fact that it is no 
longer the only game in town. 

Mr Camdessus's proposal for a 
new allocation of special drawing 
rights - the IMF's reserve cur- 
rency - has been around for some 
years. Justifying such an injection 
of liquidity into the global finan- 
cial system means answering two 
potential doubts: Erst. about 
whether it is strictly needed; and 
second, whether it will be globally 
inflationary. 

Mr Camdessus claims that a low 
level of reserves is putting unnec- 
essarily harsh constraints on the 
import capacity of some develop- 
ing and post-Conmmnist coun- 
tries. Many developing countries 
now have access to alternative, 
private sources of financing ; the 
case for supplementing these with 
IMF resources would appear to be 
quite weak. But Mr Camdessus is 
correct to point out that not ail 
countries are so fortunate, and 
may need further emergency 
assistance from the fund. 


Providing transitional help to 
developing countries in macroeco- 
nomic distress is one of the least 
controversial aspects of the IMF’s 
role in the world. Such countries 
might be supported by other 
means - by enhancing the fund's 
resources for making structural 
adjustment loans, for example. 
But the managing director clearly 
believed that a proposal which did 
not require individual members to 
contribute the extra funds directly 
would have more c hance of suc- 
cess. 

Neither Mr Camdessus's pro- 
posal nor the compromise agreed 
over the weekend among the G7 
countries themselves was an opti- 
mal solution to the problem he 
identifies. 

But neither in itself was likely 
to prove highly inflationary 
either. The s ums involved were 
simply too small. In truth, Sun- 
day's stand-off in Madrid owed 
less to this concern than to the 
fact that issues of much greater 
importance were thought to be at 
stake: namely, the existence of a 
global “capital shortage” and the 
future role of the IMF. 

The fear that rising investment 
demand is putting upward pres- 
sure on global real interest rates 
is unlikely to go away. But just as 
the future course of global infla- 
tion will not be altered by a 
phased $23bn increase in SDRs, 
nor will such an injection alter the 
fact that net saving rates in 
Europe and elsewhere are cur- 
rently too low. Mr Camdess us and 
the G7 representatives did them- 
selves a disservice by appearing to 
suggest it could do either. 


Wrong turn 


Slovakia is at a crossroads, and at 
the weekend voters steered then- 
country down the wrong path. 
Offered politicians who promised 
market reforms and liberal treat- 
ment of Slovakia's ethnic minori- 
ties, the electorate instead 
endorsed the anti-reform platform 
of former prime minister Vla dimir 
Meciar, who is now likely to 
return to office in coalition 
with more extreme nationalist 
allies. 

Unlike the former communists 
now ruling Poland and Hungary, 
Mr Meciar and his coalition part- 
ners have the potential and per- 
haps the will to turn Slovakia off 
the road or economic reforms and 
political tolerance. 

The election results are bad 
news not Just for Slovakia, but for 
the rest of central Europe. Brati- 
slava's next government could 
exacerbate ethnic tensions else- 
where in the region and provide 
an excuse for west European lob- 
bies seeking to impede central 
Europe’s access to the EU. 

Mr Medlar's promise to freeze 
Slovakia’s fledgling privatisation 
programme is the worst economic 
omen. Czechoslovakia's velvet 
divorce bequeathed to Bratislava 
the Uon's share of rust-belt indus- 
tries. The obvious difficulty of 
reforming these industries proba- 
bly explains why Slovak voters 
lost their nerve at the weekend. 
But such reforms are vital if their 
country is to compete with its 
increasingly prosperous neigh- 
bours. Mr Meciar may find it diffi- 
cult to deliver his promised mora- 
torium on privatisation - nearly 


lm Slovaks have already bought 
privatisation vouchers and facto- 
ries have already been earmarked 
for sell-off. But foreign investors 
who had shown interest in Slo- 
vakia will be discouraged. 

More worrying for the rest of 
Europe Is the fact that the symbi- 
otic relationship in Slovakia 
between economic stagnation and 
extreme nationalism is likely, to 
grow stronger. Hie fear of painful 
economic transition which pushed 
Slovaks into Mr Meciar’s arms 
also rewarded extreme national- 
ists with a surprisingly high 5.6 
per cent of the vote. Under its new 
leaders, Bratislava is likely to step 
up discrimination against the 
country's 560, 000- strong ethnic 
Hungarian minority, a prospect 
which understandably disturbs 
neighbouring Hungary. 

There is still hope that as Mr 
Meciar confronts the tricky task of 
forming a coalition, government 
and the even greater challenge of 
reviving Slovakia's economy, he. 
like former communist leaders in 
Hungary, will embrace market 
reforms and set aside ethnic quar- 
rels. 

As for western European coun- 
tries, they should not rush to pun- 
ish Mr Meciar: that would only 
push Slovakia further into its 
self-imposed isolation. But they 
should assure Slovakia's neigh- 
bours. particularly Hungary, that 
pursuit of more enlightened ethnic 
policies will be recognised and 
rewarded, and insist that Slovakia 
will not be allowed to hold up its 
more reform-minded neighbours’ 
progress towards EU membership. 


Scrambled policy 


Europe has been better at 
spawning regulations on the own- 
ership of television channels than 
it has at encouraging new ser- 
vices. The latest debate - over 
ownership of digital satellite sta- 
tions - shows signs of perpetua- 
ting the confusions of the past 

Last week, British terrestrial 
broadcasters voted against propos- 
als for a new code of conduct put 
forward in Geneva by the steering 
board of the European digital 
video project. The group, which 
brings together 145 organisations, 
is attempting to set standards for 
digital television, which could 
eventually deliver many more 
channels than conventional anal- 
ogue signals. Although a majority 
of members adopted the code, the 
row Is unlikely to die away. 

The UK broadcasters’ concern is 
that the code will permit a high 
degree of vertical integration 
which could stifle new channels. 
In particular, they fear that one 
organisation could own the 
encryption or “scrambling sys- 
tem for delivering programmes, as 
well as owning the programmes. 
In controlling the means of deliv- 
ery - in acting as ‘'gatekeeper”, in 
the industry's phrase - a company 
might prevent others gaining 
access to audiences unless they 
paid an exorbitant toll fee. 

Many are sceptical of the poten- 
tial of digital television. But the 
issue has gained heat partly 
because of the success of satellite 
channels, delivered by conven- 
tional analogue signals, which 
gain some of their revenue from 
subscription. These include 


BSkyB, in which Pearson, owner 
of the Financial Times, has a 
stake, as well as Canal Plus in 
France and FUmnet in the Bene- 
lux countries. These channels 
have demonstrated that where 
audiences are small, subscription 
rather than advertising may be an 
essential source of revenue. They 
also show that the first company 
to set up a means of encrypting 
programmes and then collecting 
subscription revenues has a natu- 
ral monopoly. 

UK terrestrial broadcasters have 
been slow to appreciate the power 
of such combinations; they made 
little mention of the issue in then- 
comments on the 1990 Broadcast- 
ing Act But their attempts to pre- 
vent the same pattern emerging in 
digital television are misguided. 
They give little weight to the 
argument that the company which 
bore the initial risk of backing one 
delivery system should get some 
reward. Moreover, new systems 
are emerging to break the sub- 
scription monopoly, notably cable. 

Vertical Integration in satellite 
television provides a powerful 
market position, which is capable 
of being abused. But there are bet- 
ter solutions than banning partic- 
ular configurations, hi particular, 
companies should press for more 
information about the gatekee- 
per’s terms for allowing access to 
the subscriber base, and to report 
abuses promptly to regulators. 
They should avoid, though, press- 
ing for rules which threaten to 
add another ill-thought out layer 
to one of the trickiest areas of 
European competition policy. 


★ 


i 7 


Spanner in the 
Rolls-Royce engine 

Peter Norman explains the arcane issue that has caused 
a split between the IMF and its principal shareholders 



M r Michel Cam- 
dessus, managing 
director of the 
International Mon- 
etary Fund, has 
pulled off a remarkable feat. 

He has elevated the special draw- 
ing right (SDR), the IMF's own 
reserve asset, from almost total 
obscurity into the stuff of headlines. 

On Sunday, the IMF's policy- 
making Interim Committee foiled to 
agree a modest increase to the 
world's currency reserves, prompt- 
ing acrimony over Mr Camdessus's 
role in pursuing the issue. There 
was concern among the Group of 
Seven leading industrial countries 
that the IMF managing director had 
found himself at odds with his prin- 
cipal shareholders, including Mr 
Lloyd Bentsen. the US Treasury sec- 
retary. 

While the clash will not have any 
significant effect on the fortunes of 
the global economy, it raises ques- 
tions about the future authority of 
the Fund and Mr Camdessus's posi- 
tion as its head in his remaining 
two years and four months of office. 

The issue about which so much 
heat has been generated is arcane, 
even by the standards of Interna- 
tional monetary diplomacy. 

The SDR is an artificial currency 
unit, a composite of the dollar, 
D-Mark, yen, French franc and ster- 
ling which is at present worth 
about $1.47. SDRs were first created 
in the late 1960s after years of grow- 
ing concern over a perceived short- 
age of international liquidity, but 
now just account for little more 
than 2 per cent of non-gold reserves. 

For some years, Mr Camdessus, 
backed by the developing countries, 
has been pushing for a general allo- 
cation of SDRs to be distributed 
among the IMF’s 179 members. 
Before the current IMF meeting, he 
proposed a 36bn SDR allocation. 
This stance was backed by the 
developing countries, some of which 
put forward similar plans. 

Under the IMF statutes, a general 
allocation is permissible, provided 
there is a "global need" for such 
reserves and provided it wins the 
support of 85 per cent of the IMF's 
members’ votes in the Fund board. 

To demonstrate global need, Mr 
Camdessus pointed to an antici- 
pated expansion of demand for non- 
gold reserves of all IMF member 
countries of about 400bn SDRs over 
the next five years. He said 55 per 
cent of all countries and 67 per cent 
of the former communist states "in 
transition” have international 
reserves equivalent to less than 12 
weeks of imports. 

Mr Camdessus’s proposed alloca- 
tion would meet about 9 per cent of 
the forecast expansion in demand 
for reserves. This would be modest 
in relation to the size of the world 
economy, but Mr Camdessus has 
pursued his case with extraordinary 
passion. He genuinely believes the 


SDR should live up to the plans of 
its Inventors and become a central 
part of the International monetary 
system. To achieve this, he believes 
a boost in its reserve role from the 
current low level is cruciaL 

Germany, together with the US. 
UK and other members of the G7, 
have long argued against such 
money creation by the IMF, declar- 
ing it to be unnecessary, potentially 
inflationary and creating a danger- 
ous precedent Mr Hans Tietmeyer, 
Bundesbank president, insisted that 
with today's large international cap- 
ital markets there was no “global 
need" for new reserves. 

However, Germany and the other 
big industrialised countries recog- 
nised that the 37 countries that had 
joined the IMF since the last issue 
of SDRs in 1981 were victims of an 
injustice. These countries, many of 
them former communist states, had 
no SDRs in their reserves. 

Germany was therefore prepared 


to back a compromise proposal put 
forward by Mr Kenneth Clarke, the 
UK chancellor, and Mr Bentsen for 
a special allocation of I6bn SDRs. 
This would benefit all IMF mem- 
bers, but the newcomers and cer- 
tain poor developing countries in 
particular. 

However, it would necessitate a 
change in the IMF statutes involv- 
ing parliamentary ratification In 
most member states, in addition to 
requiring an 85 per cent majority of 
the IMPs votes. These hurdles, the 
Germans felt, were high enough to 
dispel any idea that the IMF could 
become a money-creating machine . 

The UK-US compromise on the 
SDR was presented in a package 
together with plans to raise the 
annual access limits to the IMPs 
normal loan facilities for countries 
in economic difficulty. Also envis- 
aged was a boost to t he sy stemic 
transformation facility (STF), which 
the IMF has set up as a temporary 


source of support for former com- 
munist countries. 

UK officials always said it would 
be difficult to secure agreement for 
the package. But hopes rose on Sat- 
urday because the G7, representing 
about 45 per cent of the IMPs votes, 
gave it unanimous backing. The 
agreement of France was seen as 
especially significant and raised 
hopes that Mr Camdessus, a former 
director of the French Treasury and 
central bank governor, would foil 
into line with his compatriots. 

Instead, Mr Camdessus stuck 
with his proposal and carried the 
developing countries with him, with 
the support of Mr Manmohan Singh, 
the influential Indian finance minis- 
ter, who headed a G9 group or 
developing country representatives 
in the Interim Committee. 

It was clear on Sunday that nei- 
ther the UK-US nor the Camdessus 
proposals could command the nec- 
essary 85 per cent majorities. The 


proposed strengthening of the STF 
failed for the same reason. How- 
ever, agreement was reached that 
the access limits to loan facilities 
should be raised from 68 per cent to 
“at least 85 per cent of quota” or 
membership rights. 

Some poorer IMF members will be 
the losers from Sunday's events. 
British officials estimated that the 
UK-US plan would bave boosted 
Russia’s reserves by about $l.47bn 
and those of the entire former 
Sonet Union by S2.35bn, Low-in- 
come developing countries stood to 
gain $2.49bn and lower middle 
income countries $4.55bn. 

With hindsight, some G? minis- 
ters admitted it was bad tactics to 
publicise their accord on the UK-US 
plan. This gave the impression that 
they were giving the IMF member- 
ship a “take it or leave it" offer. 

B ut they also believe that 
Mr Camdessus made a 
bad mistake in thinking 
that he could break the 
unity of the G7. One par- 
ticipant observed that he had 
ignored advance warnings that the 
biggest IMF shareholders would not 
support a general allocation. By 
pushing his plan in the meeting, he 
forced them to choose between their 
own club and the IMF managing 
director they opted for the G7. 

Mr Camdessus's performance is 
seen by G7 officials as an extraordi- 
nary lapse by a man regarded as a 
skilled operator and, until now, as a 
very able managing director of the 
IMF. It has also raised questions 
about the role ol the IMF managing 
director. Was he right to lead the 
charge for the developing countries 
or should he have campaigned for 
the compromise backed by his big- 
gest members? Should he behave 
like a politician or an official? 

After Sunday's meeting, an unre- 
pentant Mr Camdessus insisted he 
had a right to promote policies of 
his own and rigorously back them, 
even if they ran counter to the ideas 
of the biggest IMF members. 

Yesterday, ministers attending 
the IMF meeting were involved in a 
damage-control exercise, cultivating 
a "business as usual” air. The talk 
was of new discussions at the IMF's 
□ext spring meetings, perhaps even 
a special Interim Committee gather- 
ing on the question. 

But the weekend row has cast a 
cloud over the IMF in this its 50th 
anniversary year. 

Mr Camdessos’s stand may even- 
tually be validated by the great 
sweep of history, as the Industria- 
lised countries lose economic clout 
to the so-called developing world 
But by battling with his principal 
shareholders, and the US in particu- 
lar, the IMF managing director has 
thrown a spanner in the works of 
what has always been seen as the 
Rolls-Royce of the international 
financial institutions. 


UK consumers may be willing to pay more, but they are also more cynical, says Diane Summers 


Mind the quality 


L and Rover unveils its new- 
generation luxury Range 
Rover, while Jaguar invests 
heavily in a new range of 
luxury saloons. At the same time, 
Louis Vuitton rations its customers 
to one of its prestige handbags each, 
and supermarkets fill their freezer 
cabinets with HSagen-Dazs and 
other expensive "adult" ice creams. 

These are all signs that manufac- 
turers believe that, now the reces- 
sion is over, demand for premium- 
priced products will mount 
Their confidence, according to the 
Henley Centre, the forecasting spe- 
cialist is not misplaced However, 
they cannot relax completely: Hen- 
ley also reveals the emergence of 
the “cynical consumer", who is wise 
to marketing ploys and in relentless 
pursuit of value for money. 

For the time being, consumers in 
the UK seem willing, once again, to 
seek out and pay for quality, 
according to Henley’s annual con- 
sumer attitudes survey* of 2,000 
adults in Britain, published this 
week. This should cheer up the 
owners of big-name consumer 
brands, which have seen their mar- 
gins eroded by cut-price and own-la- 
bel rivals. 

The responses to one question - 


“Do you agree that highest price 
usually means you get the highest 
quality?" - show how attitudes 
have changed “In the boom years 
between 1985 and 1989, there was a 
strengthening association between 
high price and high quality," says 
Henley. “Then, as the recession bit, 
this association weakened 

“A low point was reached in 
either 1991 or 1993, depending on 
the market, but since then a recov- 
ery has taken, place such that in 
most . . . markets, the strength of 
the association has reached or sur- 
passed the levels of 1989." 

This sounds like good news for 
manufacturers. Less encouraging, 
however, is what appears to be a 
contradictory finding in the report 
When asked whether they agreed 
with the statement “When shopping 
always look for the cheapest items", 
35 per cent of Henley’s sample said 
yes this year - up from 32 per cent 
in 1993 and 29 per cent in 1989 - and 
Henley forecasts this price pressure 
will continue. 

Henley says the two findings are 
not inconsistent. Consumers are 


prepared to pay a premium for qual- 
ity - what is at issue is the size of 
that premium. In the past, some 
brand owners "allowed unsustaina- 
ble price differentials to develop to 
the point at which the consumer 
(prompted by recession) revolted”, 
it says. The lesson is that price pre- 
miums can be charged, but their 
size needs to be monitored by man- 
ufacturers alongside quality. 

Not everyone agrees with Henley 
that consumers’ increased aware- 
ness and insistence on value for 
money are here to stay. Winston 
Fletcher, chairman of thus Advertis- 
ing Association, which represents 
both brand owners and advertising 
agencies, is sceptical. 

"The changes may be more tem- 
porary than many now think. There 
is always a tendency to overesti- 
mate the significance of contempo- 
rary moods. It will all depend on 
whether the economy continues to 
be buoyant for any length of time." 
Three to five years of growth would 
see consumers giving a lower prior- 
ity to price, In his view. 

For the present, however, con- 


sumers are demanding quality and 
value - as well as higher standards 
of service and wider choice. Hen- 
ley’s data suggest that, even in the 
depths of the recession, pressures 
on manufacturers and retailers to 
provide better service and choice 
continued to grow. 

Archie Norman, chief executive of 
Asda, the retail group, agrees: 
“We’ve had an explosion in con- 
sumer choice. Customers have been 
shopping around and they’re aware 
of the differences. 

“That doesn't just mean they're 
more price conscious - they're 
more value conscious. I think that 
is a permanent change. They'll pay 
a premium for better value, but 
they won’t pay a premium for noth- 
ing extra." 

In the past, brand owners' strat- 
egy for attracting consumers to 
expensive goods was to throw 
money at an advertising agency. 
Henley suggests this may no longer 
be so successful, owing to the emer- 
gence of what it terms the “cynical 
consumer", who is sceptical about 
advertising claims and “unwilling 


to accept the messages of the mar- 
keting community at face value". 

Those bora since the war have 
grown up surrounded by mass-me- 
dia advertising and can spot over- 
blown claims and the hard sell. 
Experience means they know, says 
Henley, that "the real message of 
all advertisers is, crudely put, *we 
want your money' ". 

Fletcher, of the Advertising Asso- 
ciation, says: “People understand 
the wiles of the advertiser very 
weLL The average 35-year-old has 
seen 150,000 different commercials 
and seen most of them more than 
six times. It has been shown that 
infants can differentiate between 
commercials and programmes from 
the age of about three onwards.” 

Overall, the message to brand 
owners is that, as Henley says, con- 
sumers will retain “a willingness 
constantly to reappraise the price- 
quality equation”. In. spite of eco- 
nomic recovery and a reviving 
interest in high quality, the “cyni- 
cal consumer” is likely be a fixture 
for some years to come. 

* Planning for Social Change, Henley 
Centre, 1994/95, pari of a syndicated 
programme for £9.000 a year. 071-353 
9961 


Pasternak 

pastiche 

■ She was “a frail bird, whose 
wings had been torn apart” and be 
was a “skilled, adventurous lover” 
who didn't know the meaning of 
bulimia. Welcome to Princess in 
Love, Anna Pasternak's account of 
the romance between the Princess 
of Wales and Captain James Hewitt 

The book has the unique virtue of 
having "sickened” Dame Barbara 
Cartland, the 91-year-old authoress, 
outraged the unshockable publicist 
Max Clifford, and caught virtually 
every British tabloid editor on the 
hop. 

Indeed, one wonders whether 
someone in the dirty tricks 
department at Tory central office 
might have had a hand in it It 
certainly helps divert the spotlight 
from Labour's Tony Blair Iove-fest 

But back to Ms Pasternak, 
great-niece of the Dr Zhivago 
writer. She even obliges with a 
cut-out-and-keep guide to the 
qualities which you need If you 
want to get sybaritic with a 
princess of your choice: “The 
languid arrogant walk, the right 
shoes, the laid-back drawl; and the 
nonchalance to sail through any 
social situation." 

What she cannot provide is any 
indication of how to make true love 
last, although there are good 
recommendations for what to do 
when things go sour (listen to 
Pavarotti, go and fight in the Gulf 


war. hold your head in your hands 
for a few moments and contact a 
publisher). 

The only possible way of making 
this ludicrous book at all readable 
is to substitute the words 
“monstrously lucrative" for the 
word “special” throughout, as in 
the author’s note: “It seemed to me 
that the love that Princess Diana 
had shared with another man was 
too special to remain secret" 


Exercise room 

■ Spotted in the postroom of a 
large London publishing company; 
“This department requires no 
physical fitness program; everyone 
gets enough exercise jumping to 
conclusions, flying off the handle, 
running down the boss, flogging 
dead horses, knifing friends in the 
back, dodging responsibility and 
pushing their luck." 


I’m all right Jack 

■ it’s all right for some. Neil 
Kinnock, preparing to depart for his 
£l(&500-a-year (plus expenses) 
sojourn in Brussels, yesterday 
offered the Labour conference the 
definition of “rich" which the 
present party leadership has 
consistently refused to disclose. 

Anyone earning over £60,000 a 
year should consider themselves in 
that category and thus come to 
terms with the possibility of higher 
taxes, Kinnock told a Blackpool 


Observer 



Td sell my grandmother and her 
ideology to get elected’ 


fringe meeting. He, of course, will 
not be paying British taxes, Tory or 
Labour. 


Older men 

■ Ructions within the City's Court 
of Aldermen last week suggest that 
the principal of Buggins' Turn has 
gone ever so slightly out of fashion 
as a means of producing Lord 
Mayors. 

Not only has alderman Neil 
Young resigned, but it is 
understood that two other names 
will not “go forward". Bryan Toye, 
chairman of Toye & Co, a company 
making civil and military regalia. 


seems to want to slide down the list 
a bit. 

Tony Bull, a partner in surveyors 
Walter Bull, who when elected 10 
years ago was initially vetoed by 
his fellow aldermen, has also heard 
his name will not now go forward. 
Unlike Young, he has not resigned. 

Meanwhile, Old Etonian Young's 
departure has sparked the 
reemergence of a rather unlikely 
ally in the form of Dennis 
Delderfieid, a liveryman who edits a 
rag called the City of London & 
Docklands Times and who used to 
be on the Court of Common Council 
until he was declared bankrupt two 
years ago. He would like aldermen 
elected every four years - at 
present, once elected, they can hang 
on until they are 70. 

The Corporation of London knows 
him only too well. He played a big 
part in orchestrating the Smithfleld 
meat traders’ (largely successful) 
battle over funding of their market. 
His grasp of the arcane world of 
City politics seems to be as keen as 
his tongue is vicious. 

Dennis the Menace has found 
another cause. 


Excess slop 

■ If Ms Pasternak gets upset at the 
reviews of her work mentioned in 
Observer's first item, she should 
spare a thought for poor old Dan 
Moldea, 

Moldea has just spent a small 
fortune taking the New York Times 
all the way to to the US Supreme 


Court because the paper’s reviewer 
had rubbished his book, 

Interference : how organized crime 
influences professional football. 

The Supreme Court has thrown 
out Moldea 's $10m libel lawsuit on 
the grounds that the NYT review 
was "a supportable interpretation of 
the author's work". 

The review, written by Times 
sportswriter Gerald Eskenazi, 
concluded that there was “too much 
sloppy journalism to trust the bulk 
of this book’s 512 pages". 

Sloppy journalism as a defence 
against libel? That's a new one. 


Hot- footed 

■ Football talent scouts must 
already be booking their flights for 
Buenos Aires. The goalkeeper of 
Argentine championship leaders 
Velez Sarsfield - Jose Luis 
Chilavert - is making something of 
a name for himself. . . as a 
goal-scorer. 

At the weekend Chilavert, an 
international player for Paraguay, 
scored a last minute goal with a 
25-metre free kick, giving his team a 
1-0 victory over Deportivo Espanol. 

Chilavert begged to be allowed to 
take the kick, much to the obvious 
grumpiness of team captain Roberto 
Trotta. 

Trotta only gave in when 
Chilavert refused to return to his 
goal Chilavert's team-mates went 
wild when he scored; Trotta did not 
join in. 

Sour grapes or what? 







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FINANCIAL TIMES 

Tuesday October 4 1994 



Markets 
in US and 
Europe 
hit by 
rate fears 


Italian leader intervenes over state broadcasting 

President forces budget 
changes on Berlusconi 


By Robert Graham in Rome 

President Oscar Luigi Scalfaro 
has forced the Berlusconi govern- 
ment to make two embarrassing 
last-minute changes in the 1995 
budget, affecting the Rai state 
broadcasting organisation and 
reform of pensions. 

In so doing. Mr Scalfaro has 
once again been obliged to use 
his limited authority as ultimate 
guarantor or the constitution to 
correct the behaviour or the inex- 
perienced five-month-old right- 
wing coalition. 

Yesterday, Mr Gianni Letta. 
head of the prime minister's 
office, sought to play down the 
incident, saying: "Too much 
weight has been given to the 
president’s intervention. It was 
merely a procedural observa- 
tion." However, this contradicted 
Mr Scalfaro 's own view of events. 

Although the budget was 
approved early on Wednesday by 
the cabinet after an all-night ses- 
sion, the details were not avail- 
able until late Friday. Indeed, the 
president complained he had only 


been given the complex and volu- 
minous budget documentation to 
sign shortly before the September 
30 midnight deadline. 

But he had already been made 
aware of budget proposals to 
raise the annual fee paid by the 
Rai from L40bn ($25.7m) in 1994 
to L160bn in 1995. Although this 
effectively restored to 1993 levels 
the fee paid by the Rai for the 
use of three television channels, 
it threatened to undermine the 
organisation's already parlous 
finances. 

The move also hi g hli g hted the 
LlJJbn annual concession fee 
paid by the three ch ann els of 
prime minister Silvio Berlus- 
coni's Fininvest company which 
was negotiated as part of the late 
1980s political deal allowing the 
media magnate to dominate com- 
mercial television. 

On his own a dmiss ion. Mr Scal- 
faro had “several" telephone con- 
versations with Mr Berlusconi 
pointing out the measures would 
contribute to the Rai's financial 
ruin and appear to be favouring 
his own networks. Mr Berlusconi 


then agreed to withdraw the pro- 
posal - portraying it over the 
weekend as an unfortunate over- 
sight. 

It is the second time in two 
months Mr Scalfaro has checked 
the government over the Rai in 
the belief its behaviour was too 
partisan. The row also reflects 
the tension between the head of 
state and Mr Berlusconi over the 
latter's unresolved conflict of 
interest with his ownership of 
Fininvest 

The other change concerned 
the way the government was 
seeking to present controversial 
reform of the state pensions sys- 
tem in the budget. 

The president refused to sign 
the budget until certain parts of 
the decree on pension reform 
were separated from the budget 
itself. Be successfully argued 
pension reform was such a sensi- 
tive issue that it required full 
parliamentary debate and there- 
fore should not be subjected to 
the automatic time limit of bud- 
get legislation that closes on 
December 31. 


IMF returns to business as 
usual after Madrid acrimony 


By Peter Norman, Economics 
Editor, in Madrid 

The world's leading industria- 
lised countries yesterday 
launched a determined effort to 
put behind them the weekend 
failure to agree on -a modest 
increase in the world's monetary 
reserves. 

Adopting a "business as usual" 
approach, ministers and central 
bank governors underlined that 
Sunday's meeting of the Interna- 
tional Monetary Fund’s policy- 
making interim committee had 
made progress towards bolstering 
the IMF's capacity for helping 
countries in economic difficulty. 

Officials said the committee's 
derision to press ahead with a 
temporary boost to annual access 
limits, which determine how 
much economically troubled 
countries may borrow from the 
fund in any given year, could 
prove a big help to both Russia 
and Ukraine. These countries are 
planning to negotiate standby 
credits with the IMF. 

The interim icommlttee has 
asked the IMF board to agree a 
formula that would allow mem- 


bers to borrow an amount equiv- 
alent to at least 85 per cent of 
their membership subscriptions 
in the fund against 68 per cent at 
present Many countries, includ- 
ing Britain, support access limits 
of 100 per cent 

The Group of Seven leading 
industrial nations and the devel- 
oping country members of the 
interim committee were unable 
to agree on an allocation of tile 

Conference reports .—.Page 5 
Spanner in tire Rolls-Royce 
engine — Page 17 

IMF's own reserve asset - known 
as special drawing rights - at 
their meeting on Sunday. 

The talks broke up acrimoni- 
ously with Mr Michel Camdessus, 
IMF managing director, roundly 
criticised by some industrial 
country representatives for fail- 
ing to back a G7 proposal for a 
selective SDRl6bn (523.5bn) allo- 
cation. 

But yesterday, as delegations 
analysed the weekend events, 
hope grew that there might be 
some resolution of the SDR dis- 


pute in the months ahead. 

Mr Camdessus told the IMF 
and World Bank's joint develop- 
ment committee that he contin- 
ued “to hope that in the not too 
distant future, agreement will be 
reached" on a package compris- 
ing an SDR allocation and a 
strengthening of the IMF’s tem- 
porary systemic transformation 
facility which helps former com- 
munist countries. 

US officials were suggesting 
that a special meeting of the 
interim committee could be 
called ahead of the next sched- 
uled IMF gathering in next 
spring. 

This would depend, however, 
on Mr Philippe Maystadt, the Bel- 
gian finance minister and interim 
committee chairman, working 
out grounds for a satisfactory 
agreement 

French officials noted there 
had been considerable movement 
on the SDR issue compared with 
18 months ago, when most big 
industrial countries were refus- 
ing to countenance an SDR issue 
and Mr Camdessus had launched 
his campaign for a SDR36bn gen- 
eral increase. 


Warburg warns of fall in profits 


Continued from Page l 


and the unsuccessful defence of 
Losmo against the bid by Enter- 
prise Oil. 

As a result of the poor trading 
performance. Warburg is reor- 
ganising its senior management 
structure so that decision-making 


becomes the responsibility of 
fewer people. In particular, War- 
burg wants to pare down the 
number of people on its manage- 
ment committees, such as the 
investment banking committee, 
which has 18 members. 

However. Lord Cairns said that 
despite the difficult trading con- 


ditions, Warburg remains com- 
mitted to running a trading book, 
buying and selling securities for 
its own account from clients. 
“We continue to see our clients 
expecting us to take risks on 
their behalf and risks, that they 
will reward us for year after 
year." 


By Philip Coggan in London and 
Frank McGurty in New York 

Financial markets fell again in 
the US and Europe yesterday 
amid growing pessimism over 
the direction of US and HE inter- 
est rates. 

US Treasury bond prices 
retreated on the release of data 
suggesting that the economy was 
still growing in spite of five 
interest rate increases by the 
Federal Reserve since Febroary. 
A rise in the September index of 
the National Association of Pur- 
chasing Managers was accompa- 
nied with news that the prices 
component of the survey had 
reached a six-year high. 

The figures reinforced suspi- 
cions that the Federal Reserve 
would soon raise interest rates 
again to combat inflation. That 
outweighed the positive effect of 
the partial accord reached by US 
and Japanese trade negotiators 
at die weekend to open Japan to 
US goods and services. 

The benchmark 30-year Trea- 
sury bond was down half a point 
by early afternoon trading, with 
the yield rising to 7.86 per cent 

In London, the FT-5E 100 
Index fell 42.8 points to 2,983.5. 
UK shares were trading lower 
even before the purchasing man- 
agers' index report in the wake 
of the profits warning from S.G. 
Warburg, the investment bank, 
and a sharp rise in the annual 
growth rate of MO, the narrow 
measure of the money supply. 

HO rose by a seasonally 
adjusted 7.1 per cent in the 12 
months to September, well above 
the government’s 0-4 per cent 
monitoring range. Given that MO 
is one of the government’s infla- 
tionary indicators, the jump in 
the annual growth rate, from 6.3 
per cent in August, increased 
fears of a farther rise in base 
rates this year. 

However, some analysts 
pointed out that statistical fac- 
tors had distorted MO’s growth, 
and played down the significance 
of yesterday's figures. 

The foil in the London market 
continued a volatile sequence 
which has seen the FT-SE 100 
index rise or fall by more than 
30 points on each of the last four 
trading days. “This volatility is 
going to continue until we have 
clear visibility on the direction 
of US rates," said Mr Keith 
Skeoch, chief economist at bro- 
ker James Capel. 

Although the German stock 
market was closed for Unity day, 
other European markets were 
also affected by a general mood 
of gloom yesterday. In Paris, the 
CAC-40 index closed 1.4 per emit 
lower, while in Italy, the Comit 
index foil 1.8 per cent 

European bond markets were 
also weaker with gilts and Ital- 
ian government bonds down. 


US bonds fall Page 4 
World stocks. Second section 
London Stock Exchange. Page 39 


FT WEATHER GUIDE 


Europe today 

A large and active depression near the White 
Sea will continue to draw unseasonably cold air 
into northern and western Europe. Norway will 
be cold and cloudy with wintry showers over 
the sea and snow showers in the fjords. 

Lapland will be wintry with sub-zero 
temperatures and occasional snow flurries. 
Strong and chilly north-westerly winds will push 
showers, some with sleet or hail, into the 
northern UK. the Low Countries, northern 
Germany and Denmark. High pressure, 
stretching from Ireland to central Europe will 
promote sunny periods from northern France to 
Poland. The north slopes of the Alps will have 
cloud and intermittent rain which will turn to 
sleet or snow above 800 metres. Showers will 
develop over southern Italy and the Balkans but 
summer-like conditions will continue elsewhere 
in the Mediterranean. 

Five-day forecast 

High pressure near Ireland will intensify and 
move onto the continent. There will be settled 
conditions and cold nights from England to 
Belarus. It will remain unsettled and warmer 
from Scotland to Scandinavia Showers and 
thunder will develop over the western and 
central Mediterranean. 



TODAY’S TEMPERATURES 


Situation a 1 12 GKfT. Temperatures maximum for day. Forecasts by Mateo Consult of the Netherlands 



Maximum 

BoSIng 

fair 

20 

Caracas 

fair 

30 


Celsius 

Belfast 

shower 

10 

Cardiff 

far 

11 

Abu Dhabi 

sun 

3? 

Belgrade 

thund 

24 

Casablanca 

fair 

22 

Accra 

cloudy 

30 

Benm 

shower 

9 

Chicago 

sun 

17 

Algiers 

lair 

25 

Bermuda 

ran 

29 

Cologne 

shower- 

10 

Amsterdam 

shower 

11 

Bogota 

shower 

20 

Dakar 

fair 

30 

Albans 

fair 

M 

Bombay 

fair 

33 

Dallas 

fair 

30 

Atlanta 

SUl 

25 

Brussels 

fair 

10 

Delhi 

3U1 

34 

B. Aims 

sun 

IB 

Budapest 

loir 

16 

Dubai 

sun 

35 

8. ham 

cloudy 

11 

C.hagen 

hail 

9 

□utalin 

cloudy 

n 

Bangkok 

cloudy 

J4 

Cairo 

fair 

32 

Dubrovnik 

ffiund 

24 

BflrtMtona 

shower 

f 

22 

Cope Town 

fair 

19 

Edinburgh 

cloudy 

11 


Constant improvement of our service. 
That's our commitment. 


© Lufthansa 


Faro 

sun 

24 

Madrid 

shower 

31 

Rangoon 

shower 

35 

Frankfurt 

shower 

10 

Majorca 

shower 

24 

Reykjavik 

doudy 

7 

Geneva 

shower 

13 

Malta 

lair 

28 

Rio 

shower 

25 

Gibraltar 

(air 

23 

Manchester 

cloudy 

11 

Rome 

shower 

24 

Glasgow 

rain 

12 

Mania 

shower 

31 

S. Raco 

fair 

24 

Hamburg 

hail 

9 

Melbourne 

shower 

13 

Seoul 

shower 

IB 

Helsinki 

windy 

6 

Mexico City 

far 

21 

Singapore 

shower 

32 

Hong Kong 

fair 

31 

Miami 

cloudy 

31 

Stockholm 

snow 

6 

Honolulu 

shower 

31 

Milan 

fair 

31 

Strasbourg 

doudy 

10 

Istanbul 

fair 

26 

Montreal 

fair 

16 

Sydney 

rain 

22 

Jakarta 

ran 

31 

Moscow 

rain 

15 

Tangier 

sun 

22 

Jersey 

fair 

11 

Munich 

cloudy 

9 

Tel Aviv 

sun 

33 

Karachi 

sun 

35 

Nairobi 

fair 

29 

Tokyo 

ded 

24 

Kuwait 

sun 

38 

Naples 

thund 

25 

Toronto 

lair 

IB 

t_ Angeles 

fair 

23 

Nassau 

fair 

32 

Vancouver 

sun 

20 

Las Pams 

sun 

27 

New York 

doudy 

18 

Venice 

thund 

20 

Lima 

cloudy 

20 

Nice 

Her 

21 

Vienna 

doudy 

12 

Lisbon 

fair 

ffl 

Nicosia 

sun 

33 

Warsaw 

fair 

10 

London 

fair 

IS 

Oslo 

Fair 

B 

Washington 

fair 

21 

Lux.bourg 

shower 

9 

Paris 

fair 

12 

Wellington 

doudy 

11 

Lyon 

cloudy 

13 

Penh 

fair 

18 

Winnipeg 

fair 

11 

Madeira 

cloudy ' 

25 

Prague 

shower 

9 

Zurich 

shower 

11 


THE LEX COLUMN 

Warburg stumbles 


S.G. Warburg could have done without 
more bad publicity after its embarrass- 
ing spat with Swiss Bank Corporation 
over the Enterprise bid for Lasmo. It 
has given scant detail of what appears 
to be a slump in its trading income 
this year. Yet it would be wrong to 
assume that this fresh disa ppointment 
implies a misguided strategy. If there 
are flaws, they have more to do with 
implementation. 

Warburg has laid Itself open to the 
charge of complacency in two areas. 
With its market-making and propri- 
etary trading activities, it aimed to 
enhance its profitability by focusing 
on the revenue line. But costs matter 
too, and those at Warburg are high: 
average staff costs per employee last 
year were £105.000 compared with only 
£81.000 at Hein wort Benson. Second, 
market-making is a mug's game In 
weak markets, but the risks can be 
reduced by judicious use of deriva- 
tives, an expertise which Warburg has 
been slow to develop. 

Had manng pmpnt paid more atten- 
tion to these points, its strategy might 
now escape scrutiny. After all most 
investors seemed happy to accept the 
notion that global aspirations were 
natural for a hank of Warburg's size. 
Securitisation of financial markets Is 
creating more business for investment 
banks, so Warburg is in a growth 
industry. 

The snag, as yesterday's announce- 
ment showed, is that this means 
greater focus on trading with all its 
inherent risks. For a bank like War- 
burg, the price of ambition is a fall in 
the quality of namings 

J Sainsbury 

J Salisbury's acquisition of a stake 
in Giant Food is consistent with the 
strategy of careful diversification 
away from UK food retailing which 
began nearly 20 years ago. By acquir- 
ing 50 per cent of the voting rights in 
the Washington-based Giant aid just 
16 per cent of its equity. Sainsbury has 
capped potential risks while paving 
the way to take full control in due 
coarse. 

Giant will make a good fit with 
Shaw's, the New England food retailer 
which became a full subsidiary in 
1987. Combined, the two companies 
will have turnover of tSbn and a 
strong position In seven out of 10 of 
the US’s most prosperous states. There 
is scope for geographical expansion 
and possible synergies on the buying 
ftont and systems development 

The scope for rationalisation is how- 


FT-SE Index: 2063.5 {-42.8} 


UK merchant banks 


Share price* (rebased) 

400 — 



ever limited: at 4.8 per cent Giant's 
operating margins are lower than 
those Sainsbury achieves in the UK 
but are significantly better than 
Shaw's. The full benefits will only 
come when Sainsbury has lull man- 
agement controL The sooner this 
takes place, the better. It took five 
years for Shaw's to become a 100 per 
cent subsidiary. This delay arguably 
contributed to its poor earnings per- 
formance. 

In the short term, the deal will not 
contribute materially to earnings. Nor 
does it answer the big strategic ques- 
tion of how Sainsbury can maintain 
earnings growth when UK food retail- 
ing is stagnating. A really significant 
diversification will require Sainsbury 
to abandon its usual caution. 

Hoechst 

Hoechst's restructuring represents a 
cultural revolution at the world’s larg- 
est chemicals group. The intention is 
to internationalise and make the com- 
pany more dynamic and profit-orien- 
tated. The number of divisions has 
been slashed from 15 to seven. Each 
wiD be responsible for its own profit- 
ability, offering freedom from Frank- 
furt's bureaucratic bungling. The new 
management is younger and more 
international For the first time, an 
American is on tire board. 

Hoechst's new-found dynamism is to 
be welcomed, especially given its pre- 
vious torpor. Since 1990. operating 
profits have fallen more than 53 per 
cent, the return an assets from 1L8 
per cent to 5.3 per cent Over the same 
period, Bayer slashed 19,100 employees 
from its pay-roll. Hoechst's total edged 
down by just 407, although the figure 


does include recent consolidation of 
overseas subsidiaries. Not surpris- 
ingly. the company has underper- 
formed. the DAX by 35 per cent since 
1988. 

The biggest headache remains the 
drugs division - a decade ago the 
world's largest pharmaceuticals busi- 
ness, but now sixth. The portfolio is 
fragmented and old. More than 75 per 
cent of its drugs date from before 1974. 
Pre-research and development mar- 
gins are only 24 per cent, compared 
with an industry average of 40 per 
cent The challe nge before the new 
management is huge. The new team 
may look dynamic, but it must prove 
it knows the difference between activ- 
ity and productivity. 

Short selling 

City regulators are working them- 
selves into a tizzy over alleged market 
manipulation through short selling in 
the run-up to secondary share issues. 
The Securities and Investments Board 
has already sounded off on the sub- 
ject Now the Stock Exchange has pub- 
lished a consultative document outlin- 
ing ways in which regulations . 
covering short selling could be tight- 
ened. The aim would be to prevent 
investors artificially depressing a 
stock's price and then covering their 
positions by buying shares in an 
offering. 

The regulators are putting the cart 
before the horse. Before suggesting 
more regulations, they first need to 
establish whether any abuse is taking 
place. Certainly, there are cases of 
share prices foiling in the run-up to 
issues such as the second tranche of 
BT and Wellcome. But this may 
merely be a natural adjustment to the 
fact that the market is having to 
absorb more stock. 

Regulators should also remember 
that issuers are adept at finding ways 
of supporting share prices during an 
offer period. Not only does a vast 
array of advisers mean discordant 
voices are often hard to find; issuers 
are able to refuse stock to investors 
who sell shares in the offer 
period. 

Some of the rules suggested could 
have the effect of so tilting the playing 
field that share prices were artificially 
inflated. A wise regulator would tread 
warily before taking sides. The best 
reason for intervening would be to 
ensure greater transparency in share 
dealing. Beyond that, regulation is 
likely to become so heavy-handed that 
it stifles financial innovation. 


This announcement appears as a matter of record only 

£19,500,000 

Management Buy-Out 


IEC 


Group 

Innovative Electronic 
Components Group Ltd 

A leading pan-European distributor of electronic components 
Arranged, structured and led by 

CINVen 

Equity funding provided by 

CINVen Funds 
Gresham Trust pic 
Misys pic 

Banking facilities arranged by 
NatWest Markets Acquisition Finance 


Having the capital to back a big idea is only half the secret. 
Having the vision to spot one is the other half. 


CINVen 


CINVen UP Isa member of IMRO 






ftS&N 



O 


telia 


Your Swedish Telecom Partner 

UK Tel: 071 416 0306. UK Fa* 071 416 0305. 


BRIEF 


Deutsche move on 
Morgan Grenfell 

Deutsche Bank is expected later this month to 
tum ?!*? ce closer «>-operatioo. with its 
banking subsidiary Morgan Grenfell which could 
lead in several years' time to the integration of 
their investment banking operations. Deutsche will 
also try to combine and bolster its equity broking 
activities in Europe. Page 20 

COS rewards of Goneste programme 

Ailing French-based computer services group Cap 
Gemini Sogeti has forged a multinational stru ct ure 
from a disparate range of operations. Dubbed Gene- 
sis. the ambitious restructuring prog ramme could 
help it return to profit in 1995 . Page 23 

Baneatto rescue plan bears fruit 

Mr Alfredo SSenz is putting his reputation as 
Spain's most famous banking troubleshooter to the 
test In his new role as chairman of troubled Ban- 
esto. First-half figures suggest a rescue plan involv- 
ing a PtalSObn ($L4bn) capital injection, the pur- 
chase of Pta285bn worth of nan-perfor ming assets 
and a zero-interest loan of P£a315bn to afi55et cur- 
rent losses is working. Page 20 

AMD wins deal with Digital 

Strong demand for microprocessors, used in per- 
sonal computers, has helped Advanced Mic ro 
Devices to achieve record third-quarter sales. The 
Silicon Valley chip maker also announced a con- 
tract to provide microprocessors to Digital Equip- 
ment, one of the fastest g r owin g PC manufacturers. 
Page 22 

Purchases help Badger! Ine 

The acquisition of two regional bus companies 
helped Badgerline, the UK bus group to more than 
double its interim pre-tax profits to £5.38m ($8^m). 
Page 26 

Roadblocks for Australian Insurer 

NRMA, Australia’s largest motor insurer, wants to 
move to shareholder-owned status before the end of 
the year through a stock market flotation. But 
NRMA is running into surprising roadblocks as it 
pursues the demutualisation path. Page 24 

Revival in Latin American eurobonds 

Greater political and economic stability in Latin 
America helped the region's eurobond market 
revive during the third quarter of this year, follow- 
ing two successive quarters of decline. Eurobonds 
were also boosted by a better tone in the US Trea- 
sury market Page 25 

US practice alters company's value 

Using US accounting methods, in which goodwill is 
written off through the profit and loss account over 
40 years, earning s at Attwoods. the UK waste ser- 
vices group, would be more than halved, according 
to the offer document for the group published by 
Browning-Fenis Industries, which launched a hos- 
tile £364m (8515m) bid last month. Page 27 

Merger and acqulstton sector buoyant 

With the US takeover market just completing its 
most active quarter so far, the merger and acquisi- 
tion advisory business remains one of Wall Street's 
bright spots, with a total of $3bn in fees earned so 
far this year. Page 22 


Companies In this Issue 


AMD 

Aaaroo 

Assoc British Foods 

Attwoods 

Axa 

BBV 

Badgartlne 
Banco Santander 
Banesto 
Bettenvare 
Bilton 

BlsfcH Mining 
BolsWessanen 
Bor&al Assurances 
Browning-Ferns Inda 
Cl Group 
Camellia 

Cap Gemini Sogeti 
Capita 

Cereal Partners 
Chez G4rard 
ChrroBCfence 
Cogetar-lmpresit 
Densltron 
Deutsche Bank 
Doeflex 
Equifax 
FR Group 

Fleming Inv Mgemant 

Fujisawa 

Gates (Frank G) 

Giant Food 
Gtynwed 


Market Statistics 


^Annual reports sentea 3 
Benchmark Govt bonds 
Bond fuhrro and options 
Bond prices and yields 
Commodates prices 
Dividends announced. IK 
Bits currency rates 
Eurobond prices 
Bud Interest fasttces 
FT-A world frScea Back t 
FT Gold Mtees Index 
FT/BMA Wfiond wc 
FT-SE Actuaries indices 


22 Harrfng Baker 

23 Hutchison Whampoa 
27 Intracom 

27 Intrasoft 
22 J. Sakrabury 
20 Japan Air Lines 
26 Karishamns 
20 KeSogg 

2D London & Assoc Inv 

26 Lucas Industries 

27 MCI 
27 MGN 

10 Morgan Grenfefl 

22 NRMA 

27 National Power 

26 Nippon Mortgage 

28 OAG 

23 Pearson 

27 Forth 

19 Power Corporation 

28 OS Holdings 
28 RTZ 

20 S.G Warburg 
27 Safe Partners 

20 Scottish Television 
27 Shoprifa 
27 SnteBPD 

26 Stanhoma 

27 TransTec 

24 Transco Energy 

28 Unite* 

19 Weetabix 

28 Zsolnay Porcelangyar 


Foreign exchange 36 

GDIS prices 25 

Lifts equity options Back Page 
London share service 3433 

London trad options Backpage 
Managed funds sendee 34-37 

Money markets 3B 

New Inti bond issues 25 

Recent Issues, UK 31 

Short-term W raies 36 

US Merest rates 55 

World Stock Markets 37 


K6W YORK (5) 
Aba 

Alcoa 

CaraKttwk 
Wfl Amw 

Mia 

AM) 

MtonlKh 

Tensta 

PARSE (FF«1 

Rt*e» 

Credlyw 1 

Ecco i 


8sn + m 

24 «. 13* 

5W + 

28 - Ifa 

33H - in 

- 1h 


cad) Med 4«.i - 179 

Fonc Lyon 583 - 62 

UFSUat 3S9 - 31 

TOKYO (Tun) 

Maas 

wraChem BB7 + 29 

ToaWB 808 + 18 


430 + « 

853 + 21 

Z12 - 12 


wraOwo 

T09MW 

Fmnm 

Ando Cans 
Cerda! Rn 
DMSHm 
FbJBKHM 


612 - 28 

465 - 20 

7S3-« 
I860 - 110 


Frankfurt efaeod. N*» York prksee at ixaopm. 


LONDON (Pence) 


AAF 

AMnceRu 

Btecfcteja 


40+6 

11* + 2h 

87 + * 

123 ♦ 7 

ATS + 10 

56+7 


AranoSean 7Sh - J** 

Aeda 62H - 31* 

BWQ SscwIBH 84 - ■ 

BaMBrgmi 320-1+ 
Dhte Mom 178 - 7 

Eastern BK 707 - 35 


Bdcs 305 - 30 

KMtdWdtag 215 - 10 

KsiitnQ Mw 2B - 16 

un Fortwng 154 - « 

looms tm - 8 

IpfpM I9H - 3h 

scottfsti Power 33111 - 2415 

snarea* 181 - « 

gnprite 28 " * 

Sjnflji New Out 33 * - *0 

IMMJMKB 460 - M 

VftrtwglSO SW - 101 


FINANCIAL TIMES 


COMPANIES & MARKETS 


©THE FINANCIAL TIMES LIMITED 1994 


Tuesday October 4 1994 


~v -HE SAYS rr EASES the j 
01^2 -JsiWW OF BUNNlhlG] 
>¥ |2 u? 7W£ gar fleet." f 


ALTERNATIVELY: 

OTWpili 021-7063388 

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JAL to disclose huge currency hedge loss 


By WaGam Dawkins in Tokyo 

Japan Air Lines is preparing to 
disclose a long-suspected, unreal- 
ised foreign exchange loss 
amounting to many billions of 
yen, the result of a misjudged 
currency hedge. 

Japan's largest airline refused 
to confirm reports that its unreal- 
ised loss stood at Y45bn (8450m). 
It said details of JAL’s finances 
would be published with jntwiwi 
earnings on October 28. 

A company official did confirm 


the existence of a 10-year $3.6bn 
forward currency contract, taken 
out in 1986. JAL started to take 
out forward dollar agreements 
after the 1985 Plaza Accord to 
curb the dollar, at the time val- 
ued at Y240. According to market 
reports, unconfirmed by JAL, the 
airline contracted to buy dollars 
at an average rate of Y185. 
against the current rate of 
Y99.58. 

JAL is among several large 
Japanese companies expected to 
declare heavy currency losses 


when they announce first-half 
results at the end of this month 
and early in November. 

Until now, companies have 
been able to subsume currency 
losses in depreciation and operat- 
ing costs, but the Finance Minis- 
try has told listed companies to 
declare unrealised profits or 
losses from forward currency 
trading, from the present tax 
year. 

JAL needs to raise an average 
of 8800m each year for buying 
aircraft, about 40 per cent of 


which it finances through for- 
ward rate agreements, with the 
remainder raised at current 
exchange rates, the official said. 

The aim of the new disclosure 
rules, introduced from the end of 
March, is to avoid shocks, like 
the Yl65bn foreign exchange loss 
on unauthorised dealings at 
Shows Shell, an 00 refiner, in 
February last year and the 
Yl52.5bn currency deficit from 
Kashhna Oil, another refiner, last 
ApriL 

The initial indications of JAL's 


loss have already caused a mild 
shock, sending the airline’s share 
price down 14 per cent to Y737 in 
Tokyo yesterday. 

Securities analysts had 
assumed that the airline would 
be charging a loss of that order 
against published profits in 1996 
and 1997. “They have been qui- 
etly swallowing foreign exchange 
losses of this size, year-in year- 
out," said Mr Paul Smith, securi- 
ties analyst at James Capel 
Pacific. 

The average market guess is 


that JAL has charged a total of 
Yl55bn of foreign exchange 
losses to operating profits over 
the past six or seven years, he 
said. 

There was therefore no reason 
to change JAL's forecast of a 
tumround to a Ylbn pre-tax 
profit this year, from a Y26.16bn 
loss in 1993. If anything. JAL 
appears to be making use of bet- 
ter than expected revenues in the 
first half of this year to close 
currency contracts quickly. Mr 
Smith said. 


Sainsbury buys $325m Giant 
holding in second US foray 


By NeO Buckley tn London 

J. Sainsbury. the UK’s largest 
grocery retailer, is strengthening 
its presence in the US by taking a 
$325m stake in (Kant Food, the 
Washington DC-based supermar- 
ket chain. The deal is Salisbury's 
second foray into the US, after it 
took control of the Shaw's super- 
market nhafn tn thft north-east- 
ern US in 1967. It gives the UK 
retailer a strong position an the 
eastern seaboard, and a t rading 
presence in seven of the 10 
wealthiest US states. 

Giant the I5tb-Iargest US food 
retailer, has 107 stores in the 
Washington DC metropolitan 
area, including surrounding 
counties in Maryland and Vir- 
ginia, and 42 in or around Balti- 


more, Maryland. It do mina tes 

these local markets - with 44 per 

cent of the Washington DC gro- 
cery market - and made a pre- 
tax profit of 8151.3m last year on 
sales of 83.57bn- 

Sainsbury is acquiring 9.5m 
non-voting “A" shares, giving it 
16 per cent of Giant’s equity, and 
125,000 “AL" voting shares. It will 
have 50 per cent of voting rights 
and the right to elect three of 
(Kant’s seven board directors. 

The total consideration is 
in wash, ftmded from bor- 
rowings and caih resources. The 
shares are being acquired from 
family members of the late Mr 
Jac Lehnnan. co-founder of 
Giant The remaining 50 per cent 
of voting shares are owned by the 
other CO-fQ UIldar and rh airman 


Mr Israel Cohen, 82. Mr Cohen 
has no children involved in the 
business, but Sainsbury would 
not comment an whether it had 
first refusal on Mr Cohen’s 
shares in the event of his death 
or a decision to «>11- 

"This is very much a first 
step," said Mr David Sainsbury, 
chairman. "We will see how 
things develop. We regard the 
North American market as one of 
the major areas of gr o w t h for the 
group in the future," be added. 

Mr Cohen welcomed the deal, 
saying he looked forward to a 
“productive relationship". 

Giant plans to expand fain the 
surro unding states of Delaware, 
Pennsylvania and New Jersey, 
where it has identified 36 possible 
locations. It expects to open at 


least six stores annually. 

Mr Sainsbury said this would 
take it into states where Shaw’s 
was also planning to expand. He 
added there was much scope for 
joint buying between the chains 
and Sainsbury in the UK, and for 
exchange of expertise In areas 
such as distribution and syste m s. 

After a slow start, Sainsbury 
has more than doubled operating 
profits in Shaw's over the past 
seven years, through centralising 
distribution, introducing “val- 
uoadded" services such as phar- 
macies, ami increasing the level 
Of hi gher-marg in OWn-Iabel prod- 
ucts to 25 per cent - compared 
with a 14 per cent average for US 
food retailers. 

Lex, Page 18 

Shoprite warning, Page 28 



Shaw's 


WRUBKtetHh. few Haaptwra, Mar 
Rhode Want, (Mae. Conowtaj t8B4 

Sales: 

Sl.96bn 

Operating profit 

S4&5m 

Stores: 

86 

Employees": 

16,200 

• Fut-Omeand poit-Ome 



Giant Food 


waMigtra DC. Montana, 

Vfaglna 

Sales: 

Pre-tax profit 

Stores: 

Employees*: 


Fat 

109* 

$3£7bn 

Sl51-dm 

159 


• fUMinwandnart-ttn* 


Warburg’s woes give UK bankers the shivers 

Lr, arsssrs Proflt warning raises questions about integrated strategy 


1 For British investment banks 
watchftil of the experience of 
New York firms and already fac- 
ing tiie prospect of severe trading 
losses, yesterday’s news from 
S.G Warburg could not have 
more worrying. Interim profits 
for the group, the largest in the 
UK investment banking sector, 
will be less than half those in the 
1998 period. Given that asset 
managraiiRnt has held Up, that 
implies that profits from invest- 
ment banking have almost 
totally dried up. 

Warburg, tike the integrated 
US investment banks which 
reported sharply lower first-half 
results, has suffered from volatile 
bond, equities and derivatives 
markets. Yesterday’s news still 
came as a surprise. “I was really 
astonished," said Mr Martin 
Cross, analyst at UBS. “I had not 
entertained that profits could be 
£10Qm (8150m) lower." 

It appears unlikely, however, 


that there wifi be any immediate 
moves to sack staff or withdraw 
from key businesses. *T suspect 
that there will be a tightening of 
the cost line but no major review 
of strategy, no major soul-search- 
ing," said Mr Philip Gibbs, ana- 
lyst at Barclays de Zoete Wedd. 

Nor do Warburg's rivals expect 
any abrupt change in strategy. “I 
wouldn’t have thought for a min- 
ute that they would make a deci- 
sion tike that based on one set of 
results," said the head of market- 
making at one of Warburg's lead- 
ing competitors. 

There appears little prospect of 
an upturn in trading profits. War- 
burg’s performance also prompts 
questions as to the profitability 
of market-making and the sense 
of Warburg’s strategy of becom- 
ing an integrated investment 
Hank “The problem is that these 


bad times don’t last long 
enough," said the head of 
operations at another large 
investment bank. "If they did, 
there would he a good shake- 
out" But the so-called integrated 
approach that Warburg has taken 
- emulating the model set by Its 
larger US competitors - is a 
strategy which requires a signifi- 
cant trading presence. It assumes 
that without trading activities, 
investment banks cannot com- 
pete for the primary market busi- 
ness of underwriting and placing 
large blocks of securities, nor can 
they act effectively as a broker 
between buyers and sellers. 

“If you deal in secondary mar- 
kets (buying and selling securi- 
ties of a particular issuer), you 
have a much better chance of get- 
ting primary market (underwrit- 
ing new issues) business. This is 


the gospel now," says Mr Gibbs. 

The largest US investment 
banks have pioneered the inte- 
gration of various businesses into 
a single package, to meet the 
myriad needs of a corporate cli- 
ent Such integrated sendees do 
not require a move away from 
trading activities, but the use of 
marketmaking, proprietary trad- 
ing or even the creation of deriv- 
atives products for individual cli- 
ents, to generate fee-based 
income. The advantage of this is 
that it balances the low-return 
but more constant income 
derived from fees and commis- 
sions against the highly cyclical 
gains from trading activities. 

For all the strategic logic of 
Warburg's attempt to turn itself 
into a full-service investment 
Hank , it has been an expensive 
venture. “To protect one bumness 


- corporate advisory - you go into 
another which has very low 
returns and is incredibly risky 
and competitive", Mr Gibbs says. 

Warburg is more heavily 
exposed to trading profits - prof- 
its derived from using its own 
capital to buy and sell securities 

- than most of its competitors. 
Warburg denied that it had lost 
money on trading on its own 
account But Mr David Poutney 
of stockbroker Collins Stewart 
was sceptical. “I perceive they 
have blown their socks off on 
proprietary trading. If you look 
at the others they are all ahead 
at the half-way stage.” 

Kleinwort Benson has adopted 
such an approach. It, too, 
reported a sharp fall in trading 
income in the second quarter of 
1994 but Its overall profitability 
rose, thanks to a sharp increase 


in fee and commission income. 

Few of Warburg's competitors 
yesterday took the opportunity to 
question the company’s strategy 
of integration. “The strategy has 
to be right for where they are 
now," says an executive at a rival 
merchant bank. “If you take big- 
ger and more aggressive posi- 
tions. then this sort of thing inev- 
itably happens. The test is to see 
how much money they can make 
when things go welL" 

Warburg’s timing has not been 
the best. It began to make mar- 
kets more aggressively and take 
positions just as the bond and 
equity markets turned. It could 
recoup its losses. “Perhaps the 
investing public is going to have 
to get used to these firms having 
more volatility in their results 
than before,” Mr Cross says. 

Norma Cohen and 
Nicholas Denton 


Chief price changes yesterday | 


Europe 
reaches 
for its 
cereal 


T he French are abandoning 
their croissants, Belgians 
their rolls and Italians 
their habit of nothing hut 
espresso. Across Europe, people 
are swapping their traditional 
breakfasts for a bowl of processed 
grain and cold mflk. The Euro- 
pean market for breakfast cereals 
has grown in recent years to be 
worth some SLSbn annually. 

Even during recession, most 
countries have increased con- 
sumption. For example, sales in 
France, the second largest Euro- 
pean market for cereal after the 
UK, increased by 21 per cent In 
the year to May 1993. 

Europe has become an increas- 
ingly competitive market for 
cereal manufacturers. The recent 
acquisition of two cereal compa- 
nies by the Dutch food and 
drinks company BolsWessanen, 
giving it almost 10 per cent of the 
European cereal market over- 
night, has brought into the open 
what industry insiders have 
known for some time. 

To compete seriously, compa- 
nies must have the market share 
and financial muscle to back new 
products with heavy advertising. 
This year, Kellogg is estimated to 
be spending fifim ($9m) in the UK 
alone to support its Corn Pops 
brand. 

Harrison & Crosfield, the UK 
conglomerate which sold, the 
companies to BolsWessanen. 
admitted it would not compete in 
this league by shedding what had 
been for it a successful, but 
peripheral, busi ne ss. 

The European breakfast cereals 
market is controlled by a few 
large companies. According to 
tiie Food Industry Bulletin, Kell- 
ogg do minates with more than 50 
per cent, followed by Weetabix at 


• > S* «,• r. 


-V * ''"i'r’X? >' 


GERMANY 




Soros SeUman Socfa 

9.5 per cent and Cereal Partners 
Worldwide, a joint venture 
between Nestlfe and General 
Mills, with 6 per cent. 

The arrival of CP in 19® is 
widely credited with setting off 
the real explosion in the market 
Within three years, through 
aggressive marketing and new 
product launches, it had won 
sales of some 8348m. 

Naturally, Kellogg fought back. 
When CP launched its Golden 
Grahams. Kellogg came back a 
few weeks later with its own 
Golden Crackers. When CP intro- 
duced Clusters, Kellogg 
responded with Notfeast 

T he battle even threatened 
a veteran campaigner. 
Tony the Tiger, of Frosties 
feme. CP lit upon Huey. Dewey 
and Lome, Donald Duck's neph- 
ews, as the cartoon warriors, for 
its Trio cereal in France. 

But the biggest beneficiaries of 
the battle between the cereal 
giants appear to have been the 
manufacturers of own label prod- 
ucts. Own labels claim 1L5 per 
cent of total European cereal 
sales, second only to Kellogg. The 
European market for private 
label products is widely acknowl- 
edged to be growing at a fester 
rate than the branded sector. 


. April/May 

. ’ 1994 

It is partly due to the increas- 
ing number of adults who are 
turning to cereal as a healthier 
breakfast option. In the UK, for 
example, the own label market is 
largely an adult market, focusing 
on mueslis and bran products. 

"Staples deliver more steady 
virtues," says Mr Mike Batten, 
marketing manager of the UK 
private label manufacturer. Tel- 
ford Foods. “They may have 
shown a dip in market share at 
times, but have stable volumes." 
And with the prospect of an age- 
ing population, "staples and bran 
are good bets for the future". 

In the UK, own label sales are 
estimated to be outperforming 
the overall breakfast cereal mar- 
ket’s growth of 2 per cent a year. 

“Private labels need size to 
compete" says Ms Nomi Ghez, 
an analyst with Goldman Sachs 
In the US. “Who wants to fight 
for a share of a market which 
only lias of about 840m?" 

But BolsWessanen, , now with 
50 per cent of the European pri- 
vate label market and the finan- 
cial muscle to baric this up, could 
could force Tony the Tiger, and 
his rivals, Huey, Dewey and 
Louie, to sing even louder for 
their breakfasts. 

Peggy Holiinger 


If your corporation is 
looking fora foothold in Ger- 
many or intends to broaden 
its existing base by an acquisi- 
tion, we can assist in search, 
approach and negotiation. 

As our domestic clients 
are usually entrepreneurs, 
proprietors or shareholders 
of privately-owned German 
companies, we are well ac- 
quainted with their mentali- 
ty. We are sensitive to this 
when making approaches 
and during negotiation and 
valuation. 

If local competence is 
needed to realize your acqui- 
sition goals in Germany suc- 
cessfully, please contact us 
for further information. 


Fuchs Consult 


Kreuzberger Ring 64 ■ 65205 Wiesbaden 
Telephone (x 49 611)7000 40 -Fax <\ 49 611)71 04 04 


)ng data lor the monitoring oi targets, ana me mr me nauuiuig ui w<t&iv |Kit.n<i H iu B . jj.«. nub „. b 







20 


FINANCIAL. TIMES TUESDAY OCTOBER 4 1994 


★ 

INTERNATIONAL COMPANIES AND FINANCE 


Deutsche Bank to tighten 
link with Morgan Grenfell 


Unravelling the Banesto tangle 

Chairman Alfredo Saenz talks to Tom Burns about the Conde legacy 


T he modem building on Madrid’s 
central Castellana boulevard where 
Mr Alfredo S&ens has his office is 
an ironic example of prob lems that he, 
Spain's best-known banking trouble- 
shooter, has inherited from Mr Mario 
Conde. his predecessor at Banesto. 

In 1990 Mr Conde, seeking to build up 
Banesto’s balance sheet, sold a real estate 
group which owned the bank's Castellana 
offices to a business associate at a greatly 
inflated price. As the associate, who 
owned the leisure group Oasis, did not 
have the cash for the acquisition, Mr 
Conde had Banesto lend it to him. Oasis 
could not meet the interests on the loan, 
so Mr Conde arranged to have Banesto 
lease the building over 12 years, paying in 
rent the equivalent of the loan’s principle 
and interest. 

"What do you make of a deal like that?" 
asks Mr Sfienz in his first interview as 
chairman of Banesto. He is now in the 
middle of what he calls a “divorce” from 
Oasis (Mr Conde had Banesto’s Industrial 
Corporation buy 50 per cent of the leisure 
group). Banesto is suing Oasis over a busi- 
ness arrangement that Mr S&enz, choosing 
his words carefully, says was not “fair”. 

Mr S&pnz arrived at Banesto as care- 
taker chairman on December 28, hours 
after the Bank of Spain, alleging gross 
mismanagement of the the hanlring group, 
had removed Mr Conde and his fellow 
board members. Four months later, Ban- 
esto was acquired for Pta281bn ($2-2 bn) by 
Banco Santander. 

Mr Sienz has a variety of messes to sort 
out. and some will undoubtedly end up 
with the public prosecutors who are exam- 
ining Mr Conde’s business dealing s during 
bis six-year reign as oh airman. But be is 
also quietly confident that he will rebuild 
Banesto’s 2£00 domestic branch unit into 
a leading Spanish retail hank. 

The bank was on course to lose some 
Pta55bn this year. However, the haemor- 
rhage was already stemmed in the first 
half - losses stood at Pta2L8bn at the end 
of June - and the shortfall could be down 
to some Ptal2bn by December. Between 
January and June, Banesto lost Pta495bn 
worth of deposits, 12 per cent of the total, 
but in the third quarter it recovered 
Pta230bn. 

The recovery is being fuelled by a rescue 
plan involving a PtalSObn capital injec- 



Alfredo Mmg if we fool up, Santander 
will kick us out at the next AGM’ 

turn, the purchase of Pta285bn worth of 
non-performing assets by the Deposit 
Guarantee Fund, and a zero-interest loan 
of Pta3l5bn to offset current losses. Ban- 
esto’s chairman is managing by far the 
largest lifeboat operation mounted for a 
Spanish bank. 

Mr is also immersed in ridding 

Banesto of its industrial assets. Recent dis- 
posals - involving the battery producer 
Tudor, the mining company Asturiana de 
Zinc and the Rioja winery Bodegas Age - 
has raised some Pta45bn. Banesto’s share- 
holdings in two television stations and in 
a newspaper group, which were bought by 
Mr Conde as a platform for his possible 
entry into politics and have proved costly 
Investments, are also up for sale 

With the worst behind him, Mr S&enz Is 
talking about expansion. "Next year we 
will begin to open 100 new offices, and 
they wffl in good urban locations: in Mad- 
rid. in Catalonia and in the Basque Coun- 
try.” 

"When I got here I didn’t know where 
the bathrooms were, let alone the docu- 
ments, and the first weeks were horrible.” 
he recalls. He turned himself into an audi- 
tor - “one of the enlightened sort" - and 
into a consultant “In a question of weeks. 
I had to discover what the possibilities of a 
recovery were and where the bank should 
go if It did recover." 

Mr S tem, who had been “lent" by his 


employers. Banco Bilbao Vizcaya, where 
he was first vice-president, to sort out the 
Banesto mess, readily accepted San- 
tander’s offer to stay on as c ha ir m a n . “The 
pank of Spain kept dropping me hints that 
I was part of the Banesto acquisition pack- 
age." 

What Mr Emilio Botin, ch a ir m an of San- 
tander, acquired when he bought Banesto 
was a plain- talking Basque-born profes- 
sional Mr Sdenz, 52, who worked in the 
steel industry before joining Banco Viz- 
caya (later merged with Banco Bilbao ta 
form BBV) in 1981. made his reputation by 
turning around Bancs Catalans, a bank- 
rupt Barcelona-based institution acquired 
by Vizcaya from the Guarantee Fund. 

Mr Sdenz is delighted with the financial 
muscle that Banco S an ta n der provides, 
and with the “total management freedom" 
that Mr Botin has given Banesto’s new 
fpam , all of whom followed the new chair- 
man from BBV. 

“If we foul up, Santander will kick us 
out at the next AGM." he says. "Those are 
rules of the game that we understand and 
we are happy to live with them.” 

I nherent to the “rules" are that Ban- 
esto will be competing directly with 
Santander - it will open a branch next 
door to one of its parent’s if it believes 
there are sound business reasons for doing 
so. Mr Sdenz Is keen to segment the Ban- 
esto business between its strong rural net- 
work, the hank 's traditional cash cow, and 
the urban branches he plans to develop. 

“I know Emilio Botin very well and 1 
know that real competition, gripping a 
knife in your teeth, is exactly what he 
expects. It would be a mistake, in any 
case, to act differently, at Catalans, we 
competed ferociously with BBV." 

Santander owns 67.9 per cent of Banesto 
but as part of its acquisition arrangement 
will this week be disposing of 13.7 per cent 
of its equity to existing shareholders. It 
will offer one new shar e for every two held 
at par value of Pta400. 

“I would be very surprised if the share- 
holders don't wholly subscribe the offer," 
says Mr Sdenz. If the offering is successful. 
It will not be just because of the give-away 
pricing. Battered by the Conde experience, 
the shareholders will, like the shrewd Mr 
Botin, be putting their faith in a very 
different chairman. 


Fibres business drives growth at Snia BPD 


By John Gapper 
in Madrid 

Deutsche Bank is to attempt to 
strengthen co-operation with 
its merchant banking subsid- 
iary Morgan Grenfell in a move 
that could eventually lead to 
the integration of their invest- 
ment banking operations. 

Deutsche is likely later this 
month to announce changes in 
its relationship with Morgan, 
which it acquired five years 
ago. It will also try to combine 
and bolster its equity broking 
activities in Europe. 

Mr Hihnar Kopper, chairman 
of Deutsche’s managing board, 
said yesterday that its 
attempts to build up its equity 
operations would not require a 
formal change In its coopera- 
tion agreement with Morgan. 

He said there would be “no 
dramatic changes to what we 
are doing In London" and that 


Mr Hilmar Kopper, chairman 
of Deutsche Bank's manag in g - 
board, yesterday backed the 
suggestion that banks should 
smooth out peaks and troughs 
in their earnings by making 
precantionary provisions 
against corporate loans, wri t es 
John Gapper. 

He was speaking at a brief- 
ing in Madrid to coincide with 
the annual meetings of the 
IMF/World Bank. He said 
Deutsche was “quite ready 
to participate in a discussion” 
on the broader use of general 
provisions, an idea raised 
by Mr Brian Quinn, the 


By Kerin Hope in Athens 

Intrasoft, the fast-growing 
software arm of Intracom, the 
Greek telecoms equipment 
manufacturer, is to raise 
Dr8.54bn ($35m) through a flo- 
tation on the Athens stock 
exchange. 

The company plans to 
increase its capital base by 25 
per cent, the minimum 
required for a listing on the 
Greek bourse. 

It will issue 1.09m new com- 
mon shares and 732,000 non- 


Deutsche was “particulary 
happy" with its working 
arrangements with Morgan. 
“No fantastic announcements 
will be made", he said. 

However, a working group of 
four members of Deutsche's 
managing board, including Mr 
John Craven, Morgan’s chair- 
man, believes that the 
merchant bank's corporate 
finances should work more 
closely with Deutsche's 

bankers. 

The review of investment 
banking carried out by the 
group is likely to lead to a 
statement that Deutsche is 
strengthening its equity distri- 
bution in London and wants 
closer linka with Morgan's 
advisory activities. 

Deutsche's board is likely to 
say that Morgan's merchant 
banking and advisory 
operations could eventually be 
brought together with its own 


Bank of England's executive 
director for financial 
stability. 

Mr Kopper argued that Deut- 
sche’s loan provisioning policy 
was already closer to Mr 
Quinn's suggestion than other 
financial institutions, and that 
there was “wider scope’’ for the 
use of general provisions from 

other hanks 

“A lot of analysts in the mar- 
ket do not understand what a 
bank like cur’s does when it 
talks about far-reaching provi- 
sions,” said Mr Kopper. 

Mir Quinn suggested in a 
speech last week that banks 


voting shares, of which 292,000 
are set aside for a private 
placement. The common 
shares are priced at Dr4,800 
each and the non-voting shares 
at D r4,500. 

The offering is being under- 
written by a group of 13 Greek 
and foreign banks, led by 
National Rank of Greece and 
Barings of the UK. Alpha 
Finance, the merchant banking 
arm of Alpha Credit Bank, is 
financial adviser for the issue. 

Intrasoft, Greece's largest 
producer of integrated software 


under a single management, 
but Deutsche directors expect 
that this could take about five 
years. 

Five of Morgan's eight activi- 
ties - asset management, 
Channel Islands Trust 
operations, emerging markets 
debt and equity trading, devel- 
opment capital, and treasury, 
will be unaffected by the initial 
changes. 

Its equity distribution and 
project finance activities in 
Asia are likely to be integrated 
more closely with Deutsche's 
primary equities activity in the 
region, although stopping 
short of a full merger. 

In addition, corporate advi- 
sory and equity underwriting 
in Europe, as well as project 
and export finance advice - 
which together employ 300 of 
Morgan's 2,800 staff - will be 
linked more closely with Deut- 
sche. 


could counter swings in earn- 
ings over economic cycles by 
making general provisions 
against corporate loans when 
they are made rather than 
waiting for defaults. 

The idea would face some 
accounting difficulties because 
auditors might argue that a 
bank was artificially underval- 
uing its assets, although banks 
currently use the approach for 
consumer loan portfolios. 

Mr Kopper disclosed that 
Deutsche had decided to use its 
own name for its I talian sub- 
sidiary Banca d’ America e 
dltalia. 


systems, said it would Invest 30 
per cent of funds raised in new 
premises and updating its 
hardware and software 
systems. The remainder would 
be spent on developing prod- 
ucts new to Greece, such as 
electronic mailing and data 
interchange systems, and 
expanding activities in Balkan 
markets. 

Intrasoft’s first -half pre-tax 
profits were DrLlbn, a 95 per 
cent increase over 1993. Turn- 
over rose 50 per cent to 
DiS-lbn, 


Finland’s 
Unitas 
struggles to 
trim deficit 

By Christopher Brown-Humes 
bn Stockholm 

The depth of the 1992 crisis in 
the Finnish banking sector 
was highlighted yesterday 
when Unitas, the country's 
second largest banking group, 
announced heavier write-offs 
and another big loss for the 
first eight months of the year. 

The bank said its credit 
losses, at FMI.82bn ($374m), 
were FM137m higher than in 
the same 1993 period. 

It relied on lower interest 
rates, higher capital gains on 
equities and the acquisition of 
part of the Savings Bank of 
Finland to achieve a 14 per 
cent redaction in overall pre- 
tax losses, to FM870m from 
FMl.Olbn. 

Banks in Finland, Sweden 
and Norway were over- 
whelmed by losses in 1992 
after their economies fell into 
recession and real estate mar- 
kets crashed. However, while 
banks in Norway and Sweden 
have returned to profit. Fin- 
land's leading banks warn 
they may not show black fig- 
ures until 1996. 

Finland’s domestic economy 
is still straggling to emerge 
from a three-year recession, in 
spite of a boom in the export 

sector. 

Mr Markka Pohjola, Unitas 
executive vice-president, said: 
“In Sweden, the banking crisis 
was mainly related to the real 
estate market. In Finland, it 
has more to do with small and 
medium-sized companies 
which have gone bankrupt. 
The Finnish process has devel- 
oped more gradually." 

A large part of Unitas’ credit 
losses in the first eight months 
was caused by the collapse of 
two groups - Haka, a con- 
struction concern, and Eka, a 
retail and wholesale company. 

Mr Pohjola said Unitas 
expected lower credit losses in 
the final four months, and an 
overall pre-tax loss that was 
roughly half last year's 
FMlL57bn. Next year the bonk 
expects to break even before 
retaining to the black in 1996. 

Non-performing loans 
totalled FM6.18bn at the end 
of August, down from 
FM&84bn at the end of last 
year. 


Snia BPD, the fibres, chemicals 
and biotechnology subsidiary 
of flat, lifted operating profits 
by nearly 50 per cent and more 
than doubled pre-tax profits in 
the first half of 1994, writes 
Andrew Hill in Milan. 

The group, quoted on the 
Milan stock exchange. 
Increased pre-tax profits to 


L26Bbn ($17 .2m) in the first six 
months of the year, from 
L12.1bn in the year-ago period. 
Operating profits rose to 
L54.6bn on turnover of 
Ll337bn, up 16.7 per cent an 
turnover for the first six 
months of 1993. 

The group attributed the 
strong performance mainly to 


improvement in the fibres divi- 
sion. headed by its quoted sub- 
sidiary Snia Fibre. It returned 
to an operating profit of 
LlO^bn in the first half, com- 
pared with a loss of Lli.7bn a 
year earlier. 

Snia BPD said it expected its 
full-year pre-tax result to show 
“a significant improvement” 


on 1993, thanks partly to a con- 
tinued reduction in financial 
charges. 

By contrast, Cogefar- 
Impresit, the Fiat construction 
subsidiary, is still suffering 
from the downturn in the Ital- 
ian public works sector. It 
announced a consolidated loss 
of L36bn for the first half. 


Kopper urges broad provisions 


Intrasoft plans Dr8.54bn float 


. • 7 .. . :: . 

AU these securities having been sold, this announcement appears as a matter of record only, September, 1994 


Q 

do 


Public Offer for Sale of 70,572,000 Issued 
and Fully Paid-up Shares of 

Commercial Facilities Company (s.a.k.) 

Incorporated as a Kuwaiti shareholding company 

on behalf of 

Kuwait Investment Authority 

Lead Manager 

National Bank of Kuwait; 

Co-lead Manager 

Kuwait Investment Company S.A.K. 

Underwriters 

National Bank of Kuwait S.A.K. 

Kuwait Investment Company S.A.K. 

Burgan Bank S.A.K. Gulf Bank K.S.C. 

Waff a International Investment Company S.A.K. A1 Ahli Bank of Kuwait K.S.C. 

Industrial Bank of Kuwait K.S.C. International Financial Advisers, K.S.C. 

Kuwait Real Estate Bank K.S.C. Securities Group S.A.K. 

The Bank of Kuwait and the Middle East K.S.C. 

Adviser to the Vendor 

Gulf Investment Corporation 


© 


Arranger 


struts gll cEsh 

, If# National Bank of Kuwaiti 



AU of these securities honing been sold, this announcement appears as a matter of record only. 


$80,500,000 

Pacific Basin Bulk Shipping Limited 

5,750,000 Units 
Each Unit Consisting of 
One Common Share 
and 

One Warrant to Purchase 0.25 Common Shares 


Lazard Fr£res & Co. 

Furman Selz Incorporated 

NatWest Securities Limited 

Kleinwort Benson Securities Asian Capital Partners Cazenove & Co. 

Jaroine Fleming Nikko Europe Plc Petercam S.A. 


Fondsfinans A.S. 


September 1994 


WOOLWICH 

-Building Society - 

£175,000,000 

Floating rate notes due 1997 

Notice is hereby given that 
the notes wlU bear interest 
at 6. 10156% per annam from 
30 September 1994 to 30 
December 1991. Interest 
payable on 30 December 1994 
will amount to S/52 12 per 

910.000 note and SI. 521 21 per 

3100.000 note. 

Agent: Morgan Guaranty 
Trust Company 

jpMorgan 


Mortgage Funding 
Corporation No 1 Plc 
£175,000,000 Class Arl 
£25,000,000 Class A-2 
Mortgage backed Boating 
rate notes March 2020 
For the interest period 
30 September 1994 to 30 
December 1994 the Class A-I 
notes will bear interest at 
633306% per annum. Interest 
payable on 30 December 1 9S-J 
will amount to SI. 580.42 per 
SI00.0Q0 note. The Class A -2 

notes will bear interest at 

€.53906% peratuiumJnlemt 
payable on 30 December 1994 
will amount to S 1.63029 per 
S100.000 note. 

Agent: Morgan Guaranty 
Trust Company 

JPMorgan 


Currency or Bond Fax - FREE 2 week trial' 

also daily gold and stiver faxes Annc v/hltby 

:tcM Ch " ! ". , '' llly '’ l: ’ L: , d „ , , r«> I- 07 1 -734 7 1 74 

7 SIMN3W Lw .cn V. !3 7HEJ. UK- .. Fox- 07 1 -439 49*6 



Yukong Limited 

(Incorporated in the Republic of Korea with limited liability) 

Notice 

to the Warrantholdersof 

Yukong Limited 
U.S. $75,000,000 5% per cent. 
Bonds due 1996 with Warrants 

IS HEREBY to the holdersof the warrants that as a 

result of issuance by the Company of convertible bonds which 
e nt0 3 ' 067 * 484 shares of common stock of the 
company, the current subscription price per share of common stock 
“° rnp 5 n Y shall be. pursuant to the provisions of the 
adjusted from W26.021 lo W25.9I6 with effect from 
3uth August, 1994 {the pay on which convertible bonds are Issued). 

4th October. 1994 Yukong Limited 


DO YOU WANT TO KNOW A SECRET 

Th e l.O.&.Gann Seminar wS stow you howtfw motets R£AUY work. The an 
Be: W.D. Gam cm Increase your polls and ccrtai 
rasas, how? Tharg the segBt Fang D61 474 0080 to boott your FREE ptaca 





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FINANCIAL TIMES TUESDAY OCTOBER 4 1994 




-O 



CASH MANAGEMENT 
AROUND THE CLOCK, 
AROUND THE WORLD. 




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. * 






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YOU NEED 

LOCAL MARKET ACCESS, 








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Citibank combines technological inno- 
vation and professional expertise to create 
solutions based on your company's unique 
cash management needs. In countries, 
no other bank can maximize your money’s 
productivity like Citibank can. 


CITIBANK 


YOU WANT 

UP-TO-THE-MINUTE 

INFORMATION, 

DOWN TO THE LAST DETAIL, 


l-NcJi&L" . . . 



YOU WANT A BANK THAT 

DOES MORE THAN 

MEET YOUR EXPECTATIONS 

YOU WANT A BANK THAT 

EXCEEDS THEM 


(i*r* 






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§ 

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FINANCIAL TIMES TUESDAY OCTOBER. 4 1994 

INTERNATIONAL COMPANIES AND FINANCE 


★ 



September 1994 


Moody's Investors Service 
has assigned an 


Aal Credit rating 

to the long-term deposits of 



The undersigned acted as advisor to Bremer Landesbank. 



CS First Boston 


rhis announcement appears as a matter of record only August 1994. 

PETROBRAS 

petrGleo brasileiro s a. 

U.S. $175,000,000 
Commercial Paper Program 

Issuer 

PetrOleo Brasileiro S.A - Petrobrds 


Co-Lead Managers 

Banco Latinoamencano de Exportaciones. S A 

Bank ol America NT&SA 

Banque Franchise du Commerce Eneneur 

Barclays Bank FLC 

Credit Lyonriais New York Branch 

Sociere Generate 

Unibanco - Undo de Bancos Brasileiros S A 
WestLB / BEAL 


Managers 

Chemical Bank Akhengesotlschall 
ING Bank 

National Bank ol Kuwaii S AK - Grand Cayman Island Branch 


Co-Manager 

Banco RealS A -Miami Agency 


Participant 

Banco Espmto Santo e Comeroal de Lisboa - Nassau Branch 


Depositary 

BankAmerica National Trust Company 


Co- Dealers 
BA Securities. Inc. 
Chemical Securities. Inc. 


Leber of Credit Bank and Administrative Agent 
BARCLAYS BANK PLC 


Arranged by 


Bank of America 


ojt* o» ruaSA 




BARCLAYS 




Mill SEDIVER Ifllll 

HALF-YEAR RESULTS AFFECTED BY LOWER PRICES IN 1993 
STRENGTHENING OF MARKET LEADER POSITIONS 
AND REVERSAL OF PRICE TRENDS 

TECHNOLOGY-DRIVEN INCREASE IN ORDERS FOR COMPOSITE PRODUCTS 

SEDIVER, world leader in electrical insulation, is also represented in tbe glass headlight and decorative glass 
block markets. 

On June 30, 1994. sales for the first six months of the year stood at 6122 million francs, compared with 
693.5 million in 1993, 30 million francs of which were accounted for by the glassware business which was 
sold o(T at the end of 1993. On a like-for-like basis, half-year sales for 1994 are 7.7% down on 1993, but 
7.4% up on estimates at the time of the stockmarfcet listing (FF 570 million). 

Consolidated operating income at June 30, 1994 was 41.9 million francs compared with 87.7 million in 1993, 
which included glassware. 

Net half-year income for the SEDIVER group was -5 . 1 million francs compared with +27.1 million francs on 
June 30. 1993. 

The foil in SEDIVER* half-year results is due mainly to the glass insulator business. In a difficult market 
environment, the fall in prices and margins due to the impact of shipments of orders taken in 1993 has 
strongly affected the figures. Other foaore such as currency-re taxed phenomena (exchange adjustment for 
the Brazilian subsidiary, in particular) and some extraordinary expenses which should not be recurrent have 
affected the first half-year. In the last few months, over and above the savings already made, the economic 
environment and market conditions in the glass insulators market have unproved enabling prices to recovec. 
This period has also seen continuation by the market of SEDIVER* strategic decisions to use composite 
technology, in the United States in particular, this technology has enjoyed a substantial increase in ordera 
(+30%). with the gradual replacement of hollow structures and lightning arresters currently made of 
porcelain still to oome. which represents a considerable additional market opportunity for SEDIVER. 

in the glass headlight sector. Holophane has benefited from a clearly targeted approach which has kd to an 
increase in sales (+t I %l, market share, income and operating mnigin. 

In the glass block sector, a recent addition to SEDIVER* activities, Vetroarredo has posted significant 
increases in sales and successfully launched a plant in Florence. 

For the whole 1994. sales will be approximately as announced at the time of the stockmarket listing 
(FF 1 .2 billion). In the more favourable market context described above, the second half year mil see a 
return to profit which should give SEDIVER a positive though sharply reduced income for tbe year as a 
whole. 

• _ - • -For addition information, contact: 

' ' " 1 Gregoirc DUBAN, Member of the Board, Tel : 33.1 .42. 12.Q3.30 


Record third-term sales for AMD 


By Louise Kehoe 
m San Francisco 

Advanced Micro Devices 
yesterday reported record 
third-quarter sales, lifted by 
strong demand for micropro- 
cessor chips which are used in 
personal computers. 

The Silicon Valley chip 
maker also announced a con- 
tract to provide microproces- 
sors to Digital Equipment, one 
of the fastest growing PC man- 
ufacturers. 

The Digital deal represents a 
breakthrough, for AMD, which 
is battling with Intel, the mar- 
ket leader, for a bigger share of 
PC microprocessor sales. 

Intel had been Digital's sole 
supplier of PC microproces- 
sors, and manufactures a large 
proportion of Digital's PC prod- 
ucts. 

Strong sales of microproces- 
sors helped boost AMD’s third- 
quarter revenues to 8543m, up 


30 per cent from 8418m in the 
same period last year. 

Net income far the quarter 
ending September 25 was 
886.7m before the payment of 
preferred stock dividends. 
After the dividends, quarterly 
net income was 86 cents a 
share, at the low end of Wall 
Street projections. 

Net income for the compara- 
ble period last year was S61_3m 
before the preferred stock divi- 
dend, or 61 cents a share after 
the payment 

“Microprocessor sales re- 
mained at record levels with 
Azn486 microprocessor sales up 
7 par cent over the Immediate 
prior quarter.” said Mr W.J. 
Sanders ni, AMD chairman 
and chief executive. 

Higher than expected yields 
from AMD's California sub- 
tnicron production facility 
boosted production volumes, 
Mr Sanders added. 

AMD also announced new 



W.J. Sanders: ‘microprocessor 
sales are at record levels’ 


“flash memory” products for 
notebook computers, personal 
communicators and other 
applications. 

During the third quarter the 


group began production of 
lfrmegabit flash memory chips 
at its new Japanese production 
facility, a joint venture with 
Fujitsu. 

“We expect revenue from the 

Fujitsu- AMD facility in tbe 
first quarter of 1995," Mr Sand- 
ers said. 

With production capacity 
increasing in both internal 
facilities and external found- 
ries, “we have prospects for 
continued overall revenue 
growth in our fourth quarter, if 
present market conditions con- 
tinue”, Mr Sanders added. 

For the first nine months of 
1994, AMD reported total reve- 
nues of 81-59bn, up 29 per cent 
from SLSSbn. Net income was 
$264J5m before preferred stock 
dividends and $2.64 a share 
after dividends. 

In the same period last year 
net income was 8187.1m, and 
per share income after divi- 
dends was $1.89. 


Crystal shines light on executive salaries 


PROFESSOR CRYSTAL’S TOP TEN 

Company 

Chief executive 

1993 total Recommended 

Difference 



compensation 

salary 

R000J 



fSaOOQ) 

&00Q) 


1. Tra vefere 

Sanford 1. WeW 

45.807 

6,803 

39,004 

2. Bear Steams 

Alan C. Greenberg 

16,240 

3^49 

12391 

3. Cftlcorp 

John S. Reed 

13,100 

3,772 

9.328 

4. Tima Warner 

Gerald M. Levin 

13471 

4.235 

9.136 

5. Ctttzena Utfmes 

Leonard Tow 

9.460 

1,978 

7,482 

6. Colgate-Palmolive 

Reuben Mark 

10,492 

3,033 

7,459 

7. Bankers Trust NY 

Charles S. Sanford Jr 

10,460 

3.118 

7344 

8. Emerson Electric 

Charles F. Knight 

0,027 

2332 

6.19S 

9. ITT 

Rand V. Araskog 

9.673 

3,555 

6.119 

10. Morgan Stanley Grp 

Richard B. Fisher 

10.565 

4334 

6.030 


By William Lewis 

Mr Sanford Weill, chairman 
and chief executive of US 
financial group Travelers, was 
overpaid by $39m last year, 
according to a report by an 
American executive pay 
expert 

The analysis, by Professor 
Graef Crystal, found Mr Weill's 
pay package totalled $45 .8m in 
1993 but that he should have 
been paid $8 .8m. 

The report concludes that 
over the past three years Mr 
Weill has been paid $90.7m 
more than he 3hould have been 
in light of the company's per- 
formance - measured by 
returns to shareholders - and 
its size. 

“Weill’s performance at the 
company has been excellent," 
Prof Crystal says, “but this 
shows that even excellent per- 
formance can be vastly over- 
paid. As for as we are con- 
cerned Mr Weill owes his 
shareholders 891m, though we 
doubt that payment will ever 
be forthcoming.” 

The next most overpaid exec- 
utive after Mr Weill is Mr Alan 
Greenberg, chief executive offi- 
cer of Bear Steams, who 
earned 8162m last year. Prof 
Crystal says he should have 
received less than $4m, a differ- 
ence of $12 Am. 


The survey examined the 
pay packages of the chief exec- 
utive officers of 200 of the US’s 
largest public companies 
and it found some large varia- 
tions. 

The lowest paid chid' execu- 
tive officer was Mr Raymond J. 
Noorda of Novell, who received 
$290,000 last year. The report 
states that because of the com- 
pany's performance and size he 
should have been paid $5.7m - 
a difference of 85.4m. 

Other CEO's were underpaid. 
inrinrilng Mr Bernard Marcus 
of Home Depot who has earned 
a total of §28m less than he 
should have done over the last 
three years and $9Am in 1993 
alone. 

The average total compensa- 
tion paid to the 200 chief execu- 
tive officers In 1993 was about 


$33m. Prof Crystal was able to 
find only a small relationship 
between the pay of top US 
executives and the size and 
performance of the companies 
they managp- 

However, he found top pay 
was influenced by geography 
with “an extremely large pay 
premium predicated on work- 
ing in the New York area”, 
says Prof CrystaL 

Another important Influence 
was the number of long-term 
incentive plans the CEO 
received during 1993. 

The analysis found when a 
company adds a new long-term 
incentive plan it typically foils 
to cut back the size of awards 
under the first long-term incen- 
tive plan, or to cut back 
enough- 

“The result is higher and 


higher total compensation.” 
says Prof CrystaL 

The analysis found that total 
pay for the 154 top executives 
that were included In last 
year’s survey remained about 
level, after having risen on 
average by 21.6 per cent 
between 1991 and 1992. 

Total pay for each executive 
includes base salary, bonus 
payments, any long-term 
incentive plans, and Prof Crys- 
tal’s valuation of share options 
granted to each executive dur- 
ing 1993. 

Total pay is put against a 
combination of two figures - 
company performance over the 
past 10 years and during each 
chief executive's tenure, plus 
company size - to evaluate the 
amoun t each CEO should have 
been paid last year. 


MCI seeks 
permission 
to provide 
local service 

By Patrick Harverson 
In New York 

MCI Communications, the 
second-largest US long-distance 
telecommunications company 
which is part-owned by BT, the 
UK telecoms group, yesterday 
sought permission from regula- 
tors in five states to provide 
local telephone services In 
competition with Baby Bell 

regional P^° ne operators. 

The decision by MCI to seek 
the rights to provide local tele- 
phone services in Illinois, 
Maryland, Michigan, Pennsyl- 
vania and Washington comes 
days after the sale of 20 per 
cent of the company to BT was 
completed. 

Some of the $4.3bn in cash 
BT spent on the stake is expec- 
ted to help finance MCTs drive 
Into local markets - assuming 
the company receives the 
go-abead from state regulators 
to compete with the Baby Bells 
in offering telephone services 
to business and residential cus- 
tomers. 

MCI wants to operate tele- 
phone services in tbe five 
states, not only because it 
wants access to lucrative local 
markets, but also because it 
will be able to avoid tbe fees it 
has to pay the Baby Bells to 
carry MCI long-distance traffic 
within their markets. 

In some cases, these fees cost 
the company as much as 45 
cents of every dollar of reve- 
nue. 

MCl’s move comes against a 
background of rapid change in 
tiie US telecommunications 
industry. Baby Bell companies 
are asking the government to 
lift restrictions which prevent 
them from operating in the 
long-distance market, and 
long-distance carriers such as 
MCI and AT&T are demanding 
to be allowed into local 
markets. 


Safe Partners 
sold for $120m 
to UK’s OAG 

By Christopher Brown-Humes 
In Stockholm 


Advisers gain in M&A revival 


Axa confirms 
details of . 
Boreal deal 

By Andrew Jack In Pari® 

Axa, one of France's largest 
Insurance groups, yesterday 
confirmed details of its pur- 
chase of Bor£al Assurances, 
the Canadian non-life com- 
pany, for FFr€30m (811931m). 

Details of the price - which 
will be paid in cash - were 
released two months after Axa 
said it would make the acquisi- 
tion from Suez, the French 
financial and industrial hold- 
ing company. 

The purchase is likely to be 
completed within the next few 
days, pending regulatory 
approvals. Axa said Boreal, 
added to its existing Canadian 
subsidiary, would make it the 
fourth largest non-life insur- 
ance company in Canada, with 
annual turnover approaching 
C$lbn (US$700m). It controls 
The Equitable of the US. 

The group said It had no 
immediate plans for rationalis- 
ation and Bor£al would con- 
tinue to operate under its 
name alongside Axa Canada. 


By Rlchnd Waters 
in Naw York 

When it comes to advising on 
hostile takeovers, there is no 
question which side it pays to 
represent 

For their work on American 
Home Products’ uninvited run 
at American Cyanamid this 
summer, Gleacher & Co, a 
small advisory boutique, will 
receive $10m. For representing 
the defending side - which 
agreed to Home Products’ offer 
after a 14-day skirmish - Mor- 
gan Stanley and CS First Bos- 
ton will be paid $47.6m 
between them. 

The fee levels agreed in 
extremis by besieged company 
bosses are often challenged 
later by successful acquirers. 

With the US takeover market 
just completing its most active 
quarter so far, however, the 
deal remains a clear sign that 
the merger and acquisition 
advisory business remains one 
of the few bright spots on Wall 
Street 

To judge from the bald num- 
bers, it appears that fees paid 
in the present takeover wave 


are well below the levels of the 
late 1980s. But anecdotal evi- 
dence such as the Cyanamid 
deal - and the comments of 
senior takeover advisers - sug- 
gests this is still a lucrative 
business. 

According to Securities Data, 
the average advisory fee in 
1988, at the height of the last 
merger wave, was equivalent 
to 2£8 per cent of the transac- 
tion value: so for this year, it 
has been L25 per cent 

The discrepancy is due 
largely to the absence of junk 
bond financing in 1990s take- 
overs. The underwriting fees 
associated with raising the 
debt to pay for acquisitions 
accounted for a large part of 
the money paid to investment 
bankers in the 1980s. 

Structural changes in the 
market could also have held 
down fees. 

Mr Felix Rohatyn, head of 
M&A at Lazard in New York, 
points to “the constantly 
Increasing level of sophistica- 
tion in the financial depart- 
ments of big companies”. 

These companies can handle 
more aspects of an acquisition 


in-house - and when they do 
need to form work out, they 
are more aware of fees, Mr 
Rohatyn says. 

Advisers generally say they 
are applying the same fee 
scales they have used for 
years, and find companies will- 
ing to pay. 

“The corporate advisory part 
of [takeovers) is really not 
much different from the 1980s,” 
says the head of M&A at one 
of the big US investment 
banks, who declined to be iden- 
tified. 

During the third quarter of 
this year, more than $110bn 
worth of mergers and acquisi- 
tions were announced - higher 
than for any other period, 
including the previous record 
of $105bn in the final three 
months of 1988. 

Based on the Securities Data 
analysis, total fees earned by 
Wall Street so far this year are 
nearly $3bn. 

The volume of debt and 
equity securities issued in the 
US markets, however, fell by 
more than half compared with 
a year before, from $298bn to 
$X44bn. 


A British investment company 
jointly owned by Union Bank 
of Switzerland and Phildrew 
Ventures has bought Safe Part- 
ners. an accommodation rig 
specialist, from privately- 
owned companies in Sweden's 
Stena group for about $120m. 

Offshore Accommodation 
Group described Safe as “a 
dynamic, financlally-strong, 
and well-managed group, 
active in an interesting market 
with strong potential”. 

Safe Partners, which has Us 
operational base in Aberdeen, 
owns five accommodation rigs 
which are mainly deployed in 
the North Sea. Last year the 
group made a pre-tax profit of 
SKr228m ($30. 4m) on turnover 
of SKrSllm. 

Celsius, the Swedish defence 
group, said yesterday it had 
sold its 40 per cent stake in 
Safe Partners to a Stena com- 
pany for 845m. 

This gave Stena 100 per cent 
of the company which it then 
sold on to OAG. 

Celsius said it had sold its 
Safe stake because it was a 
minority holding in a non-core 
area. 

It said it would make a 
SKrl80m capital gain on the 
sale and increased its full-year 
profits forecast by SKrl40m to 
SKriMOm. 


Bank S.G.Warburg Soditic AG 

has changed its name to 

Bank S.G.Warburg AG 


following the acquisition of the remaining 50% interest in 
the Bank by Mercury Asset Management Group pic. 


Bank S.G.Warburg AG 
Gartens trasse 26 
8039 Zurich 
Tel. (01) 2 01 2400 
Fax. (01)201 2414 


Banque S.G.Warburg SA 
1 IS, rue du Rhone 
1211 Geneve 3 
Tel. (022) 786 WOO 
Fax. (022) 786 0142 


ia roiaera or warrants to Bearer 


OflORAnV SHARES OFJOp EACH 

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FINANCIAL TIMES TUESDAY OCTOBER 4 1994 


23 


INTERNATIONAL COMPANIES AND FINANCE 

Momentum gathers for CGS as Genesis reaps rewards 

The troubled computer services group has forged a multinational structure in order to survive, reports John Riddin; 

Cap Gemini Sogeti V . .'- . “ . ' . ' jj P® 


C ap Gemini Sogeti, the 
French-based contender 
in the international 
computer services industry, 
has taken a beating during the 
past few years. 

Losses of YFrmm (S 8 l 2 m) 
last year raised questions 
about Its ability to respond to 
the increased competition and 
recession in the sector, and the 
efficacy of its ambitious 
restructuring programme - 
grandly dubbed Genesis. 

The message from the com- 
pany's smart Parisian head- 
quarters, however, is that the 
worst is over. Two years after 
the birth of Genesis. CGS 
believes its aim of forging a 
coherent multinational struc- 
ture from a disparate range of 
operations is entering its final 
stages and the benefits are 
emerging where they matter - 
an the bottom line. 

“The momentum is gather- 
ing," says Mr Geoff Unwin, 
chief operating officer. After 
announcing a slight narrowing 
in first-half losses late last 
month, to FFrilSm from 
FFr197501, he predicts a return 


to profit in 1995. But, as Mr 
Unwin concedes,there is still 
much to be done. 

The end of recession in many 
“arkets, apart from southern 
Europe, has helped revive 
demand and taken a little of 
the sting from price competi- 
tion which followed the expan- 
sion into the sector of industry 
hardware producers, such as 
International Business 
Machines. “The hardware pro- 
ducers came in with crazy 
prices," says Mr Unwin. “We 
are now seeing signs of sanity 
on the pricing front" 

With the introduction of new 
service offerings, such as infor- 
mation systems managmriept, 
the improved economic envi- 
ronment enabled the cnmpwtiy 
to reverse the trend of declin- 
ing revenues in the second 
quarter. Sales have continued 
to rise in the second half, while 
order books at the of June 
were up by about 12 per cent 
compared with the correspond- 
ing period last year. 

More significant, claims the 
company, are the tangible ben- 
efits of the Genesis pro- 



Nat profttftoa 
FFr.rn: 

800 ■ — -- 


Avenge workforce 

T ooo ■ 

25 •— 



20 


gramme. The restructuring 
was launched in 1992 with the 
aim of welding a series of 
acquisitions, such as Hoskyns 
of the UK and Programator of 
Sweden. 

It has involved the division 
of the company into geographi- 
cal and sectoral centres with 
the aim of re-using products 
and services across its mar- 
kets. France, for example, has 
become the centre for telecom- 
munications services, while 


1980 90 91 92 93 


the US is the base for energy 
and oil-related systems. 

The process has been expen- 
sive difficult Mr Unwin 
estimates that FFrtiOOm has 
been invested in the pro- 
gramme, about one -quarter of 
the expenses relating to pay- 
ments to the company's Gem- 
ini consulting arm, the archi- 
tect of the restructuring plan. 
The balance has gone largely 
to training and communica- 
tions charges. 


15 1 

10 

5 

’ 0 


1989 90 91 92 -93 

The result of the upheaval, 
says CGS, Is that the company 
ran now nffer clients a broader 
range of services, more 
quickly. 

“In the first halt we derived 
about 10 per cent of revenues 

from transferring expertise and 
know-how from one country to 
another," says Mr Unwin. 

He cite* as an the 

award of a telecoms contract in 
Hungary, won by a Danish 
team using technology from 


the company’s French opera- 
tion. 

For Mr Unwin, the company 
had little choice in its decision 
to launch the ambitious pro- 
gramme. Medium-sized, coun- 
try-based computer services 
groups will find it hard to sur- 
vive, he argues, in an industry 
where delivery times and the 
ability to re-use programmes 
have become the main priority. 
“Hoskyns [Mr Unwin's previ- 
ous company] was doing well, 
but we would be beaten out of 
contracts from big companies 
which could import know- 
how." 

Unlike Hoskyns. CGS has 
enjoyed the protection of a 
solid shareholder base during 
the upheaval. Mr Serge Kampf, 
founder of the group, and 
Daimler-Benz of Germany, 
which holds 34 per cent of 
CGS, have provided a valuable 
umbrella. “We could not have 
undergone such change with- 
out them. We might have been 
gobbled up.” says Mr Unwin. 

The future of the company’s 
shareholding structure is. how- 
ever, a source of uncertainty. 


Daimler-Benz has an option to 
take control of CGS from Feb- 
ruary next year through the 
exercise of its convertible bond 
holdings. 

The German group has 
expressed an interest in a 
stronger man»g*»mpn t role in 
CGS, but most industry observ- 
ers believe it is more con- 
cerned to find an additional 
partner to strengthen its 
French associate’s operations. 

Such a partner could come 
from the telecoms sector. 
"Large telecoms operators are 
looking increasingly at what 
happens at the end of their net- 
works. for both business cli- 
ents and consumers," says Mr 
Unwin. "They all have, or are 
seeking, a presence in this 
industry." 

France T€l£com, the state- 
owned operator, is one poten- 
tial candidate. But talks have 
yet to yield results. Uke other 
possible partners and Cap 
Gemini's existing smaller 
shareholders, it is likely to 
need more convincing of 
the rewards of life after 
Genesis. 


Asarco takes 
$30.7m charge 

By Laurie Morse in Chicago 

Asarco, one of the largest 
integrated copper producers in 
the US, is taking a $30, 7m 
after-tax charge to third- 
quarter earnings to pay for 
environmental clean-ups. 

The charge, equal to $45.5m 
on a pre-tax basis, largely 
results from a settlement 
between Asarco and the City of 
Tacoma, Washington, and sur- 
rounding communities over 
the clean-up of a smelter site. 


Mexico tightens rules for financial sector after alleged fraud 


By Damian Frasar in Mexico City 

Mexico is drawing up tighter 
regulations for the financial sector 
following reports of alleged fraud at 
the Union and Cremi banks, and at 
the Havre financial group. 

Mr Guillermo Ortiz, deputy finance 
minister, said that the new regular 
tions would require external auditors 
and the National Banking Commis- 
sion to investigate activities of finan- 
cial institutions in more detail. 

They would aim make ft easier for 
private agents to evaluate the quality 


of a bank’s assets by requiring finan- 
cial groups to disclose more informa- 
tion. 

The regulations are likely to be 
drawn up in time to be considered by 
the incoming government of Mr 
Ernesto Zedillo, which tai ws nfRw> on 
December l. 

The new rules are aimed at bring- 
ing regulations in line with practices 
in tire industrialised world. 

They are also intended to avoid a 
repetition of events at Havre - where 
company executives allegedly set up 
fake companies that received govern- 


mentsubsidifid loans - and at Cremi 
and Union, where fha rhipf executive 
is said to have illeg all y lent up to 
3700m to companies he controls. 

According to Mr Ortiz, the National 
Banking Commission mainly analyses 
the accounts of frnanriai institutions 
without looking too closely at the 
financial risks that institution Is 
exposed to. 

In future, the commission will 
examine more closely financial risks 
inherent in a bank’s lending or trad- 
ing practices. 

Mr Ortiz said that “the financial 


authority Is considering the emission 
of norms that will oblige hanks to 
measure Interest rate, exchange rate 
and inflation risk they are exposed to, 
and comply as a result with the neces- 
sary levels of capital." 

The role of the external auditor is 
also expected to change. According to 
Mr Ortiz, the ayt ernai auditor may 
have to analyse in depth a sample of 
credits, to verify information given by 
the banks. 

Mr Ortiz urged that the auditor 
“stop making just simple revisions of 

nrrnimfrg yid help makw clear to the 


investor the relevant information of 
each institution". 

Directors will be encouraged to 
check more thoroughly that their 
institution is complying with the law, 
and is assessing risks appropriately. 

The government believes financial 
markets should become more impor- 
tant in the evaluation of hanfcg and 
their assets. 

This should be helped by fixture reg- 
ulations that will require similar 
information disclosure in Mexico to 
that demanded by the US under 
GAAP accounting roles. 


Hungary 

privatises 

porcelain 

producer 

By Virginia Marsh 
In B u d ape s t 

Hungary is to privatise 
Zsolnay Porcelangyar, its larg- 
est manufacturer of high-qual- 
ity porcelain. 

The state would sell an 84 
per cent stake in the company 
through a one-round tender 
which would close on Novem- 
ber 28, according to AVRT, 
the state holding company. 

Because Zsolnay is one of 
Hungary's oldest and best- 
known companies, the state 
plans to keep a golden share 
with some veto rights, accord- 
ing to Japan’s Daiwa MKB 
which is advising AV RT. 

The 84 per cent stake has a 
nominal value of Ft 4 63. Bin 
(84.29m) which under Hungar- 
ian privatisation regulations Is 
the minimum price acceptable. 

AV RT said it aimed to find 
a partner which would keep 
the Zsolnay name main- 
tain employment at its factory 
in Fees, southern Hungary. 
Zsolnay, which employs 1,100, 
had turnover of Ft950m in 
1993 and is forecasting Ftlbn 
this year. 

Hand-painted porcelain, 
which the company has been 
producing for ISO years, 
accounts for about 30 per cent 
of output It also manufactures 
mass-produced household 
crockery and porcelain high- 
voltage insulators, in which it 
has a local market share of 80 
per cent 

The company has launched a 
marketing drive to lift exports 
to 40 per cent of production, 
from the present level of 
between 20 per cent and 25 per 
cent 


The Stock Eutw ofHooB Ko« linked takes so «t»p-»rel*ty lor At coomb cf d* 
MBWmteaWi ma ke, no itgre wnwil oa m»l» irn nai , o t conpletmm and apwlr 

fotl.I.n >iifceiniemi I n ■!, I— ho— i m i «i M iinfiimi m li m llo m iii mn ihi 

wfaoU or 1117 port of dir amend of Ifcii maacaML 

Hon Kwok Land Treasury Limited 

(amapmid re* kauri Kobfcy ■ UnU 

VS. $50,000,000 

4-875 per cent. Convertible Guaranteed Bonds due 2000 
(the “Bonds’) 

convertible into shares of, and guaranteed by, 

Hon Kwok Land Investment 
Company, Limited 

(taovpimBiiinifchncn! bWkjnHuflflGot* ' 

Adjustment of Coo version Price of Bonds 
On 11 ch August, 1994, the Director, of Hon Kwok Land Investment 
Company, Limited (“Hon Kwok") announced a proposed bonus Issue of 
shares of HKS0.50 each of Hon Kwok on the basis of one share of Hon 
Kwok for every ren shares of Hon Kwok heU on 2Znd September, 1994 (the 
“bonus Issue"). 

In accordance with the terms and conditions of the Bonds (the 
“Conditions") and the provisions of the Trust Deed dated 15th Dec emb er, 
1993 consituting die Bonds entered into between Hon Kwok. Hon Kwok 
Land Treasury Limited and The Law Debenture "Bust Corporation p-lx, 
the Conversion Price after appropriate rounding (as defined in the 
Conditions) In relation to the Bonds will be adjusted as a reside at the 
bonus issue. 

The adjustment will be made by multiplying che Conversion Price in force 
immediately before the bonus issue by the aggregate nominal value of the 
issued shares of Hon Kwok immediately before the bonus issue and 
dividing the result by the aggregate nominal value of che issued shares of 
Hon Kwok immediately after the bonus issue, as set out below: 

HKS340.21 1.734 

HKS4.25 x HK$ 3 74.23 2,962 0 HKS3.80 

The resolution approving the bonus issue was passed on 22nd I September, 
1994, the adjusted conversion price of the Bonds will be HKS3.80, with 
effect from 23 id September. 1994. 

By Order of die Board 
Hon Kwok Land Treasury Limited 
Raymond Wing-Choi Cheung 
-■ Wiorired Repmemdve 
Hon Kwok Land Investment Company. Limited 
Hannan Man-Hei Ftmg 

Managing Dbecwr 


Q Bankers Trust 
Company, London 
4ch October, 1994 


m 

For all yore ioveataeu and occupational 
requirements in Smith Africa W fretfcre 
lolormarion on (Us emerging marks! 
contact 

Dmcaa Wao/Rkfenrdl Writer 

N 1 CH AIL 

LAURIE 

TM: 071 493 7050 
Fac P71 499 6279 



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Southwark Bridge, London SE1 9HL 


V 






August 12, 1994 


This announcement appears as a matter of record only 


* 


THE REPUBLIC OF KOREA 

acting through its Ministry of Finance 
Tied Co mm ercial Loan in an amount of 

USD 720 million 

for the purchase, by the Korea High Speed Rail Construction Authority, of the 
Korea High Speed Rail Core System supplied by the Korea TGV Consortium 

Arranger 

Banque Indosuez 

Co-Arrangers 

The Korea 
Development Bank 


Banque Nationale 
de Paris 


Society G£n£rale 


Morgan Guaranty Trust 
Company of New York 


Supporting Banks 


Wardley Capital Limited 


The Bank of Tokyo, Ltd 
Basque Indosuez 
Barclays Bank Pic 

Cr&fit Commercial de France 

Electro Banque 

Hand Bank 
(Deutschland) GmbH 


BanJong Corporation 

KDB International 
(Singapore) Limited 

Korea First Finance Ltd 
Seoul (Asia) Finance Limited 


Funds provided by 

Banqne Nationale de Paris 
Cho Bung Finance Ltd 

The Dai-Ichi Kangyo 
Bank, Ltd 

The Fqp Bank, Limited 

Hand Finance 
Australia, lid 

The Industrial Bank 
of Japan, Limited 

KEB (Asia) Finance Ltd 

The Long-Term Credit 
Bankaf Japan, Ltd 


Agent Bank 


Banque Franco- ADeznande 
Banqne Paribas 

CSe FfaancBre de CIC 
et de lTJofon Enropfeone 

Deutsche Bank 
(Asia Pacific) limited 

Generate Rank 

Tbmfl inter na tional 

Finance, Ltd 
KDB Asia Limited 

Korea Commercial 
Finance, Ltd 

Morgan Guaranty Trust 

Company of New York 
Soctete Generate 




BANQUE INDOSUEZ 


August 12. 1994 


This announcement appears as a matter of record only 




THE REPUBLIC OF KOREA 

acting through its Ministry of Finance 
French Buyer Export Credit in an amount of approximately 

USD 1,700 million 

for the purchase, by the Korea High Speed Rail Construction Authority, of the 
Korea High Speed Rail Core System supplied by the Korea TGV Consortium 

Lead Manager 

Banque Indosuez 

Co-Lead Managers 

Banque Nationale de Paris Soci£t£ General e 

Supporting Banks 

JP Morgan & Cie SjV. Wardley Capital Limited 

Funds provided by 
Banque Franco- ADemande 
Banqne Paribas 
Credit Commercial de France 


The Bank of Tokyo, Ltd 
Banqne Nationale de Paris 


Banqne Indosuez 
Barclays Bank Pic 


CteFinantiferedeCXC 
et de lTJnion Europ4enne 

Deutsche Bank AG. 

G&teratedg Banque Beige 
(France) SA 

The Long-Term Credit 
Bank of Japan, Ltd 


Electro Banque 

The Industrial Bank 
of Japan, Limited 

Midland Bank SA. 


The Dai-Ichi Kangyo 
Bank, Ltd 

The Fqji Bank, Limited 
JP Morgan & Cte SA. 

Sod£t£ G&rirale 


BANQUE INDOSUEZ 


J 


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30, ma wte Ba UA SW3 Bar U A WM 
puctortarare. 

te-nw O n aa M ren a iwn l a a, MA 

•9—Ow* O 

(Mataa-UM 


US. $105,000,000 
Guangzhou Investment 
Convertible Bond 
(1993) limited 

(Incorporated with United 
BahQfty under Hie laws of 
the Cayman Islands) 

Convertible 

Guaranteed Bonds Due 1998 
convstiNe into shares in 
and guaranteed by 

Guangzhou Investment 
Company Limited 
(Incorporated with limited 
UabSity under the laws 
of Bong Kong) 

haccorchnxewitiiQflUfle7(D) 
of die Inst Deed dated 8di Octo- 
ber, 1993, Notice is hereby given 
Batin ankr to estabfish Ire 19M 
interim dividend rights to the 
shares of Guangzhou Investment 
Company Landed (the Yjtxnpa- 
register of the Company 
will be dosed on 17ft of October, 
1994 to28& of October, 1994,both 
days inclusive. la connection 
therewith, die attention of the 
boodhoideis is directed to thepro- 
risonsof Clause 6(N) of tbeTrost 
Deed dated 8Bi October, 1993. 

The Beak of 
NewYodt 

(ThePmapd 
Paying Agent) 
Ch behalf of die Company 
October 4, 1994 



Anic Partecipazioni 

Invitation to offer to purchase premises in Via Barberini n. 36 
Rome (Italy) 


The Company Anic Partecipazioni SpA (company in 
liquidation - Extraordinary Meeting of 22.654 under 
approvation), with registered office in Palermo, via Ruggero 
Settimo 55, with share capital of Lit 50,042,228.000 fully 
paid up, registered with the Palermo Court Companies' 
Registry no. 36325 vol. 287/195, intends to receive and 
evaluate afters for the purchase of approximate^ TOOO sq.m, 
of office space, currently being restructured, in Via Barberini 
no. 36 - Rome. 

For the puipose of this transaction interested parties should 
contact: 

EnlChem SpA 

Via Medici del Vaecelio 40/D, Milan, Italy 
Ufficio Immobni 

Tel. + 39 . 2 . 520 . 39806 / 30815/8981 1 
Fax + 39 . 2 . 520.39800 

The present announcement is directed both to private 
individuals and companies. Interested parties can request 
in writing, also by fax, a copy of the information 
memorandum, specifically prepared for the sale, from 
EniChem within 25th October 1994. 

Anic Partecipazioni reserves the unquestionable right to 
send the memorandum only to those interested parties 


considered to be suitable for admittance to the above 
invitation to offer. 

AH Intermediaries must disclose the identity of the company 
or person they represent 

The present announcement represents an Invitation 
to offer but does not represent either a public offer 
ex art. 1336 of the Italian Civil Code, or a solicitation 
to public saving ax art. 1/18 of Italian law no. 
216/1974, Including all successive modifications and 
Integrations thereto. Neither this invitation nor tha 
receipt of any offers will create, with respect to Anic 
Partecipazioni SpA, any obligation or commitment 
to soli to any bidder and, with respect to any bidder, 
any right to demand any performance whatsoever by 
Anic Partecipazioni SpA, including the payment of 
any brokerage or advisory fees or expenses. 

Anic Partecipazioni SpA also reserves the right to 
terminate any and all discussions without any reason 
or explanation whatsoever, regardless of their stage 
or status. 

This advertisement and the sale procedure are subject to 
Italian law. In case of controversy related to ihB'abovaT-thb 
Court of Milan (Italy) shall have sole jurisdiction. 


m 


ing data lor the monitoring oi targets, ana oic ior tnu mmuiuii; ui jiuinoBiug. ,,uinu 6 ni b 





FINANCIAL TIMES TUESDAY OCTOBER 4 1994 ^ 


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Nippon Mortgage 
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NRMA flotation hits roadblock 

Demutualisation plan faces a challenge, says Nikki Tait 

O ne might imagine that, more than just an insurance about 70 per cent of whom also years. This has been covered 
in exchange for a operation. Secondly, the ratio- hold NRMA insurance policies, by ‘‘member^ services mvest- 
“free" handout of nale hphinri the flotation has These people will determine ment income In the Afiim to 




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FOREIGN EXCHANGE 


Nippon Mortgage Corporation, 
a medium-sized non-bank 
financial institution burdened 
with substantial non-perform- 
ing loans, yesterday filed for 
liquidation. 

An extraordinary meeting of 
shareholders approved the 
action, first signalled by the 
company’s directors in July. 

At March 31, Nippon Mort- 
gage had liabilities of Y518.4bn 
($5 -24 bn) and assets of just 
Y454.7bn. Principal creditors - 
which include Sumitomo Trust 
and Banking Corporation - 
considered this gap too large to 
be plugged by fresh injections 
of capital. 

The folding of Nippon Mort- 
gage is the third largest corpo- 
rate collapse in Japan since the 
second world war. 

The company was estab- 
lished in 1982 by Sumitomo 
Trust and other companies to 
specialise in property-related 

landing 

in 1991, at the height of the 
“bubble economy”, a period of 
rapid asset price inflation. Nip- 
pon Mortgage had a loan book 
with a paper worth of 
Y540.5bn. By the start of this 
year, however, an pgHmatgd 97 
per cent of its total loans had 
become non-performing follow- 
ing the bursting of the 
bubble. 

• Fujisawa Pharmaceutical, a 


leading Japanese drugs manu- 
facturer, has revised upwards 
its non-consolidated earnings 
forecast for the first half and 
the hill year to March 1995 due 
to cost-cutting efforts and a 
rise in demand for its antibiot- 
ics, writes Emiko Terazono. 

The company, which initially 
expected a 3 per cent fall in 
interim sales to YllSbn and a 
23 per cent decline in pre-tax 
profits to Y9bn. now sees the 
pre-tax figure rising 3.1 per 
cent to Y12bn on a L3 per cent 
increase in sales to Yllfibn for 
the six months to September. 

The company at tributed 
the rise in sales to buying by 
hospitals *>nd physicians who 
had waited for a cut in 
national health insurance drug 
prices last April to purchase 
their drug supplies. 

However, foe company said 
the move by SmithHine Bee- 
cham, the Anglo-American 
pharmaceuticals group to 
which Fujisawa provided its 
sales channel, to set up its own 
distribution company next Jan- 
uary would still depress 
annual sales. The impact 
of the cut in the NHI official 
drug prices will also affect 
earnings. 

For the foil year, Fujisawa 
now expects unconsolidated 
pre-tax earnings to rise 5 .3 per 
cent to Y2lbn on a 1.2 per cent 
foil in sales to Y282bn. and a 40 
per cent decline in after-tax 
profits to Y6bn. 


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Hutchison Whampoa, the 
conglomerate controlled by Mr 
Li Ka-shing, is to sell $250m- 
worth of mandatorily 
exchangeable bands that will 
convert into shares of Hutchi- 
son Delta Forts, the proposed 
spin-off of foe group’s river- 
coastal ports activities. 

The initial public offering for 
Hutchison Delta Ports is 
planned to take place within 
seven years of the issue of the 
bonds. 


The bond issue, which will 
be increased by up to $50m if 
there is sufficient d eman d, 
is expected to close on Novem- 
ber 8. 

The bonds are due in 2024 
and will carry a coupon of 7 
per cent 

The proceeds of the issue 
will be used to finance the 
activities of Delta Ports, a 
wholly-owned subsidiary of 
Hutchison which was formed 
to own and manage the group's 
gristing and future business in 
river-coastal ports, and its 
subsidiaries. 


O ne might imagine that, 
in exchange for a 
“free” handout of 
shares worth anything from 
A$500 ($367) to A$2,000, cus- 
tomers would be fairly san- 
guine about their insurance 
company’s legal structure. 

But NRMA, the large Austra- 
lian personal lines insurer 
which wants to move to share- 
holder-owned status via a 
A$2J2bn-plus stock market flo- 
tation before the end of the 
year, is running into surprising 
roadblocks as It pursues the 
demutualisation path. 

This week, two dissident 
directors who are opposed to 
the flotation scheme will 
mount a legal challenge, argu- 
ing that NRMA’s prospectus is 
misleading and deceptive. 
Already, complaints from some 
NRMA members to the Trade 
Practices Commission, the 
Australian watchdog, have 
forced the insurer to publish 
corrective advertisements over 
sale dpteiifl. 

More f un d atm pti tell y | such 

stirrings raise doubts about the 
degree of support which the 
insurer will be able to secure 
from members when they 
finally vote on the issue on 
October 19. If demutualisation 
is successful, NRMA would 
become Australia's largest 
quoted insurance company, 
but it needs 75 per cent of 
members voting in favour 
before it can proceed. 

One opinion poll, published 
over foe weekend, suggested 
that only 56 per cent of a 600 
member-sample was support- 
ive, while 21 per cent was 
opposed. The remaining 23 per 
cent was undecided. 

Stung by these results, 
NRMA retorted that its own 
research indicated that more 
than so per cent of members 
would support the scheme. It 
also noted that the same unfa- 
vourable survey showed an 81 
per cent “yes” vote among 
members who had already 
returned polling forms. 

Nevertheless, while NRMA 
officials publicly profess a 
“quiet confidence” about the 
outcome, a heavy lobbying and 
publicity campaign speaks vol- 
umes for the inherent uncer- 
tainty. 

This unexpected tussle has 
two causes. The first derives 
from the company's history, 
which means that It is much 


This announcement appears as a matter of record only. August 1994. 


Inversiones Distrilima, S.A. 


an international consortium which indudes 


l 


Endesa 


has acquired, in the privatization process of 
the Peruvian government 60% of 


EDELNOR, S.A. 


for a consideration of 


US $176,490,000 


The undersigned acted as financial advisor to ENDESA. 


m 




Bank of America , S.A. 


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'Understand whet is driving nil prices' 

Petroleum Argus 


more than just an insurance 
operation. Secondly, the ratio- 
nale behind the flotation has 
not been particularly well 
articulated, and members 
could justifiably claim to be 
confused. 

NRMA was formed as a 
motoring rhih in 1920, mainly 
to lobby fin: better roads (its 
acronym derives from its origi- 
nal name, tha National Roads 
& Motorists Association). 


about 70 per cent of whom also 
hold NRMA insurance policies. 
These people will determine 
foe company’s fixture. 

The prospectus, sent out to 
members, is remarkably bland 
about tiie reasons for the float: 
it says simply that NRMA 
wants to demutualise “to 
pnflhia its financial success to 
be shared with its members”. 

Since then, directors and 
NRMA officials have been 


years. This has been covered 
by “member services invest- 
ment income” In the Agllm to 
AS13m range. 

Hie insurance division has 
been more rewarding, with 
underwriting losses consis- 
tently outweighed by invest- 
ment income. Pre-tax profits 
on this side - before unrealised 
investment gains or losses - 
have run out at A$44m, 
A$192m. and A$125m over the 


NRMA - Profit and teas: historical and forecast, 1990-91 ■ 1994-88 (A$m) 


Unctarwrftlng mutt 
insurance result before tax 
Financial Services proftt/ftoss) 
Member Services net income 
Member Services investment Income 
Profit before tax 


1990-91 (a) 

1991-02 («} 

1992-93 fa) 

1993-94 (e) 

1994-96 n 

£04) 

m 

(118) 

(15) 

(12 9) 

104 

372 

322 

111 

243 

9 

9 

9 

13 

18 

(10) 


P) 

(12) 

(12) 

12 

11 

13 

14 

13 

115 

386 

337 

126 

262 


within a few years, it had 
begun to provide emergency 
breakdown services. In 1925, it 
added an insurance arm. 

Over the next five decades, 
foe organisation entered the 
fife and hnmp mntenhi insur- 
ance markets, but remained 
focused on its New South 
Wales base. Geographical 
expansion only entered its 
strategy this year, when it 
moved into Victoria. 

Today, NRMA’s business 
splits into two parts. On the 
o n e hand , there are the insur- 
ance operations, which are still 
dominated by the motor busi- 
ness. Car policies accounted 
for 51 per cent of NRMA’s 
A$Llbn premium income last 
year, with compulsory third- 
party policies accounting for 15 
per cent This makes NRMA 
Australia's largest motor 
insurer, with more than i Rm 
policies in force. 

On the other, there is the 
road service division, which 
ranges fr om a 24-hour hriptinp 
for car breakdowns to travel 
information and a hotel book- 
ing facility. It is broadly simi- 
lar to the RAC and Automobile 
Association in the UK, 
although Australia’s geogra- 
phy makes membership a more 
essential precaution. 

To access these services, a 
motorist must become an 
NRMA member and pay a one- 
off joining fee of A$36 plus an 
annual subscription of the 
s ama amo unt There are cur- 
rently more than L8 members, 


more ingenuous, stating that 
foe flotation, is vital to fixture 
growth. They point out that 
mutual insurers have a limited 
ability to raise new capital 
quickly. A prudent mutual, 
therefore, will tend to store 
ftmds far unexpected needs. 

By floating, and having 
access to the stock market as a 
capital source, NRMA will be 
able to use its ftmds more effi- 
ciently. There will be less need 
to hoard funds, at the same 
time, it will be able to generate 
new capital if it wants to 
expand. Directors acknowledge 
that more diversity in insured 
risks would be desirable. 


I n addition, NRMA has 
noted that it has “signifi- 
cant” tax credits which it 
cannot utilise at present As a 
listed company, it could use 
these in payment of franked 
dividends. Finally, directors 
have rinimwi that stock mar- 
ket status would encourage a 
more “market-driven” focus 
within the group. 

Worry among members cen- 
tres on this last point one par- 
ticular fear being that efforts 
to pursue effirfenrifla on the 
insurance side will under mine 
services on the motoring side. 

At present, NRMA barely 
breaks even on motor services. 
According to the rather scant 
financial Information con- 
tained in the prospectus, motor 
services have incurred annual 
losses ranging. between A$6m 
and A$10m over the past four 


past three years. Results In the 
first year, moreover, were 
depressed by catastrophe 
rfatma- About A$10Qm is esti- 
mated for the year to end-June 
1994 with A$141m forecast for 
the current year. 

But on this score, too, oppo- 
nents of demutualisation fear 
that shareholders’ demand for 
profits will mean higher premi- 
ums. In particular, they claim 
that NRMA is planning to dis- 
continue insurance rebates for 
members. 

The company, not surpris- 
ingly, has said that these fears 
are exaggerated. According to 
Mr Ray Willing, chief execu- 
tive, NRMA will continue to 
provide “a world-leading road 
service and competitive insur- 
ance-premiums”. The organisa- 
tion claims that alternative 
means of distributing excess 
capital to members - through 
insurance rebates, say, or low 
membership fees - are either 
inefficient or less equitable. 

As for worries that a listed 
NRMA could be taken over, it 
points out that there is a 5 per 
cent cap on any single share- 
holding until 2000, and some 
protections under federal legis- 
lation thereafter. 

NRMA has even gone so for 
as to claim that foe flotation - 
with its associated share hand- 
out - is “one of the greatest 
acts of corporate generosity” 
seen in Australia. 

Somehow, with two weeks to 
go to foe crucial vote, all mem- 
bers have yet to be convinced. 


7>fctr announcement appears as a matter of record only. 


HOTEL SOFITEL-METROPOLE 

Hanoi, Viet Nam 


U.S.$29, 500,000 


Project financing for 
hotel expansion and office complex 
in Hanoi 


Co-arrangcd by 


imsfiAiiom Finance Corporation BANQUE INDOSUEZ 


September 1994 


This announcement appears as a matter of record only. 


July 1994 


S.A. EL AGUILA 


HEINEKEN GROUP 


Rights Issue of 7,062,682 Ordinary Shares 


Lead Managed by 


Ijp ABN-AMRO, S.A., Sociedad de Valores y Bolsa 




)c\ V 


■SifCHA*- 


r.:'.psp: 




CALL tor a I- RLE TRIAL to 'h\s Monih'v oubliostior. S4 / \ i 3E9 8 702 






















1 FINANCIAL TIMES TUESDAY OCTOBER 4 1994 


25 


★ 


INTERNATIONAL CAPITAL MA RKETS 

US Treasuries retreat on rate rise fears 


Revival of activity 
in Latin American 
eurobond issuance 


By Frank McGurty in New Yoric 
and Conner MkCdefmaiw 
in London 

US Treasury bonds retreated 
yesterday morning on eco- 
nomic data which reinforced 
expectations of an imminent 
increase in short-term interest 
rates. 

By midday, the benchmark 
80-year government bond was 
H lower at 95g, with the yield 
rising to 7J356 per cent At the 
short end, the two-year note 
was down K at 39ft, to yield 
6.653 per cent 

Early on. prices improved as 
the dollar gained ground 
against other leading curren- 
cies. The move reflected partial 
agreement reached by US and 
Japanese negotiators at the 
weekend in negotiations over 
an array of trade issues. 

However, bonds quickly sur- 
rendered their gains on the 
release of the monthly survey 
conducted by the National 
Association of Purchasing 
Management. The results 


By Graham Bowley 
and Martin Brice 

A small number of eurobond 
issues was launched into diffi- 
cult market conditions yester- 
day, with sharp faiic in US and 
European government bond 
prices. 


INTERNATIONAL 

BONDS 


Attention today turns to the 
World Bank’s DM2bn global 
offering of five-year fixed-rate 
bonds, which will be launched 
today and priced tomorrow, 
said joint lead manager Mor- 
gan Stanley. 

In the US dollar sector, the 
Japan Development Bank 
launched $500m of five-year 


showed continued strength in 
the manufacturing sector and 
further pressure on prices. 

The NAPM’s overall index of 
business activity climbed to 
58-3 per cent in September, 
from 56.2 per cent the previous 
month. The price component of 
the survey reached a six-year 
high of HI per cent, up from 
74-5 per cent 

The inflation-sensitive long 
end of the maturity range was 
most unsettled by the news, 
with the yield on frh ». 30-year 
issue climbing a little closer to 
the 8.00 per cent level But the 
short end was also down, as 
the data provided a little more 
evi d en ce which might support 
a move by the Federal Reserve 
to put up short-term rates for 
the Sixth rime this year. 

Many traders are expecting 
the Fed to act before the end of 
the month, as it becomes more 
apparent that the five policy 
tightenings so liar have failed 
to slow the economy. 

The timing of the central 
bank's next move could be 


bonds, priced to yield 22 basis 
points over US Treasuries. 

Demand for the offering 
came horn institutional inves- 
tors in Japan and continental 
Europe, who were attracted by 
the relatively wide spread and 
high coupon, said joint lead 
manager IBJ. The proceeds 
were swapped into yen. 

One syndicate manager 
described the pricing and size 
of the deal as “generally wen- 
conceived", although another 
said it seemed to have received 
a mixed response. 

A syndicate official at IBJ 
said: “The only problem has 
been the weakness in the US 
Treasury market Some inves- 
tors are postponing their pur- 
chases until they reach the 
point where they feel that the 
market has gone too low.” 


determined by the strength of 
this Friday’s report on August 
employment conditions. 

■ European government bonds 
followed US Treasuries lower 
on the NAPM data, and senti- 
ment was jittery amid contin- 
ued speculation over a near- 
term increase in US interest 
rates. 


GOVERNMENT 

BONDS 


“Fears of imminent Fed 
tightening are likely to be a 
depressing factor for European 
markets all week,” said Mr 
John Shepperd, chief econo- 
mist at Yamaichi Interna- 
tional. 

With Germany closed for a 
national holiday, turnover was 
relatively thin and price move- 
ments were mainly futures-led. 
Hopes of fresh cash allocations 
at the start of the fourth quar- 
ter were dashed by the 
renewed market weakness. 


The Kingdom of Sweden 
launched a $3Q0m issue of 
fixed-rate two-year bonds, 
priced to yield IS bams points 
over US Treasuries. 

Joint lead manager Morgan 
Stanley said the deal met good 
demand, mostly in the Euro- 
pean retail sector. The funds 
are believed to have been 


■ UK gilts were particularly 
badly hit, closing nearly a 
point lower on the day. After 
briefly breaching technical 
resistance at 100 and rising to 
100^, the December long gilt 
futures contract on Liffe fell by 
atom 

The market began to weaken 
in the morning on news of a 
stronger than expected rise in 
M0 money supply growth, rais- 
ing fears that inflationary pres- 
sures could prompt another 
increase in base rates. MO 
posted a seasonally adjusted 
year-on-year rise of 7.1 per cent 
in September, compared with 
market forecasts of a 64 per 
cent rise. 

The news eclipsed data from 
the Nationwide Building Soci- 
ety showing a 2.9 per cent 
decline in UK house prices In 
September from August 

The sharp price decline, 
especially among longer-dated 
gilts, caused the UK yield 
spread over German bonds to 
widen markedly to 151 basis 
points from 137 on Friday. 


swapped into Ooatmg-rate dol- 
lars. One syndicate manager 
said he thought the deal was 
priced tightly, but added: “It 
was an opportunity that Mor- 
gan Stanley saw on the day 
and pounced on.” 

The Council of Europe Reset- 
tlement Fund launched its first 
sterling deal since 1984, £100m 


■ Although Germany was 
closed, the bund future on Liffe 
fell Vi point to 88.30 in the 
wake of the US numbers. The 
October 16 federal elections 
were also weighing on the 
market. 

While most market partici- 
pants are betting on a reelec- 
tion of the governing centre- 
right coalition, there is wide- 
spread talk of a grand coalition 
including the opposition Social 
Democrats. 

However, the market does 
not seem to be discounting a 
change in government Conse- 
quently, "if polls continue to 
show a dose outcome in com- 
ing weds, the risk remains for 
somewhat higher bond yields 
near-term”, warn analysts at 
Salomon Brothers. 

■ Italian bonds fell nearly a 
point, depressed by the NAPM 
numbers and fears that Italy's 
budget could face a struggle 
through parliament. The 
December BTP future on Liffe 
fell by 047 to 9840. 


of two-year fixed-rate bonds 
priced to yield 17 basis points 
over gilts. The issue, which 
found demand amrmg financial 
institutions in the UK and 
retail investors in Luxembourg 
and Switzerland, offered a wide 
yield spread against other 
European markets, said lead 
manager S.G. Warburg: 


US mutual 
funds back 
Investcorp 
acquisition 

By Norma Cohen, 

Investments Correspondent 

Investcorp, the international 
investment bank, said it had 
completed the acquisition of 
Ebel SA, a leading Swiss man- 
ufacturer of luxury watches, 
In a deal whfcfa uses a financ- 
ing technique never used 
before in Europe. 

The deal relies on a form of 
financing, becoming increas- 
ingly common in the US mar- 
ket, under which mutual fond 
companies establish separate 
funds specifically to Invest in 
senior floating-rate notes and 
longer-term loan maturities. 

In the Ebel deal, Investcorp 
will acquire a majority stake 
in Ebel, with the company’s 
management buying remain- 
ing shares through a SFrl30m 
multi-currency facility 
arranged by Bankers Trust. 

This consists of a SFrSOm 
three-year revolving credit 
facility and a term loan in two 
tranches. 

The first tranche is a 
SFr48m five-year amortising 
bullet loan with an average 
life of 3% years; the second 
tranche of the loan is for 
SFr32m, does not begin amor- 
tising until the sixth year and 
funds are provided by mutual 
funds managed by Merrill 
Lynch and Van-Kampen 
Merritt 

Because Ebel, which has 
extensive US sales, has dollar- 
based cashflow, the mutual 
funds can rely on receiving 
their interest and principal 
repayments in their home cur- 
rency. 

"We have structured the 
tom loan to tailor the matu- 
rity profile to the needs of the 
investors and the company," 
said Mr Paul Soldatos, a mem- 
ber of Investcorp’ s manage- 
ment committee. 


By Graham Bowley 

The Latin American eurobond 
market saw a rerival of activ- 
ity in the third quarter of this 
year, following two successive 
quarters of decline. 

It was lifted by greater politi- 
cal and economic stability in 
the region and a better tone in 
the US Treasury market. 

According to a report by 
West Merchant Bank, the Lon- 
don subsidiary of Germany's 
Westdeutsche Landesbank, 
$3.4bn worth of new offerings 
were launched during the third 
quarter of 1994, compared with 
S2.0bn in the second quarter. 

This is still less than the 
$6.4bu worth of bonds offered 
in the first three months of the 
year and the $94hn launched 
in the final three months of 
1993. Nevertheless, it is a sig- 
nificant improvement on the 
second quarter of the year, 
which saw many borrowers 
withdraw from the market. 

Mr Peter West, economic 
adviser at West Merchant 
Bank, said in the report: “The 
third-quarter upturn suggests 
that the market is slowly 
recovering from the negative 
shock caused earlier In the 
year by higher US interest 
rates, the collapse In the sec- 
ondary debt market, and 
adverse political and financial 
developments In countries like 
Mexico and Venezuela." 

However, further progress 
will depend to a great extent 
on the state of the US govern- 
ment bond market. 

The recovery in the third 
quarter takes total Latin Amer- 
ican offerings for the year to 
$11.9bn, down 31 per cent on 
the same period in 1993 but 
greater than the $104bn raised 
during the whole of 1992. 

Brazil and Mexico accounted 
for a large part of the resur- 


gence in activity. The success 
of the Real Plan in controlling 
infla tion and the prospect of 
victory in today's presidential 
elections for Mr Fernando Hen- 
rique Cardoso, the former 
finance minister and the plan 's 
architect, has boosted investor 
confidence in Brazil. 

Sentiment in Mexico, which 
has been battered by political 
unrest, found support In the 
recent election victory of Mr 
Ernesto Zedillo. The signing 
last month of the “pacto". the 
agreement between business, 
labour and the government 
under which prices, wages and 
exchange rate policies are set, 
will provide further support. 

However, the assassination 
last week of an important fig- 
ure in the ruling PR1 party is 
likely to be a significant blow 
to confidence. 

Brazil launched eight offer- 
ings in the third quarter with a 
total value of 8537m, compared 
with only two offerings in the 
second quarter worth SSlm. 

“Brazilian issuers have to 
some extent improved their 
ability to access international 
capital markets.” said Ms 
Rebecca Clarke, research man- 
ager at West Merchant Bank. 
“Now the elections are over, 
we are likely to see more new 
issuance from Brazil.” 

Activity was greatest in Sep- 
tember, when issuance reached 
its highest level since Febru- 
ary. There was a rush of large 
offerings from Mexico and 
Argentina, including two deals 
from Cemex, Mexico’s largest 
cement producer. 

The quarter was also notable 
for a rise in the number of 
countries tapping the market 
Colombia, Chile and Trinidad 
and Tobago, all absent in the 
second quarter, returned to the 
market, to join Argentina, Bra- 
zil, Peru and Mexico. 


Japan Development Bank launches $500m deal 


NEW INTERNATIONAL BOND ISSUES 


Amount 

Coupon 

Price 

Maturity 

Fees 

Spread Book rumor 

Borrower 

US DOLLARS 

m. 

% 



% 

bp 

Japan Devatopment Bank 

BOO 

7.60 

99-43R 

Oct 1909 

CL2SR 

+22(m%-99) IBJ/ Swtaa Bunk Corp. 

Kingdom of Sweden 

300 

8875 

99806R 

Nov. 1996 

0.125R 

+15j8V4%-S6) MStantey/Nomura MIL 

STERLING 

Council of Europe 

TOO 

8J&TS 

99J85R 

Nov. 1990 

0.12SR 

■*■17(1096-95) SG Warburg Secures 

SWISS FRANCS 

SM»* 

126 

5-50 

10230 

May. 1907 

. 

MerrtB Lynch CapLMos. 

Final terms end norr-caSabia unless stated. The yield epraed (over relevant gmemniant bond) at launch Is suppled by the lead 
manager. wUnSatad R: freed re-offer price; fees are diown at the re-affer level a) Long 1st comsotl 


| WORiD BOND PRICES 1 

BENCHMARK GOVERNMENT BONDS 

Red Day’s 

Coupon Date Price change 

Week 
Yield ego 

Month 

•o° 

Italy 

■ NOTIONAL ITALIAN QOVT. BOND (BTP) FUTURES 
(UFFET Lira 200m lOOths of 10096 

FT-ACT U ARIES FIXED INTEREST INDICES 

Price Indices Day's Fri Accrued 

UK QMs Oct 3 change % Sep 30 Mteresi 

xd nq. 
ytd 

— Low coupon yield — - Medum coupon yield High coupon yield — 

Oct 3 Sep 30 Yr. ago Oct 3 Sep 30 Yr. ago Oct 3 Sep 30 Yr. ago 


AustraOa 

8.000 

CWD4 

92.0200 

+0.010 

1030 

1020 

922 


Belgium 

7850 

04/04 

918000 

-0200 

326 

826 

826 

Doc 

Canada' 

6800 

06704 

845500 

-a»o 

822 

825 

676 

Mar 

Denmark 

7.000 

12AM 

88.5500 

-0270 

ao7 

9.07 

601 


France STAN 

8.000 

05/98 

1018500 

-0430 

7.66 

7.48 

7.34 


OAT 

5800 

04AK 

828000 

-0690 

824 

8.14 

7.96 

■ ITALIA 

Germany Treu 

7800 

am 

_ 

- 

- 

7.59 

7-40 


Italy 

8800 

asm 

018000 

-0210 11.64f 

1121 

1129 

girun 

Jipan NoilB 

4800 

00/98' 

103.4200 

-0210 

324 

325 

425 

Price - 


4.100 

12/03 

96.7030 

-0.440 

421 

423 

429 

0650 

Netherlands 

5.750 

01/04 

87.6000 

-0.420 

723 

725 

729 

9900 

Spain 

8.000 

05A4 

818000 

-0.180 

1122 

11.18 

11.18 

9900 

UK GBts 

0.000 

06/99 

89-10 

-12/32 

8.74 

8.72 

637 

Eat ML to 


0.750 

11A)4 

65-21 

-22/32 

822 

620 

659 



SU»0 

10/00 

100-30 

-27/32 

8.88 

826 

651 


US Troasuy ■ 

7850 

08AM 

87-05 

-10/32 

728 

724 

721 



7800 

11/24 

95-25 

-13/32 

727 

7.78 

720 


ECU (French Govt) 

aooo 

04/04 

62.6200 

-OAfiO 

8.75 

8170 

649 

Spain 


Open Sett price Chance High Low Eat vol Open hit 
99.80 8&S3 -OB4 100.00 98.7B 30642 64349 

9000 9028 -088 89.10 8030 300 785 


Dec 

2.15 

187 

181 


CALLS 


PUTS 


MW 

281 

2.58 

287 


Do; 

1.72 

184 

2.18 


Mar 

303 

380 

389 


Eat ML tout, Cato 1880 Pun 0744. Pimtoua day*a opart int, Coflo 1BM7 Put* 23317 


^ YMOa: Local mariM atandud, 

t Gram PWuano w*«***M tax m 1Z5 par cent payMto by m nrartrirad 

Moac US, UK h a&raa, Ohara M dadmri Swer MMS fmmfa na t 

US INTEREST BATES 


■ NOTIONAL SPANISH BONO FUTURES (MET) 


Open Sett price Change 
8070 8020 -020 


Wflh 

8680 


Low 

8017 


Esl voL Open Ml 
30548 71875 


UncMkm 


Mimnu 

Bratar tarn rate . 
ftcLtoaSs. 


FadJbnfi NktorwNtoeu 



Treasury Site anc Bond Yletts 
482 Two sear- 


489 Tbraeyw- 
484 Rwpw_ 
048 ID-near 
689 30-jaar 


884 

882 

733 

785 

788 


BOND FUTURES AND OPTIONS 

France* 

■ NOTIONAL FRENCH BOND FUTURES (MATTF) 


Dec 


UK 

■ NOTIONAL UK CULT FUTURES (UFFg* £50,000 32nds of 100% 

Open Sen price Change High Low Eat vol Open ML 
Dec 99-28 98-29 -0-27 100-06 98-25 55773 96029 

Mar - 9809 -0-27 - - 0 0 

■ LONG CULT FUTURES OPTIONS (LIFFE) £50000 64ihe oflOMt 


Open Sea price Change Hgh 
Dec 11094 11008 -074 11098 

Mar 11014 10032 -074 11014 

Jim 109.40 108.58 -0.74 108.40 


a LONG TERM FRENCH BOW OPTIONS (MA7TT) 


Law 

11006 

Em. vol 
115225 

Open ML 
121292 

SHra 

Price 

Dec 

CALLS 

Mar 

Dec 

PUTS 

Mar 

10670 

269 

7208 

M 

2-16 

2-53 



10640 


354 

99 

1-44 

2-23 

1-50 



100 

1-14 

1-80 

2-20 

3-42 


EsL ML mm. cela B7B Pub 3078. nwtota oafa open Ini. Cato 543Z7 Pub 847S2 


Strike 

Price 

110 

111 

112 

113 

114 


NOV 

— CALLS 
Dec 

Mar 

Nov 

- PUTS — 
Dec 

Mer 

Ecu 


128 

1.91 

695 

142 

- 

■ ECt 

0.61 

1.05 

- 

1.44 

1.85 


023 

028 

m 

2.14 

246 

662 


612 

640 

- 

228 

620 

- 

Dec 

605 

0-22 

- 

- 

405 

- 


17204 

Pun 40,154 . 

Previous day* open Int, Cato 21M01 Pure 390,541. 

US 


Open Sett price Change 
8010 78.44 -044 


High 

6010 


Low 

7036 


EeL voL Open ML 
860 8,753 


Germany 

■ NOTIONAL GERMAN BUND FUTURES (UFFQ* DM2SQQ00 IQOtfla Of 100% 

Open Sottprice Change High Low Eat vol O pen Mt 
aa.95 8832 -048 89.10 8021 79*22 152283 

87.70 -038 - - 0 


■ US TREASURY BOND FUTURES (CB7) SI 00,000 32nds of 10036 


Deo 


1789 



Open 

latest 

Change 

High 

LOW 

EsL voL 

Open Ml 

Dec 

98-28 

99-04 

■*0-06 

99-06 

98-24 

350377 

396,507 

Mar 

88-08 

98-14 

■*046 

98-15 

9803 

2243 

26X01 

Jui 

97-26 

97-25 

- 

97-25 

87-25 

3 

10.778 


■ BUND FUTURES OPTIONS (Uffti DM250J00 pohtta Of 100«_ 

Strike — 

Price Nov 

8800 0.95 

sen ora 

8900 0.47 

B*. voL ratal, Cato S7S7 Putt 9031 Pravtous span hi, Cato 7101 *8 Pus 20*50 


Dec 

CALLS - 
Jan 

Mar 

Nov 

Deo 

PUTS 

Jan 

Mar 

121 

1.04 

680 

1.16 

693 

673 

120 

126 

125 

663 

687 

1.15 

699 

122 

1.48 

1.45 

1.73 

2.03 

1.80 

ZOB 

225 


Japan 

■ NOTIONAL LONG TBQI JAPANESE QOVT. BOND FUTURES 

(UFFg YIQOm IQOtria of 100% 

Open Ctaae Change Htfi Low EsL vd Open ML 
Deo 107.89 - - 107.70 107.52 3627 0 

Mar 108*1 - 10091 10091 30 0 

* LffTE co nc ede traded on APT. Al Open Manat «b>. am for pwrtoua day. 


UK GILTS PRICES 


„ YtoU 

ht Rad raae+w- 


_.1Mi- 
Hgfi Low 


9d_ — 1994 — 

Rad PritaE+v- W» Law 


Matas 


_YWd_ _1M4_ 

(l) flPitaE ta- Hflh Law 


ttanr'HAwwtone&wl 

Treat flpclBMtt M8 

12k 1996 11.77 

acnspcta two-95 — an 
KHOC1M5 W» 

I4peim 1J* 

154*pclB0ft#— 1J71 

EKftlttpeiWJ 1225 

- - 083 

7.19 
1188 
1IUH 

aw 
1280 
048 
753 
7.13 
1110 
1168 
tOJS 
0Z7 


CuoraHon U»C 1998 — 
Vitas Cm 7081987$*. -- 
Traul3%K 1967# — 

Eadi IDVr 1067. 

TtasiKfK IfflH# 

Bali 15 k 1987— 

Mtpciwa 

TritoTV* 1B08#.— 
Tran 6V* 1085-66#- 

14k 1998-1 

Treat lSVncU## 

toil to: 1668™ ... 

tan BV* 1098# 


RntaNtteifM* 

Mi 12V* 18W 

tax 10V* 1899 

HeoafipeiSW#---— 

CdnwtHonUftfPeiBBS- 
Hat* Rg Rata IBM — 

fan too 2000# 

Tree* 13K 2000 

Wpc 2001 — 

7* 2001#. 

TpeznaiA 

B\k 2002 

8*8103# 

10* 2003 

tan »%* 2001-4 — 


I 528 

my . 

’ 558 

101a . 

h 520 00}M ■ 

1 66G 

1 723 

: 

1 730 

108 . 

724111*4 . 

7.74 

ISoA 

BA) 

toyi 

600 

07* 

612 

110* 

617 

104U 

638 

101* 

1 654117*18 

696 

103& 

BJW 

86 

654 

94*ri 

BJA 

11% 

675 

122B 

601 

’IK* 

' 682 

1QSA 

! 604 

112* 

1 691 

106* 

674 

m 

1 694 

105V 

i 686 

& 

1 606 

117V 

; 606 

IMA 

1 663 

I 

sojito 

0O,Vd 

l 901 

104 

1 620 

MU 

1 6W 

UK* 

i 922 

HI* 


iima 

1074 
BOA 
UJ7B 
113*. 
1174 
tna 
117B 
112 * 
100 *. 
121H 
114* 
110,1 
131 U 
114*1 
108* 
102 
131* 

140A 

128* 

118* 


RMfcOSlaK itor— 
10(8} Conmln 0^*2004 — 
imH Traas 6V* 2004#— 
Q7\ aVgcCOOS-— 
wffi tow 8 la *2005— 
hats 12%* 2003-8- 

a.BSfe- 



j£S 

Wi Tlea»8ia*20or# — 

11 Op, ISVflC 2004-3 

104? Trail 8* 2008# 

100A 

llffl 

1D2S1 

95*« 

,£j| Dear man Yam 

TM1BK2009 

T*BB 04*2010 

1018 COtW8*lfl20n# 

TtaM 806201 2# 

Tr*.p2xW»-m*- 
Treos 6*2013# — — 

73** 2012-13# 

11121 Trail flL* 2017#— 
USA Bali 12X 2013-17— 


LSI 

8.15 

782 

B« 

8.12 

1641 

180 

151 

1020 

070 

1085 

889 


7.72 7H» 

asiuBHai 
880 06ft 
688 87H 
888104*11 

8.18 12B* 

080 m 

887 BSM 
BL1B 114*] 

080 S7H 

9.18 12^1 
8871D14N 


-A 93* 

1204 

TOP* 

— S7H 
12313 

— iizfl 

-fl itl*. 

138* 

— 119* 

— 151ft 
-M iWft 


BA 

101H 

B4B 

87*. 

1021. 

11Wf 

90 5 . 

m 

112V 

BSB 

1Z4U 

m 


ZKW 0781 

«%*■»#— (135A 

212* Til (M 

2VWTB {7B8| 

4V*TK# — (1358) 

2 k TM 088) 

24* TO (7081 

2V*Tt_ (748) 

2V*ts Sag 

iSKI 

:‘30# — (135.1) 



am 

665 

96V 

-V 

ns A 

720 

670 

W* 

-H 

08* 

824 

680 

101 S 

-H 

125ft 

822 

678 

102 * 

-8 

127V 

727 

651 

72V 

-A 

m 

655 

672 

9311 

-H 

I17B 

652 

672 

01 

-A 

114V 

660 

686 

101ft 

+A 

128V 

638 

6 W 

127J1 

-ft 

150V 


sin 

77U 

iaaj 

10DV 

71V 


Other Fixed Interest 


-1804- 

in Rad Ptk>E<*or- IBS Low 


Comb* 4*. 


Mr L*nJJtfe#- 
IUZB OttiSiaWBIAR.. 

T iwlpe’Ktt- 
1D4V OoartaV*— 
•non Tana 7 Lbb. 


ON 

08B 

019 

880 

8.78 


45V 

- «A 

- 56V 


- 29*to 


-4 50V 
-4 34» 
-A 71 
— 44V 

-tt 38V 
-fi W, 


8M» Aftfcan Da. 11V 2010 — 
98» Aatai Dav 10V* 2009 — 

1284 B7BmnV*20l2 

HrttoiBVxno — 

8* to) 1996 — 

13*V7-2— — 
Knin0uatH:1G*201U 

Laeda 13V* 2008 

„ a Uw*d3V*lmd.— 

ICC 3* 120 M. 

Mfl B a nd ** 11 ] 2K 2007- 

58V ilaLWS.3*7 

33*3 IMda4igto3V*3021. 

28* 4VKL20S4— 

27*3 UUItoi8SMT6V*200i 


659 

113 

119* 

, rr 

1«4 

114* 

940 

611 

109 

, r — 

«6V 

107* 

691 

693 

110 

m,,r 

142 

115 

699 


B4V 

+V 

116V 

03V 

601 

1229 

1672 

1601 

99V 

107V 

138V 


1D3V 

115V 

169ft 

09V 

106 

137ft 

1671 

— 

125 

,n — 

146% 

125 

659 

— 

36V 


44\ 

33V 

630 

_ 

3Z 



48V 

23V 

1618 

173 

113 

- 

13BV 

112 

440 

B40 

68V 


7B 

56V 

.. 

(21 

130V 



150V 

129V 

- 

429 

134V 

. 

145V 

123V 

1200 

- 

136V 

— 

159V 

13<V 


1 Up to 5 yeera (2^ 

2 5-15 yeera g2) 

3 Over 15 yeera (8) 

4 Irredeemables (B) 
6 AH stocks (60) 

Index-Meed 


11922 

-0.10 

11044 

1.95 

038 

5 yre 

8.75 

8.71 

026 

8*2 

B.79 

6*1 

101 

8.95 

170 

137.22 

-0.09 

1 37X14 

1.52 

1029 

15 ym 

8.71 

8.68 

7*3 

8*4 

8.82 

7*2 

9.05 

9.02 

7*5 

163.13 

-029 

153X8 

2.17 

9*1 

20 yra 

667 

8.61 

7*1 

8.84 

8.82 

7*9 

195 

189 

7.47 

174X17 

-083 

17044 

3^5 

8*3 

Irradt 

B.72 

064 

7*7 







135.03 

-013 

13527 

ijh 

9-62 

















— 

— inflation 5% - 

■■raw 

_ 

— inflation 10% - 

— 








Oct 3 Sep 30 Yr. ego 

Oct 3 Sep 30 Yr. ago 



6 Up to 5 yeera?) 

7 Over 5 yeera (11) 

8 Al stocks (13) 

Debenture* and Loam 


18480 

172.47 

17285 


-ao7 

-024 

-022 


184.83 

OOO 

5.07 

Up to B yra 

4.10 4.08 2*3 

2*8 

2*4 

1.74 

172.88 

0*3 

3.95 

Over 5 yre 

3*8 3*8 3.18 

3*9 

187 

100 

173*3 

074 

4.04 

— 5 year yield — — 

-15 year yield- 

■■■■a ■*■■■■ 

- 25 year yield 


Oct 3 Sep 30 Yr. 090 Oct 3 Sep 30 Yr, ago Oct 3 Sep 30 Yr. ago 


9 Data & Loans (78) 124J8 -0.44 125.53 1.85 889 981 9.85 785 9.84 9.78 8.15 

Average gran radampdon yields an dnan above. Coupon Bands: Lew: 0H-7HK; Medhrat B%-lOhN; Hgh: 11* and over. T Flu yW± yu Yew to data. 


9.77 9.71 


888 


GILT EDGED ACTIVITY INDICES 

Sep 30 Sap 29 Sep 28 


Sep 27 Sep 28 


FT FIXED INTEREST INDICES 

0*3 Sep 30 Sep 29 Sap 28 Sep 27 Yr ago High* Low 

Oovt Sacs. (UK) 9004 9084 8030 9043 9010 102JJ8 107.04 8934 GBt Edged borgebn 1222 111.7 137.9 104.5 101.0 

Fixed Internet 107.17 107.34 107.29 107.02 107.17 ISOM 133M7 10050 5-rtoy averagw 115^ 1142 118.4 107.1 113.8 

- tar 1094. OowamnMnt SacwUM Idph ehce Mtiptodon: 127>C0 bar 40.18 C3/1/75L Rxed Mtereat Mgti Unce eanpautan: 13387 Rl/t/to . low S053 PA/78 . Baca 100s Government Seortta. lSHV 

2B and Hand KhM 1820. SE Kdvky ImScaB rabaaad 1874. 


FT /ISM A INTERNATIONAL BOND SERVICE 


Listed are On tatast ktanalonal bonds lor wNch ten Is an adequate seconttey marttat Lota* pdees at 7110 pm on October 3 

baaed BH OBer Chg. VWd baued Bid Oflar Chg. Yield 


Issued Bid 08* Chg. Yield 


UA DOLLAR STRAIGHTS 


4V**L .... 

Pioeoaaive raal redempUon rate on prajacied Mteflen * (1) 10% 
and P5 554- fa) House h p aenlheeM mow RPI base tv 
baMdng * 8 tnondis nrtar to bau^ CM have bean edluatad u 
ranea ratudng of RPI to 100 In JanubV 1907. Converatoi (eetor 
3J45. RPI tor J®awy 1894: 1413 and tar Awust 1994: 144.7. 


Abbey Nail Treesuy 6*2 03 

Ato»t«nD»Moa7V« 

1000 

1000 





















&#^janfaney8VW 

BOO 
- 103 


_ un 






- 200 







Fridenl Nsd Mon 7AD 04 

1500 

Rmfah Bport 9V 95 

-200 

Ford Mnar CMB 6V 0B 

GaiBacC8#d9V96 

1500 

-300 

MBkJnanFh7VB7 

- 200 





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173 

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187 

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26 


FINANCIAL TIMES TUESDAY OCTOBER 4 1994 


★ 



With over ten years of economic and political reform to Its 
credit and the recent Inauguration of Its third seccesslve 
d emo cratic government, Bolivia lean Increasing strength bi Lathi 
America. The survey will report on the country's economy, 
poflttcaf scene, financial markets, privatisation policy and more. 

For more Information on editorial content and details of 
advertising o pport un ity avaflabta in this survey, please contact 

Penny Scott In New York; 

Tel: (212] 688 6900 Rac (212) 688 8229 

Samuil** Borg In London 
Tel: (+44 71) 873 4816 Fax: (+44 71) 873 3595 

FT Surveys 


CONTRACTS & TENDERS 


LLAMADO A LICITACION 

Fecha: 30/09/1994 
Licitacidn No Cl 120/94 - DT 

1. El estado do Parang ha recibido del Banco Internacional de 
Reco n s mi ccidn y Fomroio (m ado lame deaominado ci ’BIRF") no 
prfisiamo para sufragar parcialmeme ci costo del Pro gram a dc 
Saneamcnto Ambientat da Regi&o Metropolitans de Curitiba - 
PROS AM y sc prev£ que parte de las fbndos de este prfetamo sc ha 
de aplicar a pages dcgibles oonfonne al conuato de Ampliaci6n de 
los S isle mas de Saneamienro en las cradades de Curitiba, Araocdria, 
Pinhais y Sao Jose dos Pinhaia. Podrin participar en la licitacidn 
tod os los licitantes do los palses que rednan los requisites dc 
elegibilidad que sc estipulan en las Normas de Adqaisiciones del 
BIRF. 

2. La Cornpanbia de Saacamknto do Parani - SANEPAR, q ecu (or del 
sub-pro grama PRA-03 del PROSAM, invita a los licitantes a 
presentar ofertas pan* la construcndn de Ampliaddn de los Sistcmas 
de Alcaatarillado y consUuccidn de cuatro Esadones de Tratamiento 
de Aguas Serridas de las dudodes de Curitiba, Araucaria, Pinhais y 
Sao Josfc dos Pinhais, on cl prazo de 540 a 810 dlas calendario, 
confonne a cada lotc. Esta licitacidn se realizarfi en regimen de 
ejeenridn por prerio global 

3. Los Lidtantes podrdn adqdrir los documentos de lkiticidn (y copies 
adidonales de los memos) en Superintenddneia de Planejamento 
Tficuco da SANEPAR, Celle EogpBhch'oa Rcbouqas, 1376, Curitibe - 
PR telefono (041) 322 4546. intemos 6012 y 6071. Fax (041) 224 
6515, contra d pago dc un cargo no rcembobable de RS 500,00 por 
lote, o su equivalents cn moaeda de Libre c on v er ribflldad, por cada 
joe go. Los intetesados tambidn podrin obccncr mis infbrmadortes en 
esadireeddn. 

4. Las ofcTtos serin abieitas en presenda de los licitantes que deseen 
asistir a las 10:00 turns dd dla 17/11/1994, en Ancfitdrio do Centro 
de Treinamemo da SANEPAR, Calk Engmhehxs Reboots, 1376, 
Curitiba - PR. 

5. La ofcm deberi venir acompanada de tma garamfa de seriedad de la 
oferu de LOTE 01 - RS 200.000,00. LOTE 02 = RS 60.000,00, 
LOTE 03 = RS 100.000.00. LOTE 04 = RS 60.00000, LOTE OS => 
RS 80.000,00, LOTE 06 = RS 40.000,00, LOTE 07 = RS 360.000.00, 
LOTE OS = RS 60.000,00. LOTE 09 = RS 100.000,00. LOTE 10 = 
RS 60.000,00, LOTE It - RS 80.000,00. LOTE 12 RS 20.000JM a 
un monto equivalcnte eu ana znoneda de libre convertibilidad, y 
Engcnhciros Rebouqas, 1376, Curitiba - PR, a mis tardar a las lCfcOO 
boras del 17/11/1994, oportunidad en la que las ofertas se abririn en 
presencia de los represenontes de las lidtantes que hayan deddido 
asistir. 

lngf Marco Antonio Cenovjcz lug® Mirio Augusto 

Baggio 

Director Presidents Director Tecnico 


COMPANY NEWS: UK 


Acquisitions behind 
advance at Badgerline 



Tony/ 

Trevor Smallwood: continuing the search for further acquisitions 


By Simon Davies 
Badgeriine, the Avon-based 

bus group, reported interim 
pre-tax profits more than dou- 
bled from £2. 56m to £5 .39m, pri- 
marily as a result Of maiden 
contributions from acquisi- 
tions in West Yorkshire and 
Staffordshire. 

Turnover, boosted by reve- 
nues from Rider and PMT 
Group, increased from £63 5m 
to £XL3m, but the group's core 
business showed a rise of 6 per 
cent in revenues and an 8 per 
cent improvement in operating 
profit to £5.46m (£5.05m). The 
interest charge was cut from 
£2. 72m to £2.4m. , 

Mr Trevor Smallwood, chair- 
man, said: “The second half 
has started well, with the 
group continuing to improve 
its performance compared with 
last year. Our policy remains 
one of additional margin 
pnViHnrwnpnts a nd the pursuit 
of further acquisitions." 

He said acquisitions had per- 
formed in line with budget. 
The two companies achieved 
profits of £252m, with operat- 
ing margins of 9.1 per cent, 
compared with the 8 per cent 
recorded from its existing bus 
business. 

Rider, which operates in 
Leeds, Bradford. Halifax. Hud- 
dersfield and York, has operat- 
ing margins of 9.5 per cent, 
against 17 per cent for Badger- 
line's City Line in BristoL 

The group is rapidly increas- 
ing expenditure on new buses. 
It purchased 245 in the first 
half of the year, and will bring 
in a Anther 104 in the second 
halt and 450 a year over the 
next two years. 

Rider is taking on 170 new 
vehicles to help reduce high 


engineering costs from an age- 
ing fleet, and to give it greater 
flexibility on routes, through 
the introduction of a broader 
range of vehicles. 

Badgerline was listed in 
November, and provided early 
disappointment by announcing 
that it was writing down the 
value of its Bath depot by 
£75m, after foiling to get per- 
mission for its redevelopment 
into a retail centre. 

Mr Smallwood said yesterday 
that Safeway was planning to 
revise and resubmit plans for 
the development, which pro- 
vide the possibility of a subse- 
quent write-back of asset val- 
ues. 

The company is to pay a l£p 
interim dividend, and has indi- 


cated that it will pay a 3p final. 
Earnings emerged at 3.6p (35p) 
or 3.5p (2.6p) folly diluted. 

• COMMENT 

Badgerline has been the tor- 
toise of one of the market's 
racier sectors, with depot 
write-downs being followed by 
a somewhat pedestrian operat- 
ing performance. Its shares fell 
6p to 119p, leaving it on a 
price-earnings ratio of 12.6 and 
yield of 4.7 per cent based on 
forecasts of £16m for the year. 
However, it is negotiating fur- 
ther acquisitions and has 
greater efficiencies to generate 
from its £61m of recent pur- 
chases. It is in a growth sector, 
and at the current share price 
it looks undervalued. 


Further 
disposals 
at Lucas 
Industries 

By Paul Cheeseright, Midlands 
Correspondent 

The streamlining of Lucas 
Industries will continue with 
the sale of Lucas Management 
Systems, a software business, 
and the possible sale of Lucas 
Engineering & Systems, a con- 
sultancy specialising in manu- 
facturing systems. 

The disposals continue a line 
of divestments dating back to 
1992 but come In Immediate 
response to a review of the 
Lucas business which was 
undertaken by Hr George 
Simpson, chief executive since 
last April. 

That review, Lucas noted 
yesterday, had concluded that 
resources should be increas- 
ingly directed at the group's 
automotive and aerospace 
interests, and further divest- 
ments were in prospect 

"We cannot have so many 
irons in the fire. There most 
be a focusing down to the real 
core businesses within Lucas," 
Mr Simpson said In August 

The two companies up for 
sale are part of the group's old 
applied technology division, 
now increasingly concentrated 
on the manufacture of elec- 
tronic products. 

Management Systems is 
based at Slongh, following 
extensive cutbacks in 1992-93. 
It has animal sales of about 
£45m and employs 800 people. 
Engineering & Systems, whose 
business is based on sales 
within the Lucas group, has 
turnover of about £2Gm and a 
staff of 400. 

Lucas would not say 
whether the companies were 
profitable. 


CI returns to black with £0.34m midway 


By Patti Cheeseright, 

Midlands Correspondent 

CI Group, the Wolverhampton-based 
engineer, returned to profit during the 
1994 first half as trading performance 
improved after taking losses in the second 
half of the previous year. 

Pre-tax profits for the six months to July 
31 were £337,000 against £905,000 in the 
1993 first half and a loss for the year to 
January 31 1994 of £L53m. 


"We are showing an improvement which 
we believe will be on-going," said Mr Sob 
Yates, the chief executive. 

In the second half of last year, CI suf- 
fered difficult trading and charged the 
costs of a redundancy progr amm e and the 
disposal of a lossmaking French company. 

Turnover was £35 ^m. against £35Jm. 
Including £3-13m from discontinued activi- 
ties, resulting in a 12 per cent increase in 
continuing operations. 

Earnings per share were 026p (0.69p) 


against losses of l.54p for the whole of the 
previous year. The Interim dividend is 
being halved at 02p. 

The company said that all but one of its 
businesses enjoyed better trading than in 
the previous half year. 

Those supplying the construction indus- 
try improved largely through cost-cutting, 
while the re-rolling, foundry and reinforce- 
ment businesses, although trading better 
than at any time In 1993, faced raw mate- 
rial price increases. 


UK sales setback 
for Betterware 


By Richard WoHte 

Betterware, the direct 
home-shopping group, yester- 
day reported a 48 per cent 
decline in interim pretax prof- 
its after its core UK sales 
shrunk by 9 per cent. 

The group’s shares shed Lp 
to 36p, well down from Its peak 
of 278p in July last year. The 
drop in total turnover to 
£3 1.7m (£34.4m) was blamed on 
“a loss of momentum" among 
its sales force. 

Betterware lost around 1*000 
salesmen, or more than 9 per 
cent of its distributors, after 
opening a £l0m distribution 
centre in Birmingham in Janu- 
ary. The company said it had 
now recovered from the cen- 
tre's “teething troubles", 
which included unreliable 
stock delivery. 

Analysts cut their full-year 
forecasts for the second time in 
less than a month, from £9m to 
about £6-5m. in spite of com- 
pany assurances that recruit- 
ment was improving and that 
average orders were holding 
steady at £8. Betterware lost 
more thaw a third of its market 
value two weeks ago, after 
issuing its third profits warn- 
ing in five months. 


FR acquisition 

FR Group, the maker of 
in-flight refuelling equipment, 
has completed the acquisition 
of the business assets and cer- 
tain liabilities of Sargent 
Fletcher for $10.6m (£6.7m), 
including $l.lm rash 

Net book value of assets 
being acquired amount to 
about $8.3m including liabili- 
ties of $2.1m. 

Sargent Fletcher makes 
external fuel tanks and 
air-to-air refuelling systems. 


Mr Peter Hartley, finance 
director, said the poor pretax 
profit figure was partly the 
result of the group's invest- 
ment companies reporting an 

operating loss of £405,000 
(£151,000 profit). 

Profits for the 28 weeks to 
September 10 also suffered 
from new investment In com- 
puter-aided product design and 
start-up costs In Germany and 
Spain, which form part of the 
company’s strategy of interna- 
tional expansion. 

Last month, the company 
committed itself to providing 
up to S5m (£3-im) over time in 
a Joint venture with Avon, the 
direct seller of beauty prod- 
ucts, to sell household goods In 
North and South America. 

T Would point to the Avon 
de al as an absolute demonstra- 
tion that the strategy of inter- 
nationalisation is the correct 
one," S3 Id Mr Hartley. “I 
understand that the market 
needs short-term profit, that 
you cannot just promise jam 
tomorrow, but you also have to 
continue on a strategy that 
will develop in the future." 

Earnings per share were 
halved at 2.53p (5p). The 
interim dividend was 0.85p 
(0.65p). 


Stanhorae buys 

Following its recent £37.2m 
offer for Lilliput Lane, Stan- 
home, the US-based collect- 
ibles company, is farther 
expanding In the UK with an 
offer for Border Fine Arts, the 
Dumfriesshire-based figurines 
maker, for an undisclosed 
sum. 

The move would take Stan- 
home to third place in the 
quality giftware market 
behind Waterford Wedgwood 
and Royal Donlton. 


| DIVIDENDS ANNOUNCED j 


Cones - 

Total 

Total 

Current Date erf 

ponding 

tor 

last 

payment payment 

dividend 

year 

year 


BadgerBne _____ 

int 

1.5 

- 

_ 

- 

- 

Betterware _____ 

__im 

0.85 

Jan 3 

0_65 


2.6 

BDton 

Int 

2.89 

- 

2.835 


9.64 


Int 

14 

Nov 17 

13 


31 

Cl Group 

Int 

0.2 

Jan 3 

0.4 


as 

Denaltron Inti _____ int 

0.5 

Dec 10 

0.5 


1.5 

Doeftax ______ 

int 

1.6 

Nov 22 

1.6 


4.6 

Herring Baker 

__int 

nH 

- 

0.5 


15 

Lon & Ass Inv Int 

0.05 

Dec 30 

0.05 

- 

0.64 

OS Holdings 

hit 

1.56 

Dec 6 

1.56 

- 

5.19 


Dividends shown pence per share net except where otherwise stated. fOn 
Increased capital. §USM stock. 


CASH OFFERS 
by- 

CS FIRST BOSTON LIMITED 

on behalf of 

BFI ACQUISITIONS PLC 

a wholly owned subsidiary of 

BROWNING-FERRIS INDUSTRIES, INC. 

to acquire all the outstanding Ordinary Shares and 
American Depositary Shares 
of 

ATTWOODS PLC 

and all the outstanding Convertible Preference Shares 

of 

ATTWOODS (FINANCE) N.V. 

CS First Boston Limited ("CS First Boston") announces on behalf of BFI Acquisitions pIc-CBFI (UK)") that, by means 
of a formal offer document dated and despatched on 3rd October, 1994 (the "Offer Document"), CS First Boston is 
making cash offers (the "Offers") on behalf of BFI (UK) to acquire all the unconditionally allotted or issued fully 
paid ordinary shares of 5p each in the capital of Attwoods pic ("Altwoods") (including Attwoods ordinary shares of 
5p each represented by American Depositary Shares (each an "ADS")) ("Attwoods ordinary shares") and ail the 
existing unconditionally allotted or issued fully paid 8.5p guaranteed redeemable convertible preference shares of 
5p each in the capital of Attwoods (Finance) N.V. t" Attwoods preference shares") in each case not already owned 
by BFI (UK) and any further such shares which are unconditionally allotted or issued while the Offers remain open 
for acceptance {including any Attwoods ordinary shares unconditionally allotted or issued pursuant to the exercise 
of options granted under the Attwoods pic 1 985 Share Option Plan and the Attwoods pic 1 992 Overseas 
Employees Share Option Plan). 

The Offers are made on the following bases: 109p in cash plus a pro rata entitlement to a contingent cash payment 
(the "Contingent Cash Payment"), if any, for each Attwoods ordinary share not represented by an ADS; 545 p in cash 
plus a pro rata entitlement to the Contingent Cash Payment, if any. for each ADS; and 85p in cash for each 
Attwoods preference share. 

The full terms and conditions of the Offers are set out in the Offer Document (including details of the Contingent 
Cash Payment). 

This advertisement is not being published or otherwise distributed in or sent into Canada and persons reading this 
advertisement (including, without limitation, custodians, nominees and trustees) should not distribute, send, transmit 
or mail this advertisement, the Offer Document or any related documents, directly or indirectly, in or into Canada 
and doing so may render invalid any related purported acceptance of the Offers. 

The Offers, which are made by means of the Offer Document, are capable of acceptance from 3rd October, 1994 in 
accordance with the terms set out or referred to in the Offer Document. The Offers extend to all persons to whom the 
Offer Document and any related documents may not be despatched and who hold Attwoods ordinary shares or 
Attwoods preference shares, or who are unconditionally entitled to have Attwoods ordinary shares or Attwoods preference 
shares allotted or issued to them. Such persons are informed that copies of the Offer Document, Forms of Acceptance in 
relation to the Attwoods ordinary shares (not represented by ADSs) and Attwoods preference shares, Letters of Transmittal 
and Notices of Guaranteed Delivery in relation to the Attwoods ordinary shares represented by ADSs will be available for 
collection from CS First Boston. One Cabot Square, London El 4 4QJ during normal office hours during the period of 
the Offers. 

This advertisement is published on behalf of BFI (UK) and has been approved by CS First Boston, a member 
of the Securities and Futures Authority, solely for the purposes of Section 57 of the Financial Services Act 
1986. CS First Boston is acting for Browning-Ferris Industries. Inc. and BFI (UK) in relation to the Offers and 
no-one else, and will not be responsible to anyone other than Browning-Ferris Industries, Inc. and BFI (UK) 
for providing the protections afforded to customers of CS First Boston nor for providing advice in relation to the Offers. 

The directors of Browning-Ferris Industries, Inc. and BFJ (UK) accept responsibility for the information contained 
in this advertisement and, to the best of their knowledge and belief (having taken all reasonable care to ensure 
that such is the case), the information contained in this advertisement is in accordance with the facts and does 
_not.omit anything likely to affect the import of such information. 

4th October, 1994 CS FIRST BOSTON LIMITED 



December 1 & 2, 1994 

Venture Forum Europe ‘94, the fifth in a well received European series arranged by the 

Financial Times and Venture Economics, brings together authoritative speakers from 

Europe and North America to review current developments in the venture capital industry 

and to examine future trends. 

SPEAKERS INCLUDE: 

Dr Luciano BaJLbo 

Mr Mlchiel A de Haan 

Dr Jos Peelers 

Chairman 

Partner 

Managing Director 

B&S Ventures Sri 

Allas Venture 

Capricorn Venture Partners nv 

Mr Colin Bless ley 

Dr Waiter R Henle 

Mr Oserino Pioi 

Partner in charge of Corporate Finance 

Partner 

Vice Chairman 

(Spain) 

Baker & McKenzie (Frankfurt) 

Olivetti SpA 

Coopers & Lybrand 

Mr Brian Larcombe 

Dr Fa bio Sattin 

Mr Christopher M Sown 

Executive Director, Finance & Planning 

Managing Director. Chase Gemina 

Parmer 

3i Group pic 

Italia 

Baker & McKenzie (London) 

Chairman. British Venture Capital Association 

Chairman 

Mr Peter A Brooke 

Mr Jonny Maxwell 

European Venture Capital Association 

Chairman & Chief Executive Officer 

Senior Investment Analyst 

Mr John B Singer 

Advent International Corporation 

Standard Life Assurance Company 

Director 

Mr Roger Brooke 

Mr Denis Mortier 

Advent International pic 

Chairman 

Chief Executive Officer 

Mr Michael Skok 

Candover Investments pic 

Finonci&re Saint Dominique 

Chairman & Chief Executive 

Mr Dougins R Brown 

Mr Jon Moulton 

European Software Publishing Limited 

Chairman & Chief Executive Officer 

Director 

Mr Leendert J van Oriel 

Advent International pic 

Apax Partners & Co Ltd 

Managing Director 

Mr Thomas F Cadigan 

Dr Darnel F Mnzyka 

Gilde Investment Funds 

Assistant Treasurer & Managing Director 

IAF Professor of Entrepreneurship 

Miss Theresa WaUis 

IBM Retirement Funds 

INSEAD 

Team Leader. Smaller Companies Group 

Mr Roderick Crawford 


London Stock Exchange 

Director & Head of Investment Trust Research 


Mr Michael Walton 

BZW Securities Limited 


Managing Director 

Mr Alec D'Janoeff 


Gartmore Venture Capital Limited 

Director of European Corporate Finance 


Mr Brian Winter-flood 

Coopers & Lybrand 


Managing Director 


Co-sponsored by: 

Winter-flood Securities Limited 

Advent International 1 

1 OLO*AL PftlVATfl ■aiftTT 

Buaa A M^ESsnzs 

uoopers | 


[&Lybrand 


VENTURE 

FORUM 74 

Please complete and return to: Financial Times Conferences. 

PO BOX 3651, London SWI2 8PH. 

e u o ? t - ■ 

Tel: 0S1 673 9000 Fax: 081 673 1335. 


Name Mr/Mi^/Miss/Ms/Other 

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The information you provide will be hcM by u* and may be used to keep you 


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are 


FINANCIAL TIMES TUESDAY OCTOBER 4 1994 


COMPANY NEWS: UK AND IRELAND 


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BFI says US practices 
would cut Attwoods’ eps 


By DovM Blackwell 

Under US accounting practices 
for goodwill, earnings at 
Attwoods, the UK waste ser- 
vices group, would be more 
than halved. 

That is one of the main 
points stressed in the offer doc- 
ument for the group published 
yesterday by Browning-Ferris 
Industries, the Texas-based 
waste management group, 
which launched a hostile 
£364m bid last month. 

BFI is offering 109p cash for 
each ordinary share - just 
above the year's low of I05p. 
But using US accounting meth- 
ods, estimated 1994 earnings 
would be cut from 5.3p to 2.5p, 
the document says. 

At that level, the offer repre- 
sents a premium of more than 
115 per cent, BFI claims. If the 
group were to trade at the 
average multiple for US waste 
companies of 19 times, 
“Attwoods shares should be 
valued at around 50p”. 

la the US, goodwill is written 


off through the profit and loss 
account over up to 40 years. 

In the UK it is taken through 
the balance sheet At the end 
of July 1993 Attwoods had 
£1 79.1m of goodwffl written off. 

BFI. which attacks Attwoods 
financial record as “ dism al", 
says that as the company 
makes 65 per cent of its operat- 
ing profits in the US, a proper 
comparison with other US 
waste companies should reflect 
US accounting standards. 

“All we are trying to do is 
compare apples with apples," 
said Mr Greg Muldoon, senior 
vice-president at BFI. 
"Attwoods earnings are 
inflated by US standards.” 

Attwoods yesterday said the 
offer document provided "no 
further justification for the 
wholly inadequate offer out- 
lined in its original press 
announcement” Mr Ken Fore- 
man, chief executive, said BFI 
was malting its offer to a dd re s s 
its own weaknesses in 
Attwoods markets. It was “an 
unintended compliment to our 


strengths." 

BFI also argues that 
Attwoods is not prepared to 
meet the challenges feeing the 
waste management industry, 
and would perform much bet- 
ter if it were not standing 
alone. It criticises Attwoods* 
narrow focus on waste collec- 
tion in North America. 

At the sazue time BFI sees 
Attwoods UK business, which 
is more integrated, as an 
important step in its plans to 
expand into Europe. 

BFI has already won the sup- 
port of Laidlaw. of Canada. 
Attwoods’ largest shareholder 
with 29J3 per cent of the ordi- 
nary shares and 73 per cent of 
the preference stock. 

Laidlaw, which has three of 
its directors on Attwoods’ 
board, has agreed to sell its 
ordinary shares at $8.50 per 
American Depositary Receipt - 
equivalent to five ordinary 
shares - and its preference 
shares at 85p even if a second 
bidder entered with a higher 
offer. 


ABF buys manufacturing 
base in US from Karlshamns 


By Roderick Oram, 

Consumer Industries Editor 

Associated British Foods has 
bought the US operations of 
Karlshamns, the Swedish foods 
group, giving the UK company 
its first manufacturing pres- 
ence in the US. 

ABF will use the subsidiary, 
to be renamed Abitec Corpora- 
tion, as a base for making a 
wide variety of food ingredi- 
ents. There will include stabi- 
lisers and emulsifiers which it 
already sells in British and 
continental markets to makers 
of bread, ice-cream, soups and 
other foods. 

“We’ve been looking for a 


way to get into food ingredi- 
ents in the US because they 
are more remunerative than 
some packaged foods," Mr 
Garry Weston, ABF chairman, 
said 

In common with other UK 
bakers, ABF has come under 
severe pricing pressure from 
supermarkets’ own-label 
breads. ABF, the UK's leading 
baker, produces under its own 
brands such as ADinson's as 
well as Supermarkets’ brands. 

The assets being bought 
indude a plant in Columbus, 
Ohio, and one in Janesville, 
Wisconsin, which process vege- 
table oils to produce food 
ingredients and products for 


healthcare. It makes a small 
profit on annual turnover of 
&5Qm (£95m). 

ABF had been negotiating 
with Karishawins for more 
than a year. It declined to dis- 
close the purchase price. The 
Swedish group, which had 
over-extended by expanding 
rapidly overseas during the 
last decade, ha6 had to 
retrench by selling some sub- 
sidiaries. 

“Over the next four or five 
years we will have invested 
about $100m” in US manpfac- 
turing, Mr Weston said Turn- 
over of Abitec Corporation 
could double over the same 
period. I 


Bilton edges ahead to £9.06m 


By Christopher Price 

Patchy trading conditions in 
the south-east industrial prop- 
erty market were yesterday 
blamed by Bilton for the mar- 
ginal improvement in pretax 
profits from £&99m to £9-06m 
for the half year to June 30. 

Investment income fell from 
£U.16m to Ell.llm, and Mr 
Tim Goodwin, finance director, 
said that rents remained under 
pressure. “Rental levels are 
fiat and it is difficult to say 
what is going to happen.” 

The net asset value declined 
from 372p to 325p a share fol- 
lowing the U per cent drop in 
the value of the group's prop- 
erty investment portfolio 
reported in April. 

Earnings per share were flat 
at Tip, while the interim divi- 


Bflton 


Sharopifce (pence) 
400 — r*t— 


300 .r-— •»-. 



aoo- C ' ■ * . 1 

... • tin-. \ . 1994 

S9traKFt<3mpttt* ' 

dend improved marginally to 
2B9P&84P). 

Turnover from ordinary 
activities at the trading 
level increased by 23 per cent 


to £5.88m (£4.78m). 

Trading conditions in the 
housebuilding, plant hire and 
contracting side were difficult. 
Mr Hugh Ftee, the chairman, 
commented: “Profitable work 
remains scarce and the hous- 
ing market continues to he 
uncertain.’* 

Rents receivable improved 
slightly at £l2.52m (£i2.5m), 
although there was an increase 
in ground rents which affected 
the overall investment income. 

Mr Goodwin said there were 
a few positive signs within the 
property sector, such as fewer 
companies dosing and a corre- 
sponding rise in the number of 
companies renewing leases. 

However, he added that con- 
ditions remained too uncertain 
to comment on the trading out- 
look for the full year. 


MGN lifts 
Scottish 
TV stake 
to 20% 

By Christopher Price 

Senior executives from Mirror 
Group Newspapers and Scot- 
tish Television are to meet 
within the next week follow- 
ing the disclosure yesterday 
that MGN had increased its 
stake in STV from 15 to 20 per 
cent. 

Sources at STV said that the 
meeting had been sought by 
MGN, although the subjects 
for disenssion were not 
known. MGN refused to com- 
ment. 

A statement from STV said: 
“The purchase of the balance 
of 5 per cent of STV shares 
was anticipated and takes 
SIGN'S stake to 19.99 per cent, 
the maximum allowed by the 
cross media ownership rules 
under the Broadcasting Act. 
MGN has reiterated its 
announcement of support for 
STV and its management” 

MGN, through its subsidiary 
the Scottish Dally Record and 
Sunday Mail, bongbt 2.45m 
shares in STV at 520p per 
share at a total cost of £I2.7m. 
The move follows the dawn 
raid of two weeks ago which 
netted the publishing group a 
14A per cent stake for £37.4m. 

Then Mr Murdoch MacLen- 
nan, chief executive of the 
Scottish Daily Record, had 
said: “We do not believe it is 
necessary for the two compa- 
nies to came under common 
control for these benefits to be 
achieved.” 

STV shares closed down lp 
at 493p. MGN shares were 
unchanged at I29p. 

• Carlton Communications is 
paying £20m for the 10 per 
cent of shares it does not own 
in Carlton Television Hold- 
ings. The Telegraph and 
Gemlna Investments, which 
each took a 5 pm* cent stake in 
the subsidiary prior to Carl- 
ton’s successful franchise bid 
in 1991, will receive their pay- 
ments as shares in the parent 
group. The payment to the 
Telegraph includes the cost of 
the original £1.3m investment, 
and for £2.1m of loan stock. 

Fleming £50m 
trust launch 

By Berthan Hutton 

Fleming Investment Manage- 
ment is planning to raise at 
least £50m with the launch of 
an investment trust specialis- 
ing in natural resources. 

The trust will hold a broad 
international portfolio of com- 
panies involved in the extrac- 
tion, cultivation and process- 
ing of natural resources. 

It will be managed by the 
fond managers team now res- 
ponsible for three Save & Pros- 
per commodity unit trusts. 

An institutional placing of 
shares is due to start next 
week, followed by a public 
offer at the beginning of 
November. 


Power talks behind schedule 




By John McManus In Dublin 

Power Corporation, the Irish 
property company, has sig- 
nalled that negotiations on a 
vital new equity injection are 
not going as well as had been 
hoped. 

The company said it had 
only a "reasonable prospect” of 
concluding a deal under which 
Insas, the quoted Malaysian 
property company, would 
invest I£50m (£49.4m) and take 
a 49.2 per cent stake. A placing 
with outside investors and an 
open offer to raise an addi- 
tional I£50m is also p lann ed. 

The negotiations with Insas 
are behind schedule, admits Mr 
Tony Leonard, Power's manag- 
ing director, but he maintain 
that there are no major stumb- 
ling blocks. “We have come 
across points that took longer 


to negotiate than expected,” he 
said. 

Mr Robin Power, the chair- 
man, blamed the delays on the 
“complexity of the transaction, 
different time rones in Kuala 
Lumpur, the US, London and 
Dublin and the number of par- 
ties involved." 

The deal has to be approved 
by the syndicate of 14 banks 
which are currently owed 
I£220m and are supporting 
Power. Mr Leonard is hopeful 
the deal trill be completed by 
the “end of autumn,” but said 
there was no deadline. 

Power, which desperately 
needs the new equity injection, 
has announced pre-tax losses 
of I£13-4m for the year to the 
end of March. Last year's 
losses of l£l 04.86m were one of 
the largest ever reported by a 
quoted Irish company, and 



Robin Power blamed different 
time rones for delays 

were due mainly to exceptional 
write-offs of I£97.1m to cover 
Power's exposure to the bank- 
rupt Trocadero development in 
London and falls in the value 
of its property portfolio in 


Ireland, Britain and the US. 

Trading losses have been cut 
from I£7.7m to I£5-2m as a 
result of property disposals 
and reductions in overheads, 
according to Mr Leonard. 

Power's auditors have drawn 
attention to the current status 
of the group's banking arrange- 
ments in their opinion in the 
accounts, which have not yet 
been published. The auditors 
also draw attention to the 
negotiations on debt restruct- 
uring and the outcome of a 
compensation claim, but have 
not qualified the accounts 
according to Power. 

Power is currently pursuing 
a claim against the Los 
Angeles Unified School District 
which has abandoned a com- 
pulsory purchase of a site 
owned by Power in Los 
Angeles. 


QS continues progress with £2.22m 


By Peter Pears® 

QS Holdings, the discount clothing 
retailer, continued the progress made in 
the second half of 1993 as it reported a 25 
per cent Increase in profits in the six 
months to July 29. 

Profits at gj.ggm pre-tax, against last 
time's low £L68m, were struck on turn- 
over ahead 17 per cent at £2S.7m (£24. 7m). 
The interim dividend is held at 1.56p from 
earnings per share of 3.43p (2.79p). Last 
time's payment was also maintained in 


spite of a profits fell. Yesterday the shares 
eased 3p to 170p. 

There was no price inflation in the prof- 
its increase. There was no profits rise for 
continuing stores partly because the group 
does not count stores closed and then 
reopened in a different location. 

During the period QS opened its 100th 
store - in Bristol - and by July 31 had 101 
shops. In the six months the sales area 
increased by 7.5 per cent to 233.540 sq ft 
with the new stores in Luton, Bedford, 
Weston-super-Mare and Bristol. 


Already the group has exceeded its tar- 
get of adding a further 10 per cent of 
selling space in the year. So fer it has 
added 12 per cent with stores in Harrow, 
Lowestoft, an extension in Croydon and 
the relocation to larger premises in Fare- 
ham. 

Net cash stood at £5.7zn, unchanged 
from the January 28 amount, os were 
stock levels. Interest receivable fell to 
£133,000 (£254,000). 

Other operating income doubled to 
£128,000. 


Nat Power and Transco 
to settle out of court 


Brighter prospects for RTZ 
in Papua New Guinea 


By Michael Smith 

National Power has reached a 
settlement with Transco 
Energy of Houston, the gas 
trading company, over a dis- 
pute arising from its $150m 
purchase last year of American 
National Power from that com- 
pany. Litigation between the 
two companies has now been 
withdrawn. 

As part of the settlement, 
Transco has agreed to exercise 


Doeflex 
31% ahead 
to £0.95m 

Doeflex. the thermoplastics 
manufacturer, reported a 31 
per cent rise in pre-tax profits 
for the six months to June 30, 
from £725,000 to £950,000. Turn- 
over increased 16 per cent, 
from £15.9m to £18-5m. 

Earnings per share were 
6.28p (5.22p) and the interim 
dividend is unchanged at lifc. 

Densitron up 45% 

Pre-tax profits of Densitron 
International, the electronic 
components group, rose by 45 
per cent from £251,000 to 
£365,000 in the six months to 
June 30. 

Turnover grew from £21-3m 


its right of first refusal to buy 
back TrenFuels, a fuel services 
company and ANP subsidiary. 
National Power has received 
$12J5m for TrenFuels, which it 
says was not material to ANP's 
generation business. 

National Power's obligation 
to Transco to settle some bal- 
ance sheet issues has been 
agreed at S&n. It has received 
the net sum of $4.5m from 
Transco, which it says will not 
affect its 1994/95 earnings. 


By Simon Davies 

BTZ*s attempts to develop the 
T.thtr gold nrina in Papua New 
Guinea have taken a positive 
turn, with the newly installed 
government of Sir Julius Chan 
promising to speed up talks 
over a special mining licence. 

It is estimated that Lihir 
will produce 589,000 ounces of 
gold a year for the first eight 
years, with sufficient reserves 
for 37 years of production. 


NEWS DIGEST 


to £22.lm and the pre-tax 
advance was achieved despite 
reorganisation costs of £104,000 
in its Japanese operation. 

Earnings per share came out 
at 1.13p (Ll2p) and the interim 
dividend is maintained at 0.5p. 

TransTec 

An article published on Sep- 
tember 28 noted that Tran- 
sTec’s shares had traded at 
more than 500p in 1992. The 
contrast drawn with the cur- 
rent price was misleading 
because the shares were subdi- 
vided l-for-5 in October 1993. 

Bisichi Mining 

Bisichi Mining raised pre-tax 
profits from £102,000 to £193,000 
in the first half of 1994, after 
including this time an excep- 
tional £141,000 mostly from 
the sale of an investment 
in a company recovering dia- 


monds from the ocean floor of 
Namibia. 

Earnings per share were 
1.72p (0.74p). Net assets grew 10 
per cent to £5. 49m at June 30, 
against £5m a year earlier. 

Equifax bid 

The £51m, or 65Gp a share, bid 
by Equifax, the US credit data 
group, for UAPT-Infolink, the 
British credit reference com- 
pany. has been declared uncon- 
ditional Equifax has received 
valid acceptances in respect of 
5.54m UAPT shares, about 7L4 
per cent of the issued ordinary 
share capital 

Capita in £4.5m boy 

Capita Group, the provider of 
outsourcing, advisory and 
property services to the public 
sector, is to acquire Beard 
Dove for a maximum £4.5m. 
The initial consideration of 


RTZ currently owns 80 per 
cent of the mine, with Nlu 
Guinea Mining owning the 
remainder. However, the proj- 
ect’s equity structure remains 
under negotiation. 

RTZ also announced yester- 
day the sale of its Ridgeway 
Gold mine to Toronto-based 
Kinross Gold for $47m 
(£29. 7m). 

Ridgeway is expected to pro- 
duce 125.000 ounces of gold 
this. 


£2.7m will be satisfied by the 
issue of 656,416 Capita shares 
at I69.1p apiece along with 
£L64m in cash. 

An additional proflts-related 
payment of up to £L8m may 
become payable, satisfied -by 
the issue of either ordinary 
shares or loan notes, or by a 
combination of the two. 

Pearson disposal 

Pearson, the media and enter- 
tainment group which owns 
the Financial Times, is to 
receive at least £106m net from 
the sale of shares in Cameo 
International, the Houston- 
based oil services company. 

Pearson has sold 8.15m 
shares through an underwrit- 
ten public offer at $19 per 
share. In addition, lm shares 
are being bought by Cameo 
when the offer closes, at the 
same net price, leaving Pear- 
son with an estimated £106m. 


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Has executed a 

$8,435,080 

Debt- for-De ve I opmen i 
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Meridian International Bank, 

Morgan Guaranty Trust Company of New York. 
SpfDcra International Limited 


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The Debt-for- Development Coalition, Inc. 
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The German. Netherlands. Swiss. United Kingdom 
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unicef<& 

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$62,068,343 

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Participating creditors included: 

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I CARE l 


Has executed a 


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Participating creditors included: 

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Africare 


Has executed a 


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28 



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By Nall Buckley 

Shoprite, the discount food 
retailing chain which operates 
mainly in Scotland, yesterday 
issued its second profits warn- 
ing In four months, saying it 
expected only to break even at 
operating level this year. 

Shares in the Isle of Man- 
based group fell 4p to 28p as it 
Issued a statement warning 
that trading was still “very dif- 
ficult". 

Shoprite’s shares peaked at 
243p in February, when they 
were the best performers in the 
food retailing sector, but 
slumped after the group 
rushed out its interim results 
prematurely in May because 
they were below expectations. 

After a planned sale and 
leaseback deal on stores fell 
through in June, Shoprite said 
in July it was cutting back its 
store expansion, selling non- 
core assets, and expected full- 
year profits to be significantly 
below last year. 

Mr Charlies Good, managing 
director for Scotland, said yes- 


Camellia 
edges ahead 
to £6.65m 

Camellia, the investment 
concern with interests includ- 
ing fine art and tea planta- 
tions, announced a small 
increase in pre-tax profits from 
a restated £&49m to £6. 65m in 
the first half of 1994. 

However, Lawrie Group, the 
tea and coffee producer and 
Camellia's main subsidiary, 
reported reduced net profits. 

Mr Gordon Fox. the chair- 
man, said that because of the 
uncertain outlook for its art 
galleries and a difficult year 
generally for tea producers in 
India and Bangladesh, profits 
for the full year were likely to 
be lower than the £21 .6m 
achieved in 1993. 

Turnover amounted to 
£95.4m (£83. 3m) including 
£5.1m from acquisitions. 


A quiet Summer for Flemings 


South Africa 


Hong Kong 


Liblife International B.V. 

|.«n .I*i Hv /I t wk (unoil tabi'inn 

USS320,000,000 

6*/: percent. Convertible Bonds 
due 2004 

convertible into oidioary shares of 


Liberty Life Association of Africa Limited 

- .1 W 

Robert Flcmtng&'Co. Limited 
Merrill Lvndilnfrrnnrkiiul Limited URS Limited 
Nomura Inimutloiul Swim Hunk Corporation 


Shangri-La Asia Limited 

gtllACEliklkiBV 1 

A&(£*i)*Raa) 


Placingof 58,800,000 shares 
for 

HKS676.200.000 
Jardi ne Fleming 


SIV Industries Limited 

OS69 

Offering of 2,356,000 Units 
each com prising 
three Global Depositary Receipts 
with one Warrant to subscribe for a 
Global Depositary Receipt 

J online Fleming 

J.P. Morgan Securities Ltd. 

Boring Brothers & Co., Limited 


Singapore 


Thailand 


Taiwan 


KIM ENG 


HOLDINGS 

Placingof 

15.290.000 shares for SS49, 233, 800 

and 

7.600.000 warrants for SS 11,000,000 
Jdniine Firming Kim EngSccuritlrs (Pec) Ltd. 


BANPU 

Banpu Public Company Limited 

IftFlo'w—hpm.- 4 c/D L i’ll 
T.n.-illlft. 1 ^ 

USS80.000.000 

3V; percent. Convertible Bonds 
due 2004 


Jardi nc Fleming Swiss Bank Corporation 


Tung Ho Steel Enterprise 
Corporation 

USS103 ,200,000 

6,000,000 Global Depositary Receipts 
representing 

60,000,000 ordinary shares 
Jardinc Fleming 

Goldman Sachs (Asia} Limited Indonicz Capital 


Pakistan 


Hong Kong 


Philippines 


Pakistan Telecommunication 
Company.Limited 

USS898 ,100,000 

Placingof 3,000,000 Vouchers 
exchangeable for Shares of 
Pakistan Telecommunication 
Company Limited 
by Privatization Commission, 
Government of Pakistan 


Jardinc Fleming 


Muslim Commercial Bank 


Television Broadcasts Limited 


Placing of 30,000,000 shares 
for 

HKSl.074.000,000 
on behalf of Kerry Group 


JanUne Fleming 



International Container Terminal 
Services, Inc. 

ifhtRMi Ml IN r* rfr ireocO kfe'srri 

USS60, 000,000 
5 per cent. Convertible Notes 

due 2001 


Jardinc Fleming 


Lazard Fr+ra&Co. 




Jardine Fleming 

The leading edge in Asia Pacific. 


Jardinc Fleming Securities Ltd. 
Tel: (8521843-8883 
Fax: (852} 810-6558 


FLEMINGS 

INTERNATIONAL INVESTMENT BANKING 


Robert Fleming fir Co. Limited 
Tel: (44-71 } 638 5858 
Fax: (44-71)3828414 


TJ'-iss jrrmi na+rarrs afper. r <js a waiter of record only. 

Isvmt H Kiifccn fir*n:ry fir Co Limited ,i nxrr.bcr ar'Thc Lcuiion -5u*>' ExJ-uwee arJ The Seaninesard Futures Aielxinnj Limned 


Research spending pushes 
up losses at Chiroscience 


terday that as the group now 
looked likely only to break 
even at operating level in the 
year to October 30, it had 
decided to Issue a further state- 
ment. 

Shoprite, a classic “hard” 
discounter with more than 80 
stores in Sco tland wiring a lim- 
ited number of goods in no- 
frills surroundings, has suf- 
fered badly from the intense 
price competition • centred on 
basic goods - in the grocery 
market over the past year. 

Mr Good said trading had 
remained “extremely difficult” 
over the summer, aithnn g h he 
was pleased with the results of 
Shoprite’s latest initiatives, 
including a television advertis- 
ing campaign, repositioning Of 
its product range, and further 
price cuts on basic products. 

“We have got to hope that 
we have been through the 
trough.” he said. 

He added that the disposal 
programme was progressing 
“satisfactorily” with some 
significant deals in the pipe- 
line. 


Investment *md other Income 
rose to £821,000 (£ 574,000). 

The interim dividend is lifted 
to I4p DSp), payable from earn- 
ings of 49p (53.04p) per share. 

Herring Baker 

In another difficult six mnnfha 
Herring Baker Harris Group, 
the chartered surveyor, cut its 
interim pre-tax loss from 
£1.08m to £306,000. However 
the dividend is being passed. 

Turnover for the half year to 
July 31 was lower at £7.48m, 
against £8.48m which included 
£618,000 from discontinued 
activities. Losses per share fell 
to 2j47p (835p). There was an 
interim payment of O.Sp last 
time. 

Gates slides 8% 

Pre-tax profits at Frank G 
Gates, the Essex-based car 
dealer, fell 8 per cent for the 
six months to June 30, from 
£l-15m to £1.06m. Turnover 
improved from £34. 6m to £3Sm. 


By Tim Burt 

Chiroscience Group, the 
biotechnology company which 
floated in February, yesterday 
unveiled a divisional restruct- 
uring and plans to acquire a 
manufacturing plant 

The move follows a six- 
month operational review by 
Mr John PadfieLd, chief execu- 
tive, who is determined to 
broaden the group’s customer 
base. “We must refocus the 
group to maximise our oppor- 
tunities,*' he said. 

The company has been reor- 
ganised into two operating 
divisions: one focused on man- 
ufacturing synthons - the 
chemical components used by 
drug companies In new prod- 
ucts - and the other on devel- 
oping its own drug portfolio. 

Mr Chris Evans, the compa- 
ny’s founder and chief scien- 
tist, will no longer have a role 
in the day-to-day managpmftnt 
of the division but will oversee 
“strategic issues” as a non-ex- 
ecutive director. 

Among these, the group has 
identified Levobupivacaine, its 
single isomer local anaesthetic, 
as a potential "blockbuster” in 
a market worth an estimated 
3200m a year. It is discussing 


NEWS DIGEST 


Mr Edward Gates, chairman, 
said it was largely due to 
the 30 per cent rise in 
profits on contract and daily 
hire that the results were only 
marginally reduced on last 
year’s. 

Combined sales of new and 
used cars showed a 20 per cent 
Increase. However, departmen- 
tal profits foil 18 per cent, with 
profits fr om the sain of used 
cars almost three times those 
from the sale of new vehicles 
as margins continued to 
decline. 

Earnings per share were 
3.51p (3.6p). Mr Gates said he 
did not expect 1994's full-year 
figures to improve on 1993. 

Porth losses 

Losses at Porth Group, the 
USM-quoted decorations, pack- 
aging and framing products 
concern, incurred Increased 
pre-tax losses of £2.0Sm for the 
first half of 1994, against 
£l.S9m last time. 

Turnover slipped to £2.1lm_ 




Ttowr Hunyxvm 

Founder and c hi e f scientist Chris Evans: new non-executive role 


collaborative ventures with 
several leading drug compa- 
nies to further develop the 
drug, which has begun phase 
two clinical trials. 

It is also confident that 
Dexketoprofen, its anti-inflam- 
matory drug, will begin to con- 
tribute profits next year follow- 
ing its anticipated launch by 
Menarini, Italy’s largest domes- 
tic drugs company. 

Research spending helped 
push up pre-tax losses from 
£1.33m to £3.75m in the six 
months to August 31, In line 
with expectations. Costs were 


(£2.2m) and Interest charges 
were £306,000 (£189,000). Losses 
per share came to 10.8p (9.8p). 

London & Assoc Inv 

Pre-tax profits at London & 
Associated Investment Trust, 
the property investment com- 
pany, were 21 per cent ahead 
for the half year to June 30, 
from £713,000 to £865,000. 

Turnover from property and 
listed investments rose 16 per 
cent to £2.54m (£2.2m). The 
company's net assets increased 
by 27 pp cent to £35 -8m. 

Earnings per share were 
0.74p, compared with 0.64p, and 
an interim dividend of 0.05p is 
maintained. 

Chez Gerard ahead 

Groupe Chez G&ard, the res- 
taurant operator, reported pre- 
tax profits up 74 per cent to 
£L67m for the year to June 26. 
£50.000 ahead of the forecast 
made when it ramp to the mar- 
ket in March. 


partly offset by gross profits of 
£391,000 (£745,000), but the fig- 
ures were dented by adminis- 
trative expenses of £814,000 
(£437,000) following increased 
recruitment 

Costs will increase further in 
the second half as another 60 
staff are hired to boost 
research. After this year's 
£45m rights issue, however, the 
company still has £34m (£8.6m) 
in c ash and investments to 
fund future expenditure. 

Turnover was £757,000 
(£i^4m) and losses per share 
5.5p (4.7p), with no dividend. 


Turnover rose 10 per cent to 
£10-2m. against £9.27m when 
the pre-tax profit was £959,000. 
The company said costs contin- 
ued to kept under control 
resulting in an increase in 
operating margins to 16.4 per 
cent 

The result was also helped 
by a foil in net interest charges 
from £206,000 to £42.000. During 
the year capital spending was 
£682,000 of Which £380,000 
related to the acquisition of 
Scotts Restaurant. The com- 
pany plans to expand by two to 
four restaurants a year. 

Earnings per share were 
7.28p (4A4p). 

Glynwed purchase 

Glynwed, the engineering, con- 
sumer and building products 
group, has bought Wilford 
Plastics (Holdings), a distribu- 
tor of thermoplastic systems, 
for £6.1m in cash. 

Wilford had operating profits 
of £330,000 on sales of £5.92m in 
the year to September 30. 


The BIEE memorial award for 
Andrew Holmes 


A fund has been established in memory of the distinguished 
Financial Times journalist and editor of Power in Europe, 
Andy Holmes. The British Institute of Energy Economics 
(BIEE) is to give an annual research award of £1,000, subject to 
finding a suitable candidate. The arrangements are being 
administered by BIEE. The award is open to men and women 
between the ages of 21 and 35, resident in the United Kingdom, and 
who are interested in energy issues. 

Applicants should submit a two-page original and non-technical 
research proposal related to energy or to energy and the 
environment, and likely to lead to a 5,000-10,000 word paper. This 
proposal should reach toe address below by October 31, 1994 with a 
cover note giving details of address, phone and fax numbers plus 
university or company a ffi liation, if any. A shortlist of applicants will 
then be drawn up and interviewed in London in December. The 
winner will receive half toe money on winning toe award and toe 
remainder on completion of toe paper. The results will be announced 
in early 1995. 

The aim of the award is to encourage young managers, 
postgraduates and others to think about toe wider issues of energy 
policy. Topics could include the European Energy Charter, global 
warming, the impact of China's economic growth on energy 
demand, policy on the the development of alternative transport 
fuels, toe future of nuclear power, third party access to transmission 
grids etc. These are purely illustrative. The judges do not wish to 
specify a precise topic, but toe subject matter and final essay should 
be fully comprehensible to a non-scientific or non-technical audience. 
The winner may be asked to present his or her findings at a BIEE 
meeting, and toe resulting paper may be published in shortened 
form in toe FT Energy Economist. 

Applications should be sent to: Lucy Plaskett, FT Newspapers, 
126 lermyn St, London SW1Y 4UJ. Fax: 071-411-4415. 


FINANCIAL II MLS 

EAST EUROPEAN MARKETS 


Reliable, comprehensive and objective - East European Markets, the twice monthly 
newsletter covering the rapidly changing emerging markets of Central and Eastern Europe 
including Russia and the rest of the former Soviet Union. 

Tc recent a FREE sampte cop y cornua: 

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Tt^mhnuMayonpwidtftTllbehelJb) wag Mlcnanalm , coMaitof«migiag^nmiMrt. 




























30 


FINANCIAL TIMES TUESDAY OCTOBER 4 1994 


i 


[commodities and agriculture! 


Rubber pact 
members try to 
break deadlock 


Bumper crop puts cotton prices under pressure 

T his year’s US harvest could be the biggest in nearly 60 years, writes Laurie Morse 


By Frances Williams in Geneva 

Rubber producing and 
consuming countries yesterday 
began a second round of talks 
on a new price-stabilising com- 
modity pact to succeed the 1937 
International Natural Rubber 
Agreement. The negotiations 
will centre on the key issues of 
the price level and range for 
buffer stock operations. 

Mr Peter Lai, chairman of 
the talks, has put forward new 
price proposals to break the 
deadlock that prevented agree- 
ment on a new accord at the 
last negotiating session in 
April. However, despite 
expressing cautious optimism 
that a deal can be reached this 
time, the two sides have shown 
little sign of shifting their posi- 
tions. 

Consumer countries, led by 
the US and European Union, 
have so far resisted the 
demand by producers for an 
increase in the reference price 
for rubber. This has remained 
basically unchanged since the 
first rubber pact was agreed in 
1979. The current reference 
price is 196.84 Malaysian/Slnga- 
pore cents a kilogram with a 
range of 15 to 20 per cent either 
way before buffer stock 
operations come Into play. 

The present round of talks 
takes place against a backdrop 
of an unexpected surge in rub- 
ber prices this summer which 
enabled the buffer stock man- 


London Commodity Exchange 
COFFEE futures lost steam 
and closed lower in thin vol- 
ume following arbitrage selling 
and conflicting reports about 
the Brazilian weather situa- 
tion. dealers said. COCOA 
prices also slipped as dealers 
awaited news regarding the 
size of the Ivory Coast's crop. 

At the London Metal 


ager to sell most of the 222,000 

tonnes accumulated over four 
years of depressed prices. 

The reasons for the sharp 
rise in prices include heavy 
r ains in the three main export- 
ing countries - Thailand. 
Indonesia and Malaysia - 
which restricted tapping, 
increased imports by China in 
particular, stockbuilding in 
industrialised countries, where 
economic recovery is under 
way and purchases by invest- 
ment funds. 

Some analysts believe this 
could signal a fundamental 
shift in the balance of world 
supply and demand, from 
abundance and low prices to 
scarcity and generally higher 
prices. This would underpin 
the producers' case for a 
higher reference price. 

The 1987 accord, the only 
international commodity pact 
remaining with price-stabilis- 
ing provisions, is due to expire 
on December 28 but can be 
extended for a further year if 
no agreement is reached this 
time. 

The two-week meeting, 
under the auspices or the 
United Nations Conference on 
Trade and Development, is 
being attended by 32 countries, 
accounting in 1993 for 97 per 
cent of world exports and 72 
per cent of world imports. The 
main consumers, apart from 
the US and EU. are Japan and 
China. 


Exchange COPPER prices 
staged an Impressive rally on 
short-covering and fresh buy- 
ing in the afternoon to break 
back above $2,480 a tonne for 
three months delivery. The 
ALUMINIUM market sucked in 
speculative buying as the three 
months price pushed back 
above $1,620 a tonne. 

Compiled from Reuters 


Norway to 
step up 
Statfjord oil 
recovery 

By Karen Fossfi in Oslo 

Statoil, the Norwegian state oil 
company, expects to increase 
recovery from the prolific 
North Sea Statfjord field by 
220m barrels of oil worth an 
estimated NKr22bn (£2. 05m) at 
current prices. 

“We are pushing the recov- 
ery from the Statfjord field to 
the limits," Ms Wenche Skorge, 
a Statoil spokesperson, said 
yesterday. 

The field's recoverable 
reserves are to be upgraded to 
3.89bn barrels from 3.69bn, 
marking the fourth upgrade 
since production of crude oil 
came onstream in 1979 and lift- 
ing the recovery factor to 62 
per cent against an average 40 
per cent from other Norwegian 
North Sea fields. 

By the end of this year about 
3bn barrels of these reserves 
will have been produced but 
daily average production this 
year has reached 650,000 bar- 
rels, exceeding the 1993 produc- 
tion plan for 600,000 barrels. 

Statoil attributes the poten- 
tial to increase recovery from 
the field to the development of 
expertise in reservoir engineer- 
ing. highly-deviated well dril- 
ling and extended reach-hori- 
zontal well drilling - so called 
"designer wells" - enabling the 
tapping of oil from the Brent 
and Statfjord reservoirs that 
would not be possible with con- 
ventional technology. 

For the Statfjord reservoir a 
new drainage strategy - in 
which water win be injected 
into the gas-filled reservoir so 
as to drive residual oil towards 
production wells - is expected 
to boost production by an esti- 
mated 88m barrels and the 
recovery factor by 80 per cent 
from this formation. 

An improved and growing 
understanding of the Upper 
and Lower Brent reservoirs is 
expected to sustain a high rate 
of recovery over a longer 
period, potentially yielding 
132m barrels more of oil from 
these structures. 


T he US cotton harvest is 
moving into full swing 
in the US Mississippi 
Delta region this week, with 
farmers projected to bring in 
the largest crop in nearly 60 
years. Although traders and 
cotton merchants initially scof- 
fed at the US Department of 
Agriculture's forecast of a 
record-breaking harvest of 19m 
bales (4801b each), early har- 
vest data show the estimate is 
on target. 

“Our cotton is picking a little 
better than it looks, and Fm 
hearing the same thing from 
folks in Louisiana and Arkan- 
sas,” says Mr Will McCarty, 
Extension Cotton Specialist 
with Mississippi State Univers- 
ity. 


Logistical snags are tying up 
aluminium warehouse stocks 
and contributing to a supply 
tightness that could boost 
ingot prices above $1 a pound 
($2,204 a tonne) by mid-1995, 
according to industry analyst 
Stewart Spector, reports Reu- 
ters from New York. 

In the latest issue of the 
Spector Report, he also said 
the shortage could prompt 
Western producers to restart 
idled capacity by mid-1995 to 
keep prices from rising too 
quickly. 

“While a large statistical 
ingot surplus does exist, it's 
not all available for immediat e 
delivery to markets where 
d emand is rising rapidly. . . It 
is possible, in our opinion, that 
by the end of 1995 Western 
smelters could be operating at 
nearly 100 per cent capacity." 

Spector said that London 
Metal Exchange warehouses in 
Rotterdam, with 1.1m tonnes of 
aluminium, are the principal 
and most convenient location 
for shipping Ingot to the world 
market. Total LME warehouse 
stocks now stand at 2.31m 
tonnes, down 13 per cent from 
the mid-June record. 


“The farmer that was expect- 
ing to get about 7751b per acre 
is getting 800. What that means 
Is the mid-South cotton crop 
could be a little bigger than 
expected”. 

Texas is the only state 
reporting disappointing yields 
in the early harvest period. Its 
crop suffered from localised 
early-season drought. While 
some traders still expect the 
USDA to reduce Its crop esti- 
mate as the harvest progresses, 
local agricultural agents say it 
appears gains in the delta 
region will more than offset 
any sho rtfall in the Texas har- 
vest 

Prices as high as 86 cents a 
pound during the the spring 
planting season provided a 


The report suggested that 
logistical problems at Rotter- 
dam could limit weekly alu- 
minium shipments to about 
30,000 to 40,000 tonnes in the 
next several months, short of 
the optimum 60,000 tonnes. 

“At that rate, it could take 
well into 1996 to empty Rotter- 
dam's warehouses.” Spector 
said. 

The result, he said, was 
likely to be a further jump in 
aluminium prices to between 
80 and 85 US cents a pound by 
the end of 1994 and to $L20 to 
$L30 by the end of the first 
quarter or early in the second 
quarter of 1995. The current 
price is 72 cents a pound. 

Spector also estimated that 
western al uminium shipments 
this year would rise 10 per 
cent, while production would 
slip 4.6 per cent to 14.4m 
tonnes. Stocks were projected 
to fall by 855,000 tonnes. 

For 1995, Spector forecast 
that shipments would rise 6Jj 
per cent, with production 
likely to grow 3.6 per cent to 
14-9m tonnes. 

Meanwhile, a worldwide 
shortage of alumina (alumin- 
ium oxide) was likely to keep 


strong incentive for farmers to 
seed more acres than usual to 
cotton, says Mr Kevin Brink- 
ley. an economist with the 
National Cotton CounciL Since 
then, as the reality of an extra- 
large crop has sunk in, the 
market has dropped into a 
range of 65 to 75 cents a pound, 
and is now feeling pressure 
from the harvest 

However, even with the 
world cotton production situa- 
tion much improved over last 
year, when China, India, and 
P akistan all had crop short- 
falls, the US producer will still 
benefit from strong exports, 
Mr. Brinkley says. 

Last year, when world cotton 
production fell to 76m bales, 
the US exported 7m bales of 


Russian primary aluminium 
production at or below current 
levels for the next few years, 
the report said, while the state 
of disrepair at Russian smelt- 
ers would also weigh on output 
levels. 

“The CIS [Commonwealth of 
Independent States] ingot that 
started flowing into the West 
in 1990 and trashed ingot 
prices could soon fade away as 
an industry concern, " it 
suggested. “In 1995. the West- 
ern al uminium industry may 
finally get its share of the 
peace dividend.” 

Spector predicted that, if 
western primary producers 
returned to full capacity in the 
middle of next year and if Chi- 
nese and eastern European alu- 
mina imports remained at cur- 
rent levels, the market might 
see an annual alumina short- 
fall of 2m tonnes in 1996 and 
1997. 

That could result in a cut in 
Russian al umina imports and 
reduced production, he said. 

He forecast Russian produc- 
tion at 2.66m tonnes this year, 
o ff 5.6 per cent from 1993, with 
a further decline to 2.58m 
tonnes possible next year. 


raw cotton. This year, with 
world output projected to rise 
to 86m bales, US producers 
expect to export 7.3m bales. 

US manufacturers are also 
getting better at exporting fin- 
ished cotton. They will ship 
the equivalent of 2m bales in 
finished textile products over- 
seas this year, compared with 
only 429,000 in 1934, according 
to National Cotton Council sta- 
tistics. 

Mr James Steel, a commodi- 
ties analyst with Refco in New 
York, notes that US cotton con- 
sumption is also rising. 
“Domestic demand is the high- 
est it's been since the 1947," he 
says. “We're currently project- 
ing domestic consumption at 
11m bales, but it could go even 


Norway’s Hydro Al uminium is 
seeking to rehabilitate Russia’s 
Bratsk aluminium smelter, the 
biggest in the world, to 
improve efficiency and 
environmental standards, 
according to a company offi- 
cial. reports Renters from 
Moscow. 

A delegation from Hydro 
Al uminium , part of the Norsk 
Hydro group, visited Bratsk 
last month to discuss tbe proj- 
ect. “It was a very positive 
meeting," said Mr Odd Efies- 
tad, senior vice-president in 
charge of aluminium at 
Hydro's Moscow office. Negoti- 
ations were well advanced, but 
no contract had been signed 
yet. be added. 

Officials at the central 
Siberian smelter, where envi- 
ronmental groups have voiced 
concern over pollution, were 
not immediately available for 
comment 

The Kommersant Daily 
newspaper reported that offi- 
cials at the Bratsk plant which 
has capacity to produce up to 
820,000 tonnes of aluminium a 
year, were studying recon- 
struction and modernisation 
proposals submitted by virtu- 
ally every leading aluminium 


higher," He is also optimistic 
that as Japan and Europe 
emerge from recession, cotton 
demand will increase in those 
regions. 

Over the longer term, Mr 
Steel sees world cotton demand 
rising as developing countries 
like China and India succeed in 
boosting the real incomes of 
their vast populations. “China 
is consuming far more of its 
own cotton than ever before, 
and while their own harvest is 
better than fast year, they still 
need to buy US cotton to mix 
to get the quality they need. 
The US is expected to ship 
about lm bales of cotton to 
China this year, down only 
slightly from last year's 
1.069m. 


company in the world. 

It said the Russian officials 
were impressed with the Nor- 
wegian technology, but gave 
few details. 

Mr Efjestad said that Hydro 
Aluminium wanted to improve 
existing facilities at the Bratsk 
smelter “In a way that they 
would reach almost the same 
results, in terms of both effi- 
ciency and the environment, as 
if they were rebuilding with 
expensive pre-baked technol- 
ogy". 

The Bratsk smelter is 
equipped with Soderberg type 
pots. The more expensive pre- 
baked technology has come to 
dominate in the western alu- 
minium industry. 

“In Bratsk, we are just 
modernising the Soderberg 
cells. With our technology’, we 
will achieve almost the same 
effect for almost the same 
cost," Mr Efiestad said. 


Acknowledgement 

The photograph in the centre 
page of our May 17 survey on 
world forest products should 
have been credited to Jay 
Maisel of New York. 


MARKET REPORT 

Coffee futures lose steam 


Logistical snags are tying up 
aluminium stocks, says report 


Hydro seeks to update 
Russia’s Bratsk smelter 


^COMMODITIES PRICES 


CROSSWORD 


BASE METALS 

LONDON METAL EXCHANGE 

iPncas from Amalgamated Metal Trading) 
ALUMINIUM, 99.7 PORKY (S per tonne) 


Precious Metals continued 

GOtD COM EX POO Troy qz.; S/troy ca.) 



Cash 

3 mtfts 

Close 

1802J 

1627-8 

Previous 

1592-3 

1617-8 

HifjMow 

1 590/1 589.5 

162971612 

AW Official 

1569.5-90.5 

1014.5-6 

Kero close 


1627-9 

Open m. 

252.557 


Total doily turnover 

42.010 


■ ALUMINIUM ALLOY (5 per lonne) 


Close 

1 645-55 

1665-70 

Previous 

1635-45 

1655-60 

High/low 


1670 

AM Official 

1640-50 

1655-60 

Kerb cfcee 


1667-70 

Open lm. 

3.071 


Toial dally turnover 

294 


■ LEAD IS per lonnol 


Clows 

622.5-3.5 

636.5-7 

Previous 

620-1 

634-5 

Higfilow 


638/632 

AW Official 

617.5-8.5 

631.5-2 

Koto do 3 3 


637-6 

Open ml. 

41.285 


Tow dally turnover 

5.564 


■ NICKEL it pe« tonnoi 


Chrto 

6320-30 

6420-30 

Previous 

6360-70 

6460-70 

Htfjtvlcw 

6275 

6420/6330 

AM Official 

6280-5 

6360-70 

Kero close 


6300-5 

Open int 

70.057 


Total daily turnover 

14.003 


■ TW |S per tonnoi 



CtP5fl 

5355-60 

5435-40 

Previous 

5310-20 

5390-400 

HKJtvlo* 

5288 

5435/S360 

AM Official 

5288-90 

5365-70 

horo doso 


5435-40 

Open inL 

15.864 


Total daily turnover 

4.214 


■ ZINC, special high grade (S per tonnoi 

CK»Q 

1000 5-7.5 

1030-1 

Previous 

1005-7 

1029-30 

WglHotr 


fom/jore 

AM Olfict-il 

looa-as 

1026-65 

Kerb cipso 


1029-30 

Open irrt 

96.290 


Total daily turnover 

17.334 


■ COPPER, grade A IS per tome) 



3471 5-2 S 

2486-7 

PrmioiJB 

2476.5-7.5 

2490-1 

Hninlcnv 

2446-2443 

2492/2455 

AM Official 

2J46-7 

2462-3 


Kerb clow mso-i 

Oprrn in! 

Total daily lumovor 37.001 

■ LME AM Offldel C/S into: l.STSB 
LME CtaUng PS rate; 10782 

Sroti 5785 3 mUer 1.5773 6 mms. 1.5725 SmnwJ.5673 

■ HIGH Q BADE COPPER (COMEX) 



0OM 

Day's 

dauge 

Moll 

low 

Open 

M 

Vol 

CW 

116 40 

•3 00 

116.50 

114.60 

1570 

867 

Nm 

114.50 

.215 



m 

257 

Dec 

114 5D 

*195 

114.80 

112.60 

31869 

1.129 

Jan 

>1400 

-1.75 

114.10 

11390 

558 

1M 

Fed 

11360 

*1 65 

11180 

mso 

436 

74 

a» 

1U20 

♦1 55 

113.50 

11165 

5.834 

1.509 

Total 





50,133 

4307 


PRECIOUS METALS 

■ LONDON BULLION MARKET 

(Brices supplied by N U Ftotfuc/tfaj 


Gold (Tray t>-) 
Clow 
Opening 
Morning fit 
Afternoon tlx 
Day's Hqn 
Dave Id* 
Protons dose 


S price 

.194 70-395.10 
393.50- 393.90 
303.45 
301 T5 

3«M 90-395.30 

M 2 -ic-sa? 80 

3-3350-304.00 


£ ecuv. 


240.035 
248 955 


Lbca Ldn Mean Gold Landing Rates (Vs USS) 


Satt Day's 0m 

price change Mgh Ion M VoL 

DCt 394.8 +O.B 3952 382.6 685 1069 

H0» 385.8 

DOC 3982 +00 3992 395.71122*3 25,818 

Fen 401.6 +0.7 403.5 3990 19.668 3S7 

Apr 405.1 +0.7 406.4 4022 7,235 64 

Jun 408.7 +O.B 410.0 4065 10233 332 

Total 185,124 27,839 

■ PLATINUM NYMEX <50 Troy oz.; S/troy oz.) 

Oct 

41B0 

+0.4 

419.4 

415.5 

1,421 

1,056 

Jen 

423.6 

+12 

4240 

4105 17047 

1*42 

Apr 

427.1 

+1.4 

*280 

4220 

2072 

413 

M 

*30.6 

+1.4 

- 


524 

50 

Oct 

433.3 

+1.4 

• 

- 

335 


Total 





22089 

4,963 

■ PALLADIUM NYMEX flOO Tmy cel: S/iroy ezj 

Oct 

152 25 

+4L55 

. 

. 

2 

2 

Dec 

15325 

+0.55 

15325 

151.50 

4,991 

232 

Mar 

154-25 

+055 

134.75 

15225 

1022 

35 

Jon 

155.35 

+055 

- 


152 

- 

TOM 





0*67 

269 

■ SILVER COMEX (100 Troy OZ.; Canta/troy OZ.) 

Oct 

564.7 

+1B 



3 

. 

Km 

567.0 

+3.0 



- 

- 

Doc 

569.5 

+30 

5770 

5570 

91601 

15,141 

Jen 

577.1 

+3.8 

5610 

5010 

43 

- 

Mw 

570.1 

♦19 

5800 

5650 

10.837 

60* 

May 

58*8 

+3 6 

5035 

5710 

4.547 

60 

Tefal 




121042 10093 

ENERGY 






■ CRUDE OIL NYMEX 142.000 US gads. Starrefi 


Lataef 

Hep's 



0<M> 



price 

change 

Mgh 

Low 

lot 

Vol 

Soy 

18.32 

-0.07 

16.43 

1826 

88052 

54.361 

Dec 

10.42 

-0 03 

18.51 

1831 

75A3* 

29.308 

Jm 

18.43 

■0 03 

1652 

18.36 

•=6085 

12000 

Fell 

18.43 

-0JJ3 

18.50 

10 42 

21906 

3.878 

Mar 

18.49 

+0.02 

10.51 

18.43 

20.956 

3.781 

*pr 

1850 

+005 

1050 

1845 

14.8*0 

1063 

Total 




412^67118,798 

■ CRUDE OIL IPE (S/barrel) 





Ufiwi 

Days 



Open 



price 

change 

Mgh 

Low 

tot 

Vol 

No* 

17.07 

-0.08 

17.18 

1698 

64.107 


Dec 

17.10 

4107 

17.19 

1704 

47,035 

10028 

Jan 

17.12 

-0.08 

1720 

1705 

15.925 

1.890 

Feb 

1711 

-004 

17.74 

17.06 

7.590 

431 

Mn 

170* 

■OO* 

17.10 

17 02 

6.477 

553 

Apr 

1702 

■007 

17.09 

1701 

1.810 

161 

Total 




1520*1 

30.454 

M HEATING OIL NVMEX 142.000 US ga2a. c/US ga&O 


Latest 

0>y 'a 



Opeo 



price 

LtlMiiyi 

«gh 

Low 

tot 

Vd 

No* 

50.95 

-029 

51.40 

5085 

1002 

11.845 

Dec 

51.95 

-023 

5205 

5190 40002 

20.686 

J» 

5230 

-025 

53.10 

5780 41625 

7.505 

Feb 

53*5 

•0 05 

53 65 

5330 

31.684 

3048 

Mar 

53.00 

-020 

5345 

5100 

16242 

654 

Apr 

52.35 

-015 

5235 

52-35 

12.463 

816 

Total 




177,182 

49041 

M GAS ON. IPE <smm) 





Sen 

nays 



fen 



price 

dtooge 

High 

Low 

W 

Vd 

Oct 

154 50 

-050 

156 75 

15450 27.158 

6.573 

Now 

15725 

-0 25 

159 25 

>57 00 

21.534 

406* 

Dec 

159 JO 

-025 

16100 

15925 

27248 

3.095 

Jon 

161.50 

■025 

16150 

16125 

15 355 

412 

Feb 

167C0 

-075 

16425 

16700 

5.557 

123 

Mar 

162.00 

-0.25 

163 75 

167 CO 

506* 

183 

Total 




108047 

14098 

■ NATURAL GAS NYMEX 1 10.000 ranttu.; S/mmBtli.1 



Days 



Open 



PriCfl 

Bonge 

Mgb 

Lew 

tot 

Yd 

Not 

1 680 +0.023 

1.685 

1.640 

30255 

8.778 

Dec 

1.980 

+0 018 

1905 

L9*5 

29.113 

3.332 

Jan 

1055 +001* 

1055 

20SO 

1709* 

1019 

Feb 

1.990 +0012 

1.995 

1.983 

140M 

1021 

Mar 

19*5 

+0 012 

1045 

1.940 

11035 

317 

Apr 

1910 +4) 007 

1910 

1.900 

6.779 

154 

TOM 




151056 10,459 

M UNLEADED GASOLINE 




NYMEt (40000 US 0009.: CUE fftSl/ 




2'mcnlha - . 

i'menthe • • . .. 

...4.60 12 months 

.4 65 

5JS 


Latast 

wteo 

Bayi 

change 

Mgh 

In 

Open 

Id 

1M 

Sfevcr Fla 

prtroy os. US eta equlv. 

He* 

4895 

-074 

47JS 

48.70 

1.750 

8,199 

Spot 

350.65 

552.50 

Dec 

5505 

■0.17 

5525 

5*30 

29.673 

15.037 

J nxjmtw 

355.55 

55965 

Jan 

54.70 

-0 05 

54.90 

5480 

13033 

3.271 

6 months 

361.15 

567.00 

Feb 

Sica 

■805 

5810 

5400 

8.749 

1.139 

1 ywr 

375.00 

584.45 

Mar 

58 70 




4.124 

907 

Cold Coins 
Krugerrand 

Mapfo Loaf 

New Sovereign 

S pneo 
396-399 

405.50-408.05 

92-» 

£ oQiuv. 
251-253 

58-61 

Apr 

letd 

5960 

•0.10 

59.60 

5900 

1.495 

88041 

392 

29098 


GRAINS AND OIL SEEDS 


■ WHEAT LC£(E per tonne) 



Sett 

Daye 



Open 



priea 

change 


Lm 

Id 

VU 

Nov 

10405 

-035 

105-00 

10405 

2085 

158 

Jan 

106.70 

-030 

107.00 

10650 

1090 

285 

Mar 

108.80 

025 

109.05 

10800 

1011 

65 

my 

111.10 

025 

11100 

11100 

1.390 

49 

Jut 

11375 

- 

- 

- 

253 

• 

No* 

97.75 

• 

> 

- 

- 

5 

TaW 





7,129 

542 

■ WHEAT CBT (S.OOObu min; canta/BOlb busfwQ 

Dec 

408/4 

+30 

410/B 

402/0 47049 1B0S4 

Mar 

417/4 

+8/4 

419/0 

409/4 19.007 

6,370 

May 

395/4 

+2/0 

398/4 

392/8 

2082 

1022 

-M 

35Bffl 

-1/2 

361/4 

357/0 

5.408 

1.455 

Sap 

364/0 

+1/0 

384A1 

363/0 

124 

9 

Dec 

371/4 

♦3/4 

371/4 

371/0 

81 

3 


Total 7*153 27043 

■ MAIZE cat {5.000 bu min; oma/SBb buahal) 


Dec 

217/4 

+1» 

219/0 

215/D 134.661 

19094 

Her 

227/D 

+1/6 

22B/B 

224/6 41271 

1797 

May 

234/6 

+1/6 

230/4 

232/4 

18.888 

1039 

JU 

240/0 

+2/2 

241/2 

237/4 19063 

1,587 

S«P 

244/D 

+2/4 

2*5*1 

241/4 

1038 

199 

Dae 

248/4 

+2/B 

2*9/4 

245/4 

7,414 

- 

Total 




230008 20018 

■ BARLEY LCE (£ per tonne) 



Nov 

103.45 

+0.10 

10160 

10100 

461 

24 

Jan 

105.75 

+0.10 

105 JO 

105.23 

410 

53 

Mar 

107.75 


- 

- 

125 

- 

May 

109.65 

- 

- 

- 

46 

- 

Sap 

94.00 

- 

- 

• 

2 

- 

Nov 

95.00 

- 

- 

- 

- 

• 

Tow 





1042 

77 

M SOYABEANS C8T (50OM» iMm CMS/BOb bustle? 

He* 

538/2 

+2/2 

541/4 

535/D 77061 

31462 

Jan 

548/8 

+2/4 

551/4 

546/0 21095 

6,103 

Mb 

5W4 

+2/2 

561/6 

555(0 

11198 

40SS 

May 

567/4 

+M 

570/2 

563/4 

6,778 

1047 

Ad 

574/0 

+38! 

576/D 

569/4 

13063 

2078 

Aog 

576/0 

+3/4 

578/4 

573/D 

358 

94 

Total 




137004 48094 

■ SOYABEAN OIL C8T f60,000tas.- cents/lb) 

Oct 

24.71 

-137 

25.05 

2406 

11.867 

3,159 

Dec 

2184 

-002 

2408 

2172 

39,425 

11.499 

Jan 

2303 

-020 

2180 

2155 

9075 

1074 

Mar 

23.41 

-0.13 

2305 

2135 

9,468 

liia 

May 

2124 

-009 

2135 

MM 

8048 

1,720 

JM 

2110 

-0.04 

2300 

2302 

4.753 

1065 

TOW 





83039 21073 

■ SOYABEAN MEAL CUT (100 tons: Srtort 


Oct 

162.0 

*14 

1811 

181.4 

8,415 

4.709 

Dec 

1611 

+10 

164.4 

1611 

46.066 

10050 

Jaa 

184.7 

*10 

1E5.B 

1614 

13071 

4008 

Hta 

1G7.8 

+10 

169.1 

166.7 

11390 

1174 

Hay 

170.4 

+10 

1710 

109.4 

6025 

1.413 

M 

174.9 

+2.5 

1750 

1720 

4.932 

957 

Total 





B103B 21908 

M POTATOES LCE ffVtannef 




NOV 

1500 

- 

- 

. 

. 

. 

Mar 

105.0 

- 

- 

- 


- 

Apr 

2260 

-12 

2320 

CTO 

1.157 

129 

uay 

237.5 

-2.5 




- 

Jm 

107 5 

- 

- 

. 

- 

. 

TeW 





1,157 

129 

■ FREIGHT (BIFFEX) LCE (SlO/index point) 


net 

1731 

+8 

1720 

1720 

848 

5 

Nov 

1708 

+8 

1710 

1710 

347 

14 

Dec 

1678 



- 


- 

Jan 

1643 

- 

1650 

1645 

688 

30 

Apr 

1639 

♦14 

1630 

1630 

485 

8 

Juf 

1450 

+25 

1450 

1450 

107 

5 

Total 

Close 

Pre* 



1485 

67 

BP 

1669 

1658 






Tea 

TTwre was a good genetd demand, reports the 
Ten Brokers' Association. Good Hquoring 
Aessms worn again we* supported at fully firm 
new cut plainer jnetSums tended easier. Bright 
east Africans were strong, opening firm to 
dearer afchough prices eased by the dose. 
Coloury mediums and central Africans were 
fully firm but plainer sorts lost some ground. 
Offshore: Pair demand al firm rates. Quota- 
■Ions: best available 2l0p/kg. good I45p/kg. 
good medium 130p/kg. medium llfptkg. low 
medium aspfltg. The highest price realised this 
*eek was 2i5p/kg lor an Assam pf. 


SOFTS 


■ COCOA LCE ffAonne) 


Sett Day** Open 

price dungs Hgh law Ini Vol 

Dec 972 -14 978 988 Z7019 1043 

Uv 1008 >12 1011 1002 37055 018 

M*y 1018 -13 1028 1015 13098 92 

JU 1032 -11 1034 1029 5088 45 

SBp 10*3 -11 1045 1042 91812 86 

Dec 1059 -12 - - 8.069 

Total 105080 1182 

■ COCOA CSCE (10 tonowK S/tonrrea) 

Dec 

1302 

-18 

1326 

1300 39061 

5.418 

Mta 

1356 

-17 

1380 

1355 

16.785 

1077 

H«r 

1386 

-17 

1405 

1385 

6059 

276 

JU 

1419 

•12 

1420 

1415 

2080 

• 

Sop 

1446 

-12 

- 

- 

1004 

- 

Dec 

1468 

-12 

1470 

1470 

4,963 

4 

TIM 





740H8 7073 

■ COCOA QCCO) (SOR*a/tanne) 



SepL 30 


PriCi 


Ptav. day 

wy- 



101181 


1010.80 

■ COFFEE LCE (S/torme) 




Nn 

3851 

-24 

3940 

3850 1 0.781 

1.157 

Jan 

3B7B 

■27 

3914 

3825 

15542 

1,185 

Mar 

3748 

•10 

3820 

3745 

7056 

255 

Hey 

3710 

-13 

3750 

3890 

2,414 

153 

JU 

3688 

-2 

3695 

3665 

1014 

88 

Sep 

3635 

-15 

- 

• 

23 

- 

Total 





37030 2018 

■ COFFEE •C CSCE (370OUbx centals) 


Dec 

2D9.B0 

+0.75 2130D 

20605 

20,883 8,380 

Mar 

21160 

+100 21600 

21150 

9.110 

1045 

May 

21135 

- 

217.75 21400 

3012 

202 

JU 

21605 

+050 

21 900 

Z17.D0 

1.193 

OB 

Sep 

216-50 

+100 

22000 

21600 

525 

73 

Doc 

21705 

+000 

21800 

21800 

750 

10 

TOM 





S80S31O0B8 

■ COFFEE (ICO) (US cents/pound) 



SopL 30 


Plica 


Pip. ttarj 

Contp. da*y — . — 


19003 


20005 

is nay average — 


20*00 


20403 

■ No7 PREMIUM RAW SUGAR LCE (cents/lbs) 

Jan 

11.82 

. 

„ 

_ 

_ 


Mar 

1206 

- 

% 

• 

90 

- 

Hay 

1178 

- 

- 

- 

. 

- 

TOW 





90 

- 

M WHITE SUOAH LCE (Srtanwj 



Dec 

331.30 

+200 

331 00 

327.60 

3, BBS 

Z75 

Nta 

33100 

+1A0 

331.00 

3Z750 

7027 

556 

May 

331.00 

+100 33100 

32800 

IA37 

232 

Aog 

330.90 

+1.40 

33100 

32700 

1,177 

340 

oa 

31190 

+1.40 

N 

. 

331 

. 

Dec 

31200 

+1.40 

- 

- 

4 


Total 





14031 

1016 

■ SUGAR *11' CSCE (1 HOOOttjs: oants/Kn) 


Rtf 

1252 

*0.12 

7205 

12J2 100887 1,850 

May 

1154 

+0.13 

1156 

1135 

I80341134O 

JU 

1142 

+0.14 

1145 

1205 

11077 

1.724 

0« 

. 1113 

+001 

iiia 

1106 

9JM9 

1.402 

Mar 

11.73 

+0.10 

- 

- 

1.303 1027 

Hey 

11.73 

+0.10 


- 

9 

229 

TOW 




13901018072 

■ COTTON NYCE (50.D00tbs; cental ba) 


Oct 

66.40 

-100 

8800 

6600 

232 

112 

Dec 

66.94 

-0.69 

67.45 

5800 

27.461 

1466 

Mar 

68.72 

-0.70 

69.10 

68J0 

10043 

681 


6007 

-146 

7028 

6906 

5035 

96 

JU 

7003 

-0.47 

7100 

7000 

3015 

147 

Oct 

MJ1) 

-000 

- 

- 

502 

39 

Tow 





50081 

4.711 

M ORANGE JUICE NYCE (15.000 b* canta/lba) 

Nov 

9405 

-0.15 

an an 

9150 

9036 

1079 

Jen 

97.75 

- 

99.65 

96.73 

6005 1003 

Mar 

10100 

+000 

0300 

!OO0O 

4.744 

387 

May 

10*00 

*000 10190 

0300 

1087 

136 

JU 

107.70 

+000 

08.00 

O&OO 

818 

21 

Sep 

11005 

+000 

« 

- 

196 

30 

Total 




23071 3,736 

VOLUME DATA 





Open 

Interest 

and Volume 

data 

shown 

for 

cwwacta traded on COMEX, NYMEX. CBT. 

NYCE, CME and CSCE are one day In Bineas. 

INDICES 






■ REUTERS (Base: IB/Q/HsTOOf 



Oct 3 Sep 30 

month ago 

year ago 

2077.4 20B0.7 

aoea.4 

1578.1 

■ CRB Futures (Base: 1 967a 10© 




Sep 30 Sep 29 month ago yew ego 

229.86 730.87 332,48 217.46 


MEAT AND LIVESTOCK 

■ LIVE CATTLE CMS (40,000toa; canta/lba) 



Sett Dayi 

Open 



jifca tfcaaga Ogb Lm 

M 

VU 

Oct 

86028 +0025 80900 68075 19.188 

8044 

Dec 

60900 +0400 69.150 60475 22,199 

6,147 

Feb 

67.975 +0075 60225 87.660 14.002 

1028 

Apr 

68025 +0175 88050 68575 

9004 

745 

Jm 

85.050 - 66050 65000 

2095 

203 

*■0 

65050 -0050 85.460 65.125 

1.148 

60 

TdH 


69084 17029 

■ LIVE HOGS CME (40.000tbs; conta/lK} 


Oct 

30250 -0175 36075 36.000 

6039 

3027 

Dec 

1ft asn -0050 36000 36.025 

14.330 

2068 

Feb 

37.300 +0250 37050 30975 

5049 

2010 

A*f 

37000 -0.025 37.450 37.000 

1093 

729 

•ton 

41700 - 41700 42050 

1,432 

283 

Aug 

41050 - 41050 41.700 

178 

47 

Total 


2O0BB 

*117 


■ PORK BELLIES CME (40,D00lbs; cente/lte) 


F*tJ 

38025 +0075 39000 38050 

7,604 

1084 

Mar 

38000 

-0050 39000 38.700 

696 

160 


38000 

-0.125 4a 700 39050 

227 

40 

JU 

40900 

-a 050 41000 40000 

228 

43 

Aag 

39050 

- 39.750 39050 

46 

1 

TOW 



6000 

1047 


LONDON TRADED OPTIONS 

Strike price S tonne — CaUa Puts — 


■ ALUMINIUM 


C99.7%J LME 

Nov 

Feb 

NOV 

Feb 

1600 ... — . 

45 

39 

28 

57 

1625 .. 

32 

76 

40 

68 

1050 

22 

65 

« 

82 

M COPPER 





(Grade A) LME 

Nov 

Feb 

Nov 

Ff* 

2500 . . 

45 

82 

80 

707 

2560 

27 

71 

31 

136 

2600 . 

15 

55 

129 

168 

■ COFFEE LCE 

NOV 

Jan 

Nov 

Jan 

3600 — - — 

274 

374 

23 

140 

3650 

234 

344 

33 

166 

3700 

198 

316 

47 

188 

m COCOA LCE 

Dec 

Mar 

Dec 

Mar 

975 - 

36 

36 

33 

55 

1000 _ 

26 

73 

64 

67 

1050 

12 

53 

67 

97 

■ BRENT CRUDE IPE 

NOV 

Dec 

Nov 

Dec 

1650 

aa 

100 

12 

34 

1700 _ 

34 

66 

31 

61 

1750 ... 

14 

44 

62 

88 


LONDON SPOT MARKETS 

■ CRUDE OIL FOB (oerbarreMMovj +c r- 


Dubai 

Si 5. 60- 5051 

+0.10 

Brent Bend (dated) 

S1B.83-4.B6 

+0.08 

Brent Stand (Novi 

S17.06-7.09f 

*0.12 

W.T.I. ( 1 pm sat) 

SlB09-80Ot 

+0.13 

■ OIL PRODUCTS NWE prompt delvery OF (tonne) 

Premium GasoSne 

SI 71-174 

-1.0 

Gas 09 

*157-156 


Heavy Fuel Ofl 

577-80 


Naphtha 

SI 84-185 


Jet fuel 

*180-183 

+30 

Diesel 

S160-1B1 


Ptootaun ABUS, rot London (Oru 3S9 6792 


■ OTHER 



Gold (per troy oz)* 

$394.90 

+1.10 

Silver (per troy 02 )* 

56A5e 

+50 

Ftettnum (per tray 02 J 

S415.SO 

-3.75 

Paiadhjm (per troy az.) 

$151 00 

-0.50 

Copper (US prod.) 

1 190C 

-5.0 

Lead (US prort) 

38 75C 

-0.50 

Tin (Kuala Lumpur) 

13.53c 

+0.12 

Tin (New Yoriq 

250.50 


Cattle (Dva welghQt 

1160 Op 

+0.03- 

Sheep (live traighQt* 

70.85p 

-ASF 

Figs (jfvo weigh)} 

70.85p 

-406* 

Lon. day sugar (raw) 

33O70Q 

-6.40 

Lon. day sugar (wte) 

S33&20 

-2.30 

Tara & Lyle expod 

£307.00 

-4.00 

Barley (Eng. had) 

Una 


Maize (US No3 YoOow) 

SI 36.0 


Wheat (US Dark North) 

$180.0 


Rubber (NovfV 

93 .00p 

+0.50 

Rubb»(D«0f 

flCJOp 

+0.50 

Rubber (KLFSSNol JU) 

348.0m 

+200 

Coconut 04 IPNIjfj 

5835.0U 


Palm 01 (Malay. )§ 

WIS.Ot 


Copra (PM)S 

S413.0U 


Soyabeans (US) 

Cl 54.0V 


Cotton Outfook'A' index 

73.70c 

-0.1D 

Wooitopa (64a Super) 

4530 



£ per Mto udni uViMwae *tot*d, o pencaftp. c esnts/Sx 
r rhqoMrg- m Matapian centaAg. y jjyrSep z Aua „ 
Nm/DK. u Oct/Nov r Nov. * Aug/Ott p London PhyofeaL 
9 OF ffatfaadam. 4 Buttm menus ctooe. * Shew (Lm 
■ Cheng* on mk e Mew m hr* premia 
day. 



ACROSS 

1 From which one knows the 
place to go In (7,5) 

20 Number to play carelessly. 
It’s a favourite remedy (7) 

11 Omission of vowel say, in 10 
lines misprinted (7) 

12 Boredom most be included 
among the unseen nuisances 
(5) 

13 Dance company led by priest 
( 8 ) 

15 Stockman? (10) 

IS East End, perhaps, a place of 
great happiness (4) 

IS Water-plant in usual garden 
14) 

20 The copper's Dy (10) 

22 Unpractical people possibly 
made errors without opera- 
tional research (3) 

24 Police area of many branches, 
we hear (5) 

26 Recollect names, ie for plant 
(7) 

27 Be a survivor as No. 11 in l 
across could be 14,3) 

28 In a lesser way (12) 


DOWN 

2 Non-appearance of sailor and 
nurse at church (7) 

3 End of school period in Amer- 
ica (8) 

4 Handle a famous person (4) 

5 Was higher than but failed to 
notice (10) 

6 Belief in a poor side is mis- 
placed (5) 

7 Eg diner is drunk, “influ- 
enced" (7) 

8 Intelligence below current 
ranking (13) 

9 Girl sticks firmly around mid- 
dle of bound statements (13) 

14 Well-suited? (6-4) 

17 A northern comic’s shuffle 
(soft-shoe) (8) 

19 Shone faintly and led game 
disastrously (7) 

21 The land surface makes excel- 
lent fuel i7) 

23 Greek letter's one about a 
series of pleasant sounds (5) 

25 A positive sign (4) 


Solution to Saturday's prize puzzle on Saturday October 15. 
Solution to yesterday’s prize puzzle on Monday October 17. 


Of broking awi jobbing the Pd/Arau's fond, 

See Iuki' iwtvllu he puls pour word onto livid 

Stoikan® 


JOTTER PAD 







r 





FINANCIAL TIMES Tl rr:«;r»A v — 


31 







I 

s 





% 




MARKET REPORT 

FT-SE falls sharply 


after poor economic news 


By Steve Thompson 

A combination of disturbing 
economic news from both sides of 
the Atlantic, plus a worrying profits 
warning from S.G. Warburg, the UK 
merchant bank, cast a shadow 
across the London stock market 

The FT-SE 100 Index once more 
plunged through the 3,000 level 
closing a net 42J& lower at 2,983.5 
The retreat by the market front-line 
stocks was matched by the second- 
tier issues, where the FT-SE Mid 250 
Index dropped 45.2 to 3,449.6. 

Adding to the gloom surrounding 
the market was news emerging 
from the Labour party conference 
in Blackpool that a Labour govern- 
ment would introduce a windfall 
profits tax on the privatised util- 
ities such as electricity and water 
companies whose profits have 


surged since being taken out of pub- 
lic ownership. 

The pattern of trading in the mar- 
ket was set at the outset when deal- 
ers chopped their opening prices 
after S.G. Warburg, regarded as the 
most successful integrated securi- 
ties house in the City since Big 
Bang, issued a warning that interim 
profits would be severely affected 
by the extreme turbulence in inter- 
national markets in recent months. 
This news, which followed warn- 
ings last week of low turnover from 
Sharelink, the execution-only stock- 
broker, saw marketmakers carve 
around 16 per cent from the War- 
burg share price and triggered a 
broad mark-down of prices across 
the market, especially in the finan- 
cial areas. 

Shortly after the market had 
absorbed the Warburg news, it had 


to cope with worrying money sup- 
ply figures. MO, the narrow money 
supply indicator, expanded by 1 per 
cent during September, well ahead 
of the expected 0.4 per cent increase 
and giving a year-on-year rise of 7.1 
per cent This brought additional 
pressure to bear on a gilts market 
which opened in goad shape but 
was quickly worn down by a poor 
performance by German bunds 
which, in turn, reflected growing 
unease after the latest opinion poll 
ratings for the October 16 federal 
election. 

With gilts slipping away, the 
gloom In the stock market deepened 
and the FT-SE 100, which opened 
only two points easier, quickly fell 
to show a drop in excess of 32 
points by midday. 

Debt markets fared worse with 
the announcement of a higher than 


expected National Purchasing Man- 
agers' Index, which served to 
increase worries in the US of fur- 
ther inflationary pressures. Dealers 
took the view that evidence this Fri- 
day of increasing economic activity 
in the US, via a steeper than expec- 
ted fall in unemployment, would 
push the US Federal Reserve into 
another increase in US interest 
rates. The general consensus was 
that a fall of more than 250,000 in 
US non-farm payrolls on Friday 
would produce sleep fells in world 
markets unless the Fed moved to 
lift US rates. 

At its worst, the FT-SE 100 Index 
was down 43.9, affected by an early 
slide in the Dow Jones Industrial 
Average, before its subsequent 
dose. But there remained very little 
confidence in a UK market which 
one strategists said is being “tor- 


tured by fears of inflation across 
the globe". 

Marketmakers, bruised by the 
recent excessive volatility in mar- 
kets, remained bearish in the short 
term. “We are reaching a climax of 
bearishness in this market but you 
would have to be very brave to call 
the bottom," said one wear)' dealer. 
He expected support for the FT-SE 
100 at the 2.950 level 

The Warburg warning produced 
hefty losses across the merchant 
banks and clearing banks with big 
trading teams, while shares in 
Smith New Court, the UK's premier 
marketmaking firm, were badly 
affected. 

Reports of a £5bn flotation of 
BSkyB produced strong support for 
Pearson and Granada, two of the 
big shareholders in the satellite 
television group. 


FT-SB-A All-Share Index Equity Share* Traded 



Turnover by volume (ml Uon). Exctecflng: 
Mra-nwKei busmen and overseas unowr 



1984 


I Key Indicators 
Indices and ratios 


FT-8E 100 

2903.5 

-42.8 

FT-SE Mid 250 

3449.6 

-45J2 

FT-SE-A 350 

15002 

-21.2 

FT-SE-A AB-Share 

1490.63 

-20.14 

FT-SE-A All-Share yiekf 

4.03 

(3.98) 


FT Ordinary index 

2320.3 

•29.8 

FT-SE-A Non Fins p/e 

18.35 

(18.52) 

FT-SE lOOFut Dec 

2993.0 

-49.0 

10 yr Gilt yield 

8.89 

(8.69) 

Long giit/equrty ytd ratio: 

2.22 

[223) 


Best performing sectors 


1 Oil, Integrated -O.i 

2 Other Services 4 Bus — -0.3 

3 Mineral Extraction ............. -0.3 

A Media -0.4 

5 Leisure & Hotcta -0.5 


Worst performing sectors 


1 Merchant Banks .....-7.1 

2 Electricity -4.0 

3 Water --3.8 

4 Insurance — -3.3 

5 ToOacco ... -2.9 


Banks hit 
by profits 
warning 

A deeply disturbing profits 
warning from S.G. Warburg, 
one of the UK's leading inte- 
grated securities houses, 
pushed panic buttons among 
investors and analysts. 

The shares responded by 
plunging more than 15 per cent 
to hit their lowest level since 
the beginning of last year as 
analysts cut forecasts. 

By the time the smoke had 


cleared the stock was down 
lOlp at 569p with 4. 3m shares 
traded and beginning to look 
relatively cheap, according to 
some banking specialists. Nev- 
ertheless. with foe market cap- 
italisation already putting toe 
bank at the bottom of the 
FT-SE 100, its future in the 
blue chip Index looked precari- 
ous. 

Warburg announced that 
profits expectations of around 
£i40m for the six months to 
September would be disap- 
pointed and the figure was 
more likely to be between £55m 
and £65m. 

There was much speculation 
as to what lay behind the 
downgrade. Warburg cited dif- 


ficulties in equity and fixed 
income trading, but some deal- 
ers said toe big fails in. global 
bond and stock markets had 
occurred before the March 
year-end. It was suggested that 
the house might have lost 
heavily in its risk manage- 
ent business, particularly 
derivatives. 

Downgrades followed swiftly. 
James Capel moved to the bot- 
tom of the range, reducing its 
foil-year estimate by £l00m to 
£140m. Credit Lyonnais Taing 
took a more optimistic stance, 
lowering its forecast by £72m 
to £158m. However, the most 
shocked appeared to be Nat- 
West Securities, which had 
seen Warburg as the best of a 


bad bunch. The house cut by 
£145m to £155m, and moved its 
recommendation from “add" to 
“hold". 

Laing. formerly a strong bear 
of the stock, took the opposite 
view and upgraded to a more 
neutral stance. Analyst Mr 
Martin Hughes argued that 
with staff salaries averaging 
£105,000, the high cost base 
compared to rival houses 
would hit profits when reve- 
nues were down, but the 
bank’s net worth was now 
offering support 

The Warburg statement 
turned the spotlight on to 
other Investment banks as well 
as clearing banks with invest- 
ment arms. Smith New Court, 


TRADING VOLUME 


EQUITY FUTURES AND OPTIONS TRADING 


Stock Index futures fell steeply, 
leading the cash market lower 
for most of toe day with 
premiums to cash equities 
narrowing at times to little 


more than two points, writes 
Jeffrey Brown. 

Turnover was heavy with 
volume at the official 4.70pm 
dose running to 15,099 


contracts, against 14,599 on 
Friday. Unlike the cash market, 
futures traders had an active 
day. 

The FT-SE December 
contract dosed 49 points 
lower at 2,993. This was at 
(east above toe day's low of 
2,987 which was touched in 
the final hour of trading. 

At toe dose the premium to 
the cash market was 9.5 
points with the fair value 
premium extending to around 
16 points. 

Selling pressure was mostly 
heavy throughout the session, 
forcing the December contract 
down to a level at times dose 
to parity with the cash market 

Traders said a number of 
hard-nosed bear runs had 
been made with the locals - 
independent traders - leading 
the charge. Institutional 
business remained 
non-existent 

Traded option turnover also 
bounded ahead, rising from 
22,036 lots on Friday to 35,588 
lots. FT-SE and Euro FT-SE 
volume accounted for 22,822 
lots. 

Scottish Power was the 
most actively traded individual 
stock option at 1.356 lots, with 
HSBC also active. 


■ FT-SE 100 INDEX FUTURES (UFFE1 £25 par hffi Max po tot 


IAF0 


Open Sett price Change High Low EsL uol Open InL 
Deo 3037.0 29840 -49.0 3041 .0 2988.0 16703 53468 

Mar 3038.0 3017.0 -4941 3038.0 3029.0 4 2165 

■ FT-SE MD 250 MDEX FUTURES (LiFFEl CIO per fui Index point 


Deo 


3500.0 348841 


-47.0 35004 3475.0 


240 


3849 


■ FT-SE MB 250 INDEX FUTURES (OMLX) ElO per fuB Index pcWit 
Deo - 3468.0 

41 open InunA tlpra m fer previous da*. T Enact nttma etmxu 


■ FT-SE 100 INDEX OPTION (UFFq (*2884) E10 per Ml Index point 

2800 2850 2900 2950 3000 3050 3100 3150 

CPCPCPCPCPCPCPCP 
Oct 1B7 8>j 142*2 12 102*2 21 « 37 41 80 22^2 ST^z 10>2 131 4^ 175*2 

Hot 296*2 22>2 167*2 31 132 44*2 100 61 71h 83 SB 2 : 112 33 145*1 20^ 184 

Dec 222 33 185*2 48 1SI*2 B1 123*2 82 100 104*2 7Z* 2 133 52 162 37*2 198 

Jan 250 48 212*2 61 173 78 148 96 IIS^ 117 95 143 73 171 55 205 

junt 305*2 7B*2 8*1*2112*2 i8i*zi52* a 1*20712 

0*4,783 M» 8JM 

a EURO STYLE FT-SE 100 WDEX OPTION BJFFE1 £10 perftil Index point 

2828 2875 2925 2975 3025 3075 3125 3175 

Oct 1M Wfa 122 16*2 «3*i 27*1 Gl*z 45% 28*2 72h 13 KW* 1h 1**2 Fa 196*2 

MOV 1* 24 1ED 38 116*2 52 07 72 82 97 42*2 12^ 27 161 1ft 200 

Dec 2Bft37>2lBft 52 136 69 106 » Bft 114 6ft 14ft 44 17ft2ft 209 

Mr 25ft 66 1* Oft 13ft 138 88 193 

Junf 294 8ft 2Jft 121 176 161*2 12ft 210 

CNto M88 Pm B.445 ■ UndHtas Mn toe. torim Own n mat on mumn ericas 
t Lena Sated north*. 

m EURO STYLE FT-SE MIP 260 MDEX OPTION (DMLX) 210 per M Index point 


3460 3500 3550 3600 3360 

Oct 1 * 86 113 10ft 91 13ft 
(toft 0 ha 0 Seffleovnt price* ad rotemm are ton el 430pn 


3700 


3750 


3000 


1 FT - SE Actuaries 

Share Indices 



The UK Series | 


Oct 3 

DV’S 

ehgeH Ssp 30 Sep £9 S«p 28 

Year 

ago 

Dhr. 

ytatotet 

Earn. 

ytetd% 

WE Xd ad). 
ratio ytd 

Total 

Return 

FT-SE 100 

29805 

-1 A 30203 29906 - 3038.7 

3067.7 

424 

729 

1620 105.74 

113018 

FT-SE MM 250 

3440.6 

-13 3484.8 3604n 3S33.8 

3439.3 

OS2 

525 

2024 103.70 1286.12 

FT-SE Md 280 ex Inv Trusts 

3441.9 

-1.4 34802 3501.6 3531 2 

34409 

3.79 

045 

1081 107.68 128048 

FT-SE-A 350 

15002 

-1^1 1521.4 15002 15301 

1532.0 

4.10 

098 

1828 3123 

116228 

FT-SE SmaSCtop 

180205 

-0.7 1814J0 1819.13 182084 177086 

328 

424 

25.98 4526 

139958 

FT-SE SmsnCap ex Inv Trusts 

1774.07 

-08 1785434 17S1.11 1797.87 1786^3 

3.48 

036 

23.78 4727 

138150 

FT-SE-A ALL-SHARE 

1490B3 

-1 J 1510.97 150008 1519.78 1518.12 

4.03 

082 

17^43 50.07 

117459 

■ FT-SE Actuaries All-Share 

Day's 

Yssr 

Dtv. 

Earn 

P/E Xd ac|. 

Total 


Oct 3 

ohflsH. Sap 30 Sop 29 Ssp 28 

■00 


ylsltm 

redo yta 

Rebxn 


MINERAL EXTRACTION (1® 
Extractive JrxJusWw{4} 

QJ. IrtegraiedO) 

01 Exploration 6 Prodlll) 


264300 -0.3 266047 2821 .08 26S6J38 236&20 

3915.78 -1.0 395835 3983.60 4073X6 3142X0 

2578.71 -0.1 2581 M 2540-61 2570.70 232050 

189843 -0.7 1911.30 1904.75 192023194030 


3.48 

5.18 

24.41 

8142 

108353 

328 

5.23 

2354 

9824 

1080^3 

3.66 

553 

21.35 

86.60 

106052 

2.18 

t 

* 3853 

1098.40 


OBI MANURACTURERSPOT) 1669.38 

Bukina 6 Construction(33) 1027.70 

Bufcflng Matte & Merchsp2) 181232 

Chen*»teC23) 231937 

Dfwrelfled Mdustrtato{1« 1758.78 

Electronic & Elec* EqulpG4) 187B.98 

Engineering^) 179333 

Engineering. VeWcte*(12) 2283.61 

Printing, Paper & PctigCW} 2790.79 

Textiles & AooarelgO) 157738, 


-1.1 1880.78 167436 190031 190930 
-1.0 103832 1048.05 106339 1159.10 
-0.6 1626.92 162430 1666.68 166230 
-03 234139 234632 236836 219230 
-13 178530 1772.79 181430 187330 
-13 190T.0S 169834 1822.43 2183.70 
-12 1816.14 1B1Z19 182236 188430 
-03 230536 2280.88 228223 1662.30 
-03 2816.14 2787.19 261931 2439.10 
-03 1587.71 156731 1597.44 1866.70 


459 

6.19 

2355 

63.69 

949.13 

3.81 

551 

2450 

3252 

60853 

457 

5.10 

2353 

8153 

655.68 

359 

4.42 

2851 

7835 

102958 

521 

629 

22.70 

82-46 

90450 

45T 

0-72 

17.72 5750 

01756 

3.17 

458 

23.84 

48.95 

1028.07 

458 

069 

3056 

7359 

110753 

3.07 

5.37 

21.78 

7324 

109926 

426 

7.02 

17.43 

4&49 

80158 


CONSUMER QOODS{67) 267234 

Braweri08<l7) 2137.42 

SpMta. WVies & CWerklO) 27B022 

Food Manutoeturars{23) 226132 

Household Goods(i3) 2304f* 

Health Care(21) 158334 

Phermaceutlcotefl 2) &£?7 

Tohacccft) .365837, 


-1.1 270229 2673.17 268434 2729.00 
-03 215643 215649 218340 2035.10 
-1.1 2790.05 2782.62 2788.41 2669.20 
-0.7 2277.65 227134 227439 2273.00 
-a8 232236 230686 238938 257930 
-03 169645 161236 1B3ai8 1715.60 
-13 297343 293236 296232 304030 
-29 3661 34 353600 354438 393830 


•L45 

751 

1659 10525 

92254 

4-42 

8.01 

18.17 

61.10 

86751 

4.04 

754 

1855 100.95 

92857 

42S 

7.78 

1459 

7818 

95123 

354 

754 

1808 

57.31 

82329 

018 

357 

41.74 

48-47 

92143 

4.47 

726 

1894 12818 

042.91 

8.10 

867 

11.11 

217.07 

81157 


SERVtCES<22D) 
DtatribuiorsPOj 
Leisure 8 Hote«25> 

MedW38) 

Retatters. Food(lB) 

Retaflera. General 
Support Servtees{41> 
Tranaport(16] 

Other Saratoga 6 BuaJneaeff). 


1873.14 -tt9 1890.75 IB 7038 1801.04 188230 

2479.81 -13 251131 2521.43 256631 267430 

2034.71 -03 204536 204636208534 191610 

279738 -0.4 280830 278674 281687 252610 

1709.15 -691723331887371716101711.00 

1699.09 -69 161333 1603.81 1630.44 167140 

145687 -13 147678 148616 148638 183630 

217682 -2.0 2224.19 217649 222538 227330 

19S4 07 -63 125733 128338 126669 1241.00 . 


3.30 

8^49 

1856 

4822 

918.87 

377 

757 

1807 

0823 

86755 

344 

459 

24.09 

5389 

1004.10 

2.48 

557 

2158 

8350 

97333 

379 

952 

1327 

5158 

102329 

329 

878 

1837 

3851 

85352 

259 

883 

1752 

32-01 

887.06 

388 

881 

1954 

6928 

85555 

373 

254 

7550 

2S52 

1077.34 


umiREspe) 

Sleetricttyti7) 

So* Dtati1button{2) 
raecomn*micetlona(4) 
mwertia 


2283.11 -65 2341 .17 2325.66 23843S 237830 

232687 -4.0 2424.44 240331 2454.63 2(M830 

1862.70 -67 187748 1923.48 198674 214830 

190236 -14182934182737196830217660 

178436 -33 1854.78 188131 184669 188640 


4,81 833 

3.84 1657 

610 t 
434 837 

544 1338 
4.00 634 


14.79 73.42 
1139 83.48 
$ 6679 
14.72 5622 
832 6936 


87945 

887.68 

68637 

81133 

8S239 


VON-ftNANCIALSWML 

FWANCIAL3f104) 

tortreOP) 

nsuroncaOT) 

Jle Amranceffi) 
Merchant Bania(6) 

Dlfier Rnenctal(24) 

fropwlytfji 


1IH4 4T -13 163438 782230 164006 1827.17 _ 


1635 52.68 1142.55 


2075.19 -2.1 2118322103.83213638226330 

271921 -14 275689 273644 277624 278330 
1182.10 -3-3 1201.80 118533 1209.76 149630 

2239.94 -23 229245 225667 Z31692 2707.10 

261737 -7.1 281733 284231 289435 306330 

177658 -1.8 180950 101627 183036 178660 

144 a 4 a -1.6 14673B 147694 148602 161130 


4.66 9.60 

4,43 1653 
682 1618 
5.71 655 

697 12.62 
438 653 

4.19 434 

236 130 


1230 88.88 
1687 114.94 
1135 6430 
1617 127.82 
933 87.7B 
13.50 83.10 
29.14 4233 
6138 53.41 


824.82 

817.13 

797.78 

86688 

78631 

962.74 

82693 

917.16 


S^rTRUSTSn^ 2727.12 -60 270639274239 2787.60 258230, 


88 FT-SE-A ALL-SHARE(p68) 

■ Hourly movements 

Open 600 


149683 -13 751067 150606 1519.78 T516I2 4.03 682 17.43 50.07 1174.89 


1030 


1 130 1200 1600 1430 1600 IMP High /day Low/day 

— nrri 2994a 29953 mwj 30253 2932.4 

: 100 Sal i 34766 34704 34603 3457.4 34569 34564 34503 34863 3448.6 

*«*“ S 5:5 vSi SK SM SS ^ *» iso “ 1480 - 8 


or FT-SE 100 Dave K* 640«n ttey te* 6ttP»t FT-Sfi 100 199< 3526X 2« ) Uxr. 28^8 {£«,. 

FT-SE Actuaries 350 Industry baskets 

Open 


» jgu IIIUU 3 U J M . W . V — 

s oo ia x» 1 UO 1600 1600 1600 IMP 1610 Owe Pravteue Change 


8 Chstrcn 807. 3 987.7 


9666 963.8 882,3 

i 2919S 29067 2»1^ 
W60 1»4.7 W 1^0 


960.6 


961,0 

981-1 

0609 

9805 

971.7 

-108 

29335 

2827.9 

2921.9 

2921.3 

2949.8 

-285 

17935 

17905 

1782.7 

1781.7 

18525 

-708 

2756-4 

2762.6 

27495 

27525 

2783.1 

-402 


UH nM. Hnaecjal TteiM UnWd. & ” h . ln . i yjSSSm1 ftmut Sr rflwMrxl LWd I**. P Hie Hnancfal Him 

****** F*fhinoi of M cyyv ftn - fiw Hw and Thi flmn ol d TVOM IWwLTN FT-SE Ac&ariu 6tal 

« am «xM«d W JR- WM CaWfl 

I to £f««xano C8) t«rti Deosxtfcrt l-j u. 


■ Major Stocks Yesterday 

VoL CtaOlng Day^ 
oddb once On* 

1 A30 32ft -* 

5.700 acv -0V 

<300 386 -4 

46 -a 

KG 

523 -ai« 
816 



L 4ein»iarnt 
OVhAkwMt 
ttoi Cut 
BWi Land 
ttoistwrf 
U 

rmeh Cvaolt 
mm 

Mae Whet 
*ixy 3chwepo«t 

■dent 

Hon Convnm.t 
ei* Vlyeda 
imLlMont 
ofcaon 
umidxt 


sru 


1.100 


93 

1300 

823 

M 

47 

SSI 


21 h 

A 

*2 

-1 

*18 

-a 


891 
727 
493 

<KA 

74S 270 

1400 286 

149 608 

Tee 2S4 
1300 460 

-1,900 434 -1 

7.400 1001s 

1,100 34$ _ 

443 8S7 -ft 

5300 3881; 

7S2 302 

10,000 sea *4 

8300 SOO 1 ; -8 

8,800 208 -ft 

4^00 ue -ift 

1,000 613 -a 

1.400 278 *1 

121 400 -ft 

1/400 319 -ft 

732 4S3 -9 

2POO 442 -ft 

1300 3S3 1 ; -ft 

BJOO 29ft -a 

203 3» 

13M0 IBS 

e38 in 

»ie 64i 

383 6ft 

4P00 set 

077 443 

330 204 

323 B37 

1*0 201 

iJXn 481 

230 
435 
433 
920 
179 
707 




A^l&CaLLT. 

l.*o3d»1it 

ElecLf 


"edef 

ndMetf 


vweet 

!C(7Sp«htet 


2MD 

$15 

2JSOO 

085 


282 


687 

751 


4S00 


teneCrocMd 


152 

45 

2.100 


van Manner 
PjKTt 

cremt 
j SecuriMot 

3rt» 

8$ Gonmft 

daAbbev 

dsBakt 


335 


B&Spane«rt 
aide Beet 
non (WmJ 

VestBankt, 


4.100 

3^00 

seo 

33S 


890 013 

3*00 18712 


teTilrtnent 


i Wit 


1X00 

805 

197 

1,700 

1.100 


071 


Mi6Nav.t 

Hytho-Bect 

MiPowert 


1X00 402 »ft 

102 1335 -43 

1X00 477 -7 

1X00 3>7*i -17J2 


TiTrartt^ 

TOTBpanT 




WMM- 
am Waar . 
emoartd-t 

Sreet 


421 
084 -80 

763 -10 

511 -ift 
715 -34 

GS1 -23 

29C -12*2 
192 

312 ■* 

222 -ft 


■ We 

Woodrow 

MWaart 


Jk 


IV House 
a 

rt 

iBaeunt 


rgfStflt 4X00 669 -ioi 

nwt 1.400 tM «ft 

Winer 901 831 -12 

eWote. 90 997 -17 

Hdt 750 SJ1 -fji 

s HdBS.t 870 338 -ft 

/orruor 165 l-*6 -1 

y 1X00 13» ■ -4 

eyt 53S 783 t£ 

ire Sad. 1.100 OBO 1 ; -2ft 

nVM> 242 600 -M 

4 811 808 ft 

on Bwan wateme lor a eri mlw i of «W|er 
lee deafc asuush the SEAQ *7**" 
ley wee exopm. TredM e> ana reaon or 
re round dawi t Wacaw an FT-SE 
lucasgaM 


which has a very strong 
marketmaking presence, 
dropped 40 to 334p. Schroders. 
the merchant bank, shed 43 to 
1336p. with concern focusing 
on its Wertheim arm. Clearers 
National Westminster and Bar- 
clays fell 8% to 479p and ll’/i to 
559p respectively, although 
analysts said their strong pres- 
ence in more stable foreign 
exchange markets would offer 
protection. 

Pearson optimism 

Media conglomerate Pearson 
stood out as the best performer 
in toe FT-SE 100 as investors 
responded to press speculation 
that BSkyB, the satellite group 
in which Pearson has around 
17 per cent, would be the sub- 
ject of a £5bn flotation. 

The story was published in 
the Sunday Times, which is 
owned by Mr Rupert Murdoch 
who also owns 50 per cent of 
BSkyB. It encouraged S.G. 
Warburg to upgrade its calcu- 
lation for the contribution 
BSkyB makes to Pearson's 
share price by 32p to I60p and 
recommend the Financial 
Times owner at its morning 
meeting. The house forecast 
for Pearson shares is now 712p 
and the stock closed 17 stron- 
ger at 599p. 

Leisure and rental group 
Granada, holder of a 13.5 per 
cent stake in BSkyB, ended 2 
firmer at 510p, as analysts 
focused on the prospect of a 
windfall of between £450m and 
£5O0m to the company, should 
a stake sale go ahead. 

News that food retailer J. 
Salnsbury had bought 50 per 


NEW HIGHS AND 
LOWS FOR 1994 

KEWWOHS (in. 

BREWERIES <T) WotJumpoon IJO|. 
OMTIttBUTOftS a F Pnw U Mftatu*. 

EEBCTRNC & CL8CT EQUP (2) A. Newa 

Prt- EXTRACTIVE INOS (1) Placer Pac, 
INVESTMENT TRUSTS HUteteUtE & HOTELS 
(QHonnam Do ONx Ml. OH. EXPLORATION 
8 PROD R] Manoa RN. RETAIlBa, 
OENERAL (T) Ofl«W. TEXTILES S APMRB. 
BiNn. Fonraram, Wmawn. TRANSPORT (1> 
OUT, AMBVCANS (1J Aleghany 5 Warn. 

NEW LOWS (IBS). 

BAMC8 (1) BREWERES (2| FuSer STA. Scot. 8 
Nuw oj aa. BUIUXNO & CNSTRN |R avree 
Dev.. Bedew. Bryara. EBC. McAtotao W. 

Pvatrmon, Taylor WoodnM. TSauty Ocuett*. 

Wkiipev (GO. BLDO MAILS A MCHT8 M Cnw 
H eywoodWme.Prt.Oiftosn.Ftuberoio.SWP. 
CHEWCAL8 H Bffl. Vna. CnataMt. Uipona. 
Manoere. Poreorp. txSTWBUTORS (11) 
DCVERSHEO POLS K BTR. Do Wrta.. Do 
Wrta. 1884/95. Do wna. 1907. Homon Wits.. 
ELECTMCtTV (S3 Seen. HyAo_ Scot. Power.. 
ELECTftNC A ELECT BOUP M ASEA. BCC. Do 
tONpcBde. M20. BeiWey Buamras. 

Bowmoroa. Sieroem, enCbuxrmq fi4j 
EXTRACTIVE IND8 W MonarotL FOOO MANUF 
(T) BobWononen. HEALTH CARE W AAH. 
Ouatty Core Horae. SdKff. Umed Dma 
HOUSEHOLD OOOOS « Corowe* Portw A. 
Fine Decor. UorheoL INSURANCE (12) 
INVESTMENT TRUSTS (29 INVESTMENT 
COM>AM£S dt LEISURE A HOTELS CQ Ktmi 
0Wpe Pit., Ladbroka. LIFE ASSURANCE (4) 
MEDIA (3] Lopex. Pcrtzmoudi ft Sundederd. 
Sterft PubL. MERCHANT BANKS (SI Bartn0S 
Bpc 2nd Prt„ Ooaa Brae. Hemb ro e . Smger & 
Friedkmdar, WarbuQ (SOL OTHER FINANCIAL 
(1« OTHBI SOWS 8 BU8N8 p) Pboto-Me. 
PhKOUtl, PorOl, PHARMACEUTICALS |4) 
Reone, Grampian Now Nont Ni B. Protein ML. 
PRINCL PAPER 8 PACKS (5) Biff. Thornton. 
Ferguson ML. Ferry PIckedncL PartoMa MU 
SkSeer. PROPERTY (21) RETMLERB, FOOO (1) 
Shopite, RETALERS. OBIERAL (ttj 
SUPPORT SBtVS n ACT. BET. BSM. 
McOomefl MOl, Mcrogon. Perms. 

TR FD0MMW8WT10II8 W Came S WMleoe. 
DO 7pc Cm. 3008. TEXTILES A APPAREL n 
AMon, Alsnandrs Woritwear . AtUne. Holes, 
LNncrt. ReedcuL SST. Start. TRANSPORT p) 
Ttebed A Britten, Tranaport Dw. AMERICANS 
(3) Hasbro. R«D NY Ccrp. 

cent of the voting stock of US 
supermarket chain Giant Food 
for $325m helped the shares 
resist the market slide. 

The shares have been under 
a cloud in recent sessions on 


continuing fears of a price war 
among food retailers, but the 
stock was back in favour yes- 
terday. The shares touched 
409p before renewed fears of a 
price war and the weak mar- 
ket, particularly in toe second 
half of the session, saw the 
stock surrender the earlier 
gain to end l‘/j up at 402p. 

Mr Bill Myers at Yomaichi 
said: “The market was half 
expecting an acquisition. This 
one is in. the right place geo- 
graphically and is a quality 
outfit” 

The attention of the rest of 
the sector focused on the inten- 
sifying supermarket price bat- 
tle as Argyll Group's Safeway 
supermarket chain launched a 
£7m advertising campaign and 
Asda Group announced a price 
freeze on 7,000 grocery and 
non-food items until at least 
January 1995. 

Argyll slipped 414 to 270p, 
while the latter relinquished 
314 to 62 ‘/ip in trade of 4.7m. 

Comments by shadow chan- 
cellor Mr Gordon Brown that a 
Labour government would 
impose a “windfall tax” on the 
profits of privatised utilities 
sent a chill through the shares 
of the regional electricity com- 
panies. The worst hit included 
Midlands Electricity, down 37 
at 701p, Eastern Electricity, 
which tumbled 35 to 707p, and 
London Electricity, which fell 
34 to 651p. 

Vodafone failed to climb 
above the weak market senti- 
ment in spite of a very strong 
showing from new connections 
in its second quarter. The 
shares dipped 314 to 194p in 
5.5m trading volume. 


The group took in 277,000 
gross subscribers in the quar- 
ter, up from 98,000 a year ago, 
with digital connections 
accounting for one-third of new 
connections in September. 

Medeva. the pharmaceuticals 
group, rose 5 to 153p as the 
market responded to a positive 
presentation by the company 
In the US and a recommenda- 
tion from Panmure Gordon. 

Both British Aerospace and 
nuclear submarine maker 
VSEL moved sharply lower as 
they awaited official confirma- 
tion of widely anticipated take- 
over talks. The former fell 10!i 
to 442p and the latter weak- 
ened 32 to 117Sp. VSEL is now 
72p short of the price that most 
securities houses have been 
putting on any potential offer 
from BAe. 

Housebuilders lost ground 
following the Nationwide 
Building Society's gloomy view 
of house prices in September. 
Barratt shed 4 to 13Sp and 
Wimpey slipped a similar 
amount to I38p. 

Among building materials, 
BPB held steady at 302p, 
helped by a buy recommenda- 
tion from BZW. 

Plant hire shares were in 
demand , with Ashtead bounc- 
ing 7 to 437p on the back of a 
confident statement 

A profits warning from 
retailer Shoprite left the shares 
trailing 4 at 28p. 

MARKET REPORTERS: 

Peter John, 

Joel Klbazo, 

Jeffrey Brown. 

■ Other statistics. Page 25 


LONDON EQUITIES 


LIFFE EQUITY OPTIONS 


Option 


— Cbsj Pm* — 

Oet Jm Apr Oct Jn Kr 


MedOcmq 540 29W - - ft - - 

(*582 ) 589 6 - - 31)5 - - 

280 IBM 23 38 4>4 13 1714 
280 5 13 1814 15 2374 28)4 

60 4M 7M 9 2 4 5W 

70 1 3»« 8 9 1054 11M 


Vgyl 

r200 ) 

ASDA 

rrc ) 


Brtr Atomy* 330 30 3914 <7 2)4 1114 15 

r3SS ) 360 9V5 21 31 13)4 25 29 

Sou BcbE A <20 15)4 29)4 38)4 8 21 27)4 

r<26 ) 4® 3 12)4 21% 37 46 52 

Boots SOO 29 37 40 4 15H 23 

(•S19 ) 550 3 14 281* 34)4 44H 50 

BP 390 17 27)4 37 6 14)4 20 

[-399 ) 420 4 13)4 23 24 31)4 36)4 

BtMSM 160 11 n 2 ffl m «* 

n« i 160 2M TO TZH 14 16 20 

Bm 3 600 22 33)4 30 7)4 24 2ft 

(*512 ) 550 3)4 11M 18)4 42 58 63 

UfclWl 390 IS 29 40)4 12 22)4 29 

(-391 ) 420 ft 1ft 27H 33 41)4 4ft 

COiftMlUi 420 23)4 38 Aft 4)4 16)4 20)4 

r«34 ) 4G0 ft 17 26 28 39)4 43 

ConnUrton 454 38 49 « 2)4 ft 18 

|*483 ) 493 11)4 25)4 31)4 18)4 25 3ft 

n 800 as 8014 75 9 2ft 41*4 

(*822 ) 850 9 33)4 49 3G 521* 88)4 

Hngtaw 460 31 48)4 Sft 5)4 14)4 23 

{*482 ) SOO ft 22)4 37U 24 34 42 

Lend Saar 600 21 33 48 OK 17 22 

rmi ) 650 2 13 34)4 40 4ft 51K 

Mvtt & S 380 18 2B Sft 5 13)4 17)4 

(*399 1 420 ft 12M 21 2ft 30)4 34 

NaMteU 460 25 42 Bft 5 15»4 27 

(*477 > 500 5 21 14 30K 27 36 4ft 

Satastury 390 1ft 31)4 40 6 18 21)4 

("401 I 420 S 17 28 2ft 34)4 43 

Sal Dana. 850 Bft 6ft 75 IK 8 16 

(*«97 ) 700 12)5 32 43)4 14 25 3ft 

Storehouse 180 T5K 2ft 24 2 3)4 9* 

(-192 ) 200 3 BV4 13)4 11 15M 2ft 


80 3 >11)4 3ft 8 

90 IK 4K 7 11 12)4 14K 
1100 28)4 as 7ft 14)4 35 51 
I1C0 ft 30K 48K 45M 64 7ft 
800 24K 50 83 13 28 45 
850 5)4 28 38 46 57 73 
Wm Feb Hay Nov Fab Hay 


m l 


run) 


raoB) 

OpUOQ 


(tend MR 

390 

26 

34)4 

41)4 

ft 

19* 

23 

(*402 > 

420 

10» 

1ft 

27 

2414 

3ft 

39 

LaAroka 

140 

17)1 

23 

26 

3 

6 

9 

H51 ) 

160 

6 

12)4 

16 

13 

15 

20H 

WOBCUtb 

300 

14 

23 

2ft 

1ft 

18 

a 

1*305 | 

330 

4 

11)4 

1ft 

35 

Sft 

45 

Opto 


Dae 

Mar 

JM 

Dae 

Uar 

Jon 

Rsca* 

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8 

12 

M 

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12h 

(1101 

120 

ft 

7)4 

ft 

14)4 

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18)4 

Opto 


NOV 

Fab 

Hay 

Nor 

Fa 

May 

an Aero 

420 

37b 

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60)4 

12 

20 

29 

T442 J 

460 

IB 

32)4 

40 

32 

40 

50)4 

BAT WB 

403 

nv, 

36 

43 

1214 

19K 

30 

(*426 1 

460 

bh 

18 

24 

38 

44 

55 

BTR 

300 

18 

22)4 

27)4 

11K 

1ft 

22K 

(TOO) 

330 

8K 

9K 

14)4 

32)4 

35 

38 

BmTattM 

38) 

14 

19)4 

27 

11 

20 

23 

exo ) 

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4 

9 

15 

3ft 

40S4 

42K 

QtfuiyScti 

420 

33 

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3 

11 

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460 

ft 

21)4 

27)4: 

24K 

29K 

38*4 

EmhBk 

700 

3ft 

53 

70 

25 

38K 

49 

r7D6) 

750 

1W 

33 

47)4 

35 

67 

75 

(tennets 

420 

42)4 

52 

58V4 

4)4 

BK 

15 

r<53) 

460 

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2ft 

33)4 

1B54 

24)4 

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2S0 

16 

70 

2ft 

8 

rite 

MM 

ran 

300 

6 

11 

17)4 

17 

22h 

24M 




___ 

Cam 



Puls 



Opto 


Hoy 

Feb 


NW 

Fab 

v*L 

Hanson 

220 

16 

19K : 

22)4 

4 

9 

UK 

(■229 ) 

240 

ft 

ft- 

I3K 

14K 

20 

22 

Lasno 

140 

17)4 

21 : 

MK 

3 

8 

9K 

H50) 

180 

6 

11 

14 

13 

18 

20*4 

Lucas Mto 

180 

15 

20 : 

24K 

BK 

10 

14 

Cl* ) 

200 

6)4 

11M 

I5K 

1BK 

22 

25)4 

P*0 

600 

33 

50K 

61 

15K 

25 

3954 

P612 ) 

650 

11 

26)4 

37 

45 

53K 

6ft 

PMJrpton 

180 

15 

17H: 

23)4 

4K 

ft 

11K 

(188 ) 

200 

8 

8)4 

Ift 

16 

Ift 

a 

PrudarttaJ 

280 

20K : 

2ft: 

J1K 

5K 

9H 

16K 

r=»i > 

300 

ft 

IS 

21 

lfiK 

1914 

27K 

RT2 

850 

4ft 

66 

75 

18 

30 

47 

T888 ) 

900 

16 

39 

50 

45 

58*4 

73 

Man! 

460 

3254 

48)4 

S3 

9)4 

16K 

MK 

r<w) 

SOO 

12 

25)4 

33 

31 

37 

52* 

ft 90 tens 

260 

28 

38K 

« 

S* 

10) 4 

15 

(*280 ) 

280 

15M 

28 : 

BK 

13 

19 

25 

Taaco 

220 

21 

37K: 

1ft 

4 

8 

11K 

7235) 

240 

BW 

15 

21 

1254 

17 

21 

Vbttene 

183 

17W 

22 

- 

5 

8K 

- 

(194 ) 

200 

ft 

13)4 

Ift 

12K 

17 

Ift 

IMBams 

326 

20% 

- 

- 

6 

- 

- 

(*338 ) 

354 

6 

- 

- 

22K 

- 

- 

Opto 


PCI 

Jan 

*EL 

Oct 

Jan 

Ag 

8AA 

450 

2ft 

33)4 1 

*3K 

3K 

11*4 

15 

r<68) 

475 

9 

io : 

»K 

14 

23 

2ft 

TtowWIr 

480 

33*4 

40 

91 

4M 

IB 

18 

T487 ) 

SOO 

6 

2ft! 

3ft 

20 

3SK 

38 

Opto 


DOC 

Mar 

Jaa 

Dec 

Mar 

Jun 

Aboa ytU 

360 

3714 

48 ■ 

®>4 

04 

15)4 

MK 

P384 ) 

390 

ift: 

2ft 32)4 

19 

31 

35K 

Amstrad 

25 

3 

4 

4K 

2K 

3K 

4K 

C25) 

30 

1)4 

2 

3 

6*i 

7 

7K 

Barclays 

530 

33 

48 

94 

19 

31 

37* 

r557 ) 

GOO 

12 

23K 

32 

50 

61 

67 

Bus Octo 

280 

2814 

36. 

UK 

6 

11 

18 

(-278 1 

280 

1ft 

a 

30 

14K 

19 

28 

ftttsnsx 

280 

22 

28 32b 

8 

13 

18 

r=96> 

300 

12H 

18 22K 

)9 

22 ' 

2ft 

Dtcons 

160 

26 

29 33)4 

4 

8 

11 

(178 ) 

180 

1ft 

17 2ft 

12K 

17 

2ft 

HflstkMm 

160 

17)4 

2ft 25)4 

4 

7)4 

11 

(173 ) 

180 

ft 

12 

» 

14 

1ft 

22)4 

lonrtn 

130 

10K 

Ift- 

ift 

7 

11 

13 

(131 > 

140 

6 

9 

12 

14 

17 

IS 

Nan Power 

420 

38. 

47K 

57 

UK 

17)4. 

2SK 

("444 ) 

480 

ISM 

Z7K38K 

31)4 

37 

45 

Seel Pawr 

330 

2ft 

3ft 

41 

15 

22 

25* 

1*334 ) 

360 

13K 

21 

28 

33 

36 

<2* 

Scare 

100 

7» 

ft 

UK 

5K 

7 

9» 

noi j 

110 

ft 

ft 

7 

12K 

13 

16 

Forts 

220 

1314 

1ft 

26 

10K 

T4K 

19)4 

rz» > 

240 

ft 

11 

17 

24 

27 

31* 

Twmae 

IM 

1ft 

19K22H 

7 

9K 

12 

(124 ) 

130 

9 

14)4 " 

I7K 

13 

IS 

IB* 

Than ai 

950 

G2 

7454 

86 

20K 

34 

43 

TV77 1 

1000 

33K 

4ft 

68 

44M 

59K 

66)4 

TS8 

200 

23 

28 

23 

5 

9K 

13 

(-214) 

220 

11 

14K 

Ift 

14 

20* 

a* 

Ttntens 

200 

21 

a: 

m 

5 

8 

11 

(■216) 

220 

12» 

1TK 

24 

13 

17 

2ft 

Wtacomo 

860 

44 

B454 

78 

32 

46 

S8H 

r654) 

700 

22K 

4U4 

64 

« 

73J4 

85* 

Opto 


Oct 

Jm 

Apr 

OCt 

JM 

Apr 


Saxo SSO 33 53)468)4 7* 22 38 
r572 l 600 7» 2ft 41 3*K 48H 63 

ISCTSpEa 650 41 H 58 80 ft 28 4ft 

(*878 ) 700 14 Sft 84)4 33 00 7ft 

HMn 462 17)4 - - ft - - 

(-467 ) 475 10)4 - - 16)4 - - 

Opto Kor fat May No* Fen May 

Wtefloyca 150 ZZ 26)4 30 2K 554 9K 

(*177 ) 180 9 15 18* 8S 14 17K 

* Underlying aaOUEy pita. Piarum «xn m 

based on doamg ofhr pneo- 

Oeteber X Tool contracts; 30X07 Cato: t&397 

Puts: 19.000 


FT GOLD MINES INDEX 



Sag 

30 

% cbg 
■ day 

Sag Sap Tasr 
a a ago 

Mute 
yWd % 

62 Mk 

Mgb Low 

told Mon into (35) 

2324a 

-04 

233249 233882 1B88JO 

188 

238740 187383 

■ Sagtoral ladlcas 






Mria(IB) 

356982 

-03 

weal 362X26 231187 

3L83 

ym« 2295 l88 

JMnMafS) 

292039 

*1.4 

288*35 2871.15 1883.69 

1.78 

301349 1883.60 

Ngrti Aaerica nij 

1867J3 

-06 

1882.64 1B7051 148U7 

0.72 

2039^5 1459.46 


Gemma. n» Hnanoe Tinea Umnod 1994. _ 

Figures to txacLaa *kw rember of compare*. B*Ib US Doan Ben Vaa** 1QOQXO 317)292. 
Predaceaxr QoM Mlnoa Mtac Oetl 28L0 : toVaetaafla: -1.7 potox Y«r ago: 1028 T PaTW. 
Latest price* iwrinHi tor into atadon. 


RISES AND FALLS YESTERDAY 


RIsm FaBfl Same 






24 



2 

0 

13 








62 

258 

320 



70 

94 



52 





38 

0 



30 









31 

50 

25 



Totaia 


289 

1.112 

1208 


Oats band on thoaa corepaniaa uatad on the London Share Sanriea. 


TRADITIONAL OPTIONS 

First Deeflngs Septembar 26 Expiry Dacamb«r29 

LtstDaaflngr October 7 Settlement January 13 

CaUK Affiance Ra*. Arrrinax, CRP Loisure, Ec^se 80nda, Kode Inti, NHL Pref. Puts 
Amlnsx. CRP Lalaura. 


LONDON RECENT ISSUES.* EQUITIES 


Issue Amt 
price paid 

P UP 

Met 

cap 

(CmJ 

1804 

Ugh Law Stock 

Close 

price 

P 


Nat 

dhi. 

DN. Qrs 
COV. yld 

P/E 

net 

§125 

FP. 

102 

130 

118 Compel 

119 


WN4.0 

z\ 

4.2 

11.5 

- 

FP. 

1J» 

1*2 

1 Conti Foods wns 



- 

- 

- 

- 

* 

FP. 

200 

66 

61 Emerging Mkts C 

85 

-1 


- 

- 

- 

63 

FP. 

12.4 

G& 

65 Bwwnlx 

68 


RWO-71 

5.3 


as 

112 

FP. 

214 

120 

118 Independent Pans 

ICO 


LNAO 

2.1 

4 2 

14.5 

180 

F.P. 

17^4 

196 

190 MacMe toll 

161 

-2 

RN&O 

22 

4.1 

1A 

80 

FP. 

24.1 

85 

76 Ryland 

85 


LN3^ 

1.7 

5.1 

14.0 

• 

FP. 

3.74 

44 

Z7 Sutor Witt 99/04 

32 

-1 

- 

- 

- 

- 

_ 

F.P. 

114.0 

379 368i 2 Templeton E New 

368*2 -2*2 

- 

- 

- 

- 

- 

FF. 

12.1 

212 

192 Do. Wits. 2004 

195*2 -5*2 

- 

- 

- 

- 

_ 

FP. 

202.4 

360 

350 Wrexham Water 

350 

-10 

- 

- 

- 

- 

- 

FP. 

33.7 

330 

330 Do. W 

330 


- 

- 

- 

“ 


RIGHTS OFFERS 

Issue AmouN latest 
price paid Rerun. 1994 

p up date High Low Stook 


Ckalng *or- 
pnee 

P 


160 

W 

17/10 

9pm 

2pm 

500 

Nil 

iarto 

52pm 

27pm 

245 

Nl 

9/11 

24pm 

12pm 


2pm 

29pm -2 
12pm 


FINANCIAL TIMES EQUITY INDICES 

Pel 3 Sap 30 Sep 29 Sep 28 Sep 27 Vr ago High ‘Low 


Ordinary Shan 

23203 

2350.1 

2323.8 

23505 

23400 

5332.5 

2713.6 

22406 

Ord. div. yield 

4.43 

4.38 

4.43 

4.36 

439 

4.00 

4.48 

343 


6.40 

6.33 

6.39 

023 

033 

4,70 

0.40 

382 

P/E ratio net 

17.48 

17.67 

17.48 

17J5 

17.43 

27.15 

33.43 

1604 

P/E ratio no 

17.60 

17.70 

17.52 

17.81 

1T.69 

25X15 

30^0 

17.00 


•For 19B4. OnSrery Shoe Max ihct companion- high 27136 26)2/94; law 4&4 26S&40 
FT Ordinary Shore nda> base dsa 1/7/39. 


OnSnary Share hourly cfaan gae 

Open OOP 10X8 11.00 1A00 13JQ 1<M» 1580 1000 Wflh Low 
3351.0 2346.3 2334.4 2328^ 2328.4 2326C 2329.2 2329J 2321.9 2352.8 23203 


Oct 3 Sap 30 Sep 29 Sep 28 Sep 27 Yr ago 


SEAQ bargains 23^01 23,904 23238 24.463 

Equity turnover (£mj| - 1123.4 14406 1585.4 

Equity bregamst - M.788 27^01 27.872 

Shnrsa WM (ml)T - 480.4 5204 4906 

f Exduang ma-manat oualneos and ovnwaa bnMwsr. 


23,734 

1375.7 

30207 

5162 


29295 

1077.5 

33.323 

472.4 


APPOINTMENTS ADVERTISING 

appears in the UK edition every Wednesday & Thursday 
and io the international edition every Friday For further 
information please call: 

Gareth Joacs oa +4471 873 3779 
Andrew SkareyuU ob +4471873 4054 





mg data lor the monitoring oi targets, ana Die lor mo nimuuug u w«m« imlahisiiib- pukaugnib 





32 


FINANCIAL TIMES TUESDAY OCTOBER 4 1994 


LONDON SHARE SERVICE 


banks 


CHEMICALS 


ELECTRONIC A ELECTHCAL EQPT - Coni EXTRACTIVE INDUSTRIES 


HEALTH CARE - Coirt. 


MVE$niE)rr TRUSTS • Cant 


'Nabs. P 


-a *99* ISd VU 

fnqh low Cap*, cn PK 


{BHftnroH Q B1A E5% E2QH 8004 5.3 * ABAStf- 

Ajg«^ 188 Z78b 17 A 2075 50 28 3 AteDB_ 


~™tlD 38M 
rt*K_^C ZB* 


ABfltoMjniE 

tcmv 

Banco 

Banco 5WPJi 

BkwmJK__#a ~aSa 

_4*D 2» -i«a 


523 380% 

314 233 I, 


10 12.9 Afcd Meets ™WC1 
54 90 AnwrM N 


1994 MU YB 

Km CapEm on WE 

114 4 Smart 

027, E82ii M14 


♦or 


T5B% III 

Wi 705 305 


Nobs Prte 

12 19.5 FomaiOlSritlC EE H! 

2.4 146 FnVnV — KD 869b *3' 

12 162 SC mtWi* -5 


E-Jan 66 — *70 50 iSE 70 160 BASF DM □ C1Z0& -7H £1«S C10BA 7,011 72 - feehXW «M3 123 k 

H TOM. -1*4. B1»b 6?fl 18028 0.6 * BQC MG «W -4>i 78? 627 333 42 Z6Q Graseuy — _3lDl43%m -34 

-■Pta_a £U% +A Eli.; E14J, 3448 5.4 49 8JP 4ND 294 +3 *373 287 3949 42 146 IlmiW M’ lc M S ESObK ..... 


BankScoBM 

: — 111b 
9bnePt 117 


_ rat 62*7 sjo sls Bmm 
*319 2« 1268 42 7.6 Brant. 


1% z*7 172*2 1404 31 149 Brttaal 

-b 141*2 Ml 1112 102 


141*2 
-b 148*2 


— ittC 559rt -11*2 6*0 467 5,100 

MMHK il. — U £11 A -A toy CI0A3MB7 

OWBCM PM 1-1 £2H% -flf *3*41, E270A 11980 

BHJ .... *E13A Call 1644 
FYaterBa ju si -i ■3a go n&s 

4»cC»Pt 74 -2 *90 74 498 

TDcQrft 131 -2 m 123 622 

F^Banh V □ 1348 -6 1849b 1152% 38909 

W HC 700 ol -*% 1139 680 12950 



116 11791 10.4 

48? 9.1IH 3.7 10.? Cwranwe. JIN 57d — 

05 - Wanara --- 19 — 

29 - Caunaokb id 435 -a 

4.4 40 Onto no 36M -I 


3266 6E - M0ft»&n*.4JO MW *% 
_ 743 - JdbWWBJW^-f 1481, 

220 4749 *0 16.4 KambBJ KJ 

18 238 - - Keowood. ___***□ 

153 520 50 312 KwtatfT™-fll 

67 129 59 243 kSw___Z£I 

19 X1G - - l PA Inrtc A ffil 

S li* « K« pE*tS5Tl!£ 



tow CapEm or* WE 
200 172 10 122 


„ 14b tflJ 02 
761 390*2 12,180 05 


?» ™ ” !*= MTLlSr! 


2.7 ~:::'4«i “in *t m 95 no « 13.7 taSSSm_S '£ 

H : SSSSssm. “J - H « TB » s “3 


18 

370 

on 

SB 

98 

88 

318 


0.4 4 

44 10.1 Mason 


139d 

ISGd 


149 IS2 ... . 

5? >!! VU. « 14.0 zssxs 


g* M !M ss*a«vr:^ i «i. 


KS8Cf75p9B)„J*D (Elat -1*2 1113 680 4796 45 69 HcvcMDM □ EI31A -«£U3if1B3U £772 50 - Kjry 

42*--- .+«□ 540d -a*2 080 519 8283 53 10.6 HOWBy OwWoitgNC 220d *250 153*. 2272 25 140 JSdj 

MBawwsv n eiaj -*, eibu 0.3 a o id 822nd -9‘j bgs 72a ssm 42 66.4 

MfaTS&»r._XJ oS, -12 1162*, 687*i 11^97 ^ ~ “ " am ~ 

7231, *19 879 SI4 


1E34*2M) 


jj m *4k 


. 1&3 
121 202 
119 922 
847 14,130 
128 532 
197 148b 6692 
_ 18 9 439 

-1 388 335 1352 

_ 875 730 3012 

*7 H6 38 5J7 

*3 92 45 *28 

-1 90 58 141 

_ 328 250 572 

-2 78 33 272 

_ 2*1 210 mi 

-C 48 31 223 

*1 484 b 320 8320 

*1 *1385, raPi 14288 


4.7 14.4 AagAraCoaiR 13 

2.4 - AngtoAmR a a 

U 13.5 AngtaOsUR E7 

1.4 - AgtoP*Ra_*Jp 2 

45 * AnfitoasIS Cl; 

1.4 332 ^ta&pta.AS__ 


+sr 1904 MU W 
Hobs nm - nigh tow CmCm En WE 

3 2 048 

M 13 1J3 

8*2 5 323 

S7SJ 


- Andwran teS.tfe 13 

A52?d3TZ!!r em% 


-O £1'- ._ 

32 172 AfDrU&nMS .V }& -4 

_ BMdd Mttng 100-fN 




- Tnnrts. 
2.6 16.8 #Tl 
22 332 


*. or 1994 

Mobs Pto - H* tow 

Z 10 SI *0 

Ztw *1 *282 192 

JD 2b -3 


Dbor 



2b 143 

5^1^ £?29S«r° 

fu am. ait _ _ BLr — _. 


*J„ CMb PI 

182 I' 

376 462 
481 294' 


184 90*. 402 

27 *0 102 


i_ 80 U0 

Z -1 "313 357 

34 212 UiM Drug cZZ.tR IB *6 115 1 
- - WeflptaWlfcnJC 36481 — 400 394 
1 2 * 

: HOUSEHOLD GOODS 

34 

Now wins 
H 348 


. . _ _ . 510 11^83 02 ^ 

PfFM P £7341 *A £7*b £16% 2226 22 9- 

Ort*J. □ 29 -1 *31 24 9.14 


_ OwntasAS 
1.4 703 

0_5 - ow 


37 222 5J - HSK? *S5l 

51 -is ss “ ™ 

- - SJH“' n J 


493 


HWAwtAS „t 493 *5 620b 479 

ttiWa t tW3 «JW -8*2 «22 *3* 7576 

OnnsmPFr EZZb 133 E21b 1112 

Wtt ja*Jrt.*tm 405 -10 B20 377*2 3244 

Satan r JQ £6*, -k BtJ SBA 26337 

Wiwa7 D £12,5 -b £15% £11% 


3 7 18.1 

0.7 502 MjBMB to88^»Q 

MIP.I-.— U LU,, — , ,I3« LII'JMJCU 0.5 — PWltDRI SKT ——SH 

Samara cnwtd trd 2SC»d -i3*j ’aso 1 , 223 1402 3J 82 Pom* a 

7 31BOCM 83bra -*2 108*} B2b 812 11.1 - Scapa 

Santana Y O CIS *£ £18% E11>2 37^95 0.4 254 SwcilRa SffMk .. 

SundtomoTnY O 930*1 -2b "* 

158 t«n 214D -3'j 


05 1M *«iw 

0.7 S44 K**L 

56 105 LURE if 

" 1 &«s:jd *m .1\ 1« ’SS l| 1“ pS“_— I— j 367m ZZ m m su 


* CWHtoataWaCS„f 279b -10b 422b 38 5U 

,¥ CWfftta 55 47% -*2 HPj SB 343 

* Qultea — □ 126 *4 130 28b 732 


726 
6327 24 282 





.1X3 71 om 232 178 179.1 11 345 SS'SSV _ ~ * »7 « ee a34 ss ®™n □ GB *2 30 IS - - 

M£j is '*& fJiJ ^ ^^Hzzss u S 74% as S3 no ^ “ i ^ . ~ 

■sa i "s s tf 222s.-=i= — a “ sssteij & a *a 


* PKSSHfl 

~ Pntp, Haabpc £10 


-A G21b CI4 ... 
£119 E97% 192 


102 — 




liO TWO ZM« -J'; Z3I 197 

Total Y — o £715 -A £9 C6f3 

TojnTHiBiY G 704% *12b 852 586% 


1148% 62511287 0.6 + Htatfj SUrty! — JO 

291 197 1278 4.7 (66 WMagm HO 


Wi-lp-tAS ' 215 

YwmiTSBkY.tO 552b 

BREWERIES 


TO 586*4 1538 
250 194 3213 

858 442 8283 


0.B 47.4 WatoanhokDs 4 

0 7 62-3 Yonatta *t 

2.5 « Yiuacmta t 

02 48.8 


3 *5 °i « 

211 272 188 SOU 

Sid 68 

385 490 

I9sm 220 

768*1 623 

4OTal -S *483 

znnd -ib *338 




172 

984 


H 340m 344 

' 130U J<ffl 

115 128 

N SB -43b 

10 94 .7bpcC.PT—- 73 
5.5 207 


283 232 

70 UM 


195 <6-1 33 182 PSan - 

570 582 3.1 10 0 --r ms 

380 1084 15 17.8 B8MflWC -.-r-.i1C 
258 2682 10 202 ^6*'*" 


DISTRIBUTORS 


Motos Prtu 


*ar 


AxatHcgs El 

Bass. tlO S13 

BaMnfllun fid 2SBm 

Buflomood 2 — 

EJdMgs.PDppA.-ftH 
FtettrjAS 


3b 

-3 
-2 

183 

(60 

65 


18% 

819 


Sdnies j 

1994 UM 1U SbnmDM 

Nobs Pnca - Idflh iw CmCn GCo nE S8ram*wE_ttCI 

itld 111 — 127 111 282 42 15.6 &™Y _Z ZZ«J 


■b — Bb 
HD 2BW -10 383 

JO 234 *3 281 

42 98 

130 133 

H 17 25 

Roam tod 23tm -s 3it 

Scanoodc MO 25 +i 88 


in ai u ns 
I7b 182 
63 118 114 
Sb 110 


“ EKrtwtDeepR- 


162 872 
-ijj oio E2K® ryne 


181 612 14 182 

*g «« J? J1S ffiGa“ R 

33 7.76 9,1 117 iMnn in 

100 210 28 182 EtatftnlProR 

>S «2 - - 

229 1213 14 172 EttaMGaUR 

IB W $ B«bnrtR 

**4 to EmpetorAS 


_ DaesssalMUBH 
-j c 40peP( 

z£ n — 

32 


* _ DontaOB A* 7+ 


~ DmoM Mrtag AS— y 7 — 13b 6 

■ DWfiteBEfnn___. 994b -12% 1029b 685b 


87b -1b 81b 5% 

— 122 b 5B% 1324 


114b 


162 


End Odra Qaya.S 
2.7 22.0 EnowtUr 

ABnAS— V 


48 58L1 

— 138 78 1282 

-b 488% 300% 480.1 

173 118 812 


Km Capfin Orb WE ABLdb itfD 111 — 127 111 2U 42 165 SoavY— . «n £381, -f, E41U £321 13,723 09 4 

& *% a “ - “ ’“SssszJ 1 = i s k a ii ^ 

^8 ' 


250 3102 41 17.8 Adin SHansy an 

168 40.1 32 16.1 AMcan Lakes N 


478 
57 


ftAwSTA U)| 388 -5 

GtokMew ^4oN 463m — 

QtaUfe JlfKi) 406 -2 

Gram tong Jd 519 *3 

GnSKnorhns.iiN 143m 

Holt (A— 4 h 3600 a] -3 


181 142 312 19 322 Ateoad&s «N 28 31 

68 46b 1.770 5.1 i Aoptsvad it'd 118U 176 

W3 38a 712 2.5 182 AaBfEna Id 4b 8 

□50 


Run Y 

MBHfiM — H 

Ifcrton TlWDp. id 

Mound—. tN 

ParaBoura._$siO 

ReoMtons u 

5coa&Mrw —dd 
UraMBrm«Us.ia 

Um StNO 

WHKnpoaniiOitlC 

HW dw att lO 

Wara&ftMiey—tlO 

Yates Bras JLQ 

Young A N 

m U 


*453 348b 482 

511 399 BS2.7 

584 422 2182 

165 124 19L0 

. 3773 3125 1117 

727 -3*1 824% 

223 — m 
299 *2 314 

488 645 

am *b 10b 
269 *2 2M 

477 -7 *S9J 

8b* 9 

300 


634 

22 -% 


an — 

409 *5 

931 -8% 

649 

187 

408 . ... 
43S _ 


Bmnng Power ... _ 

BMdfcy .itH 275m 

t BogMA N 28m — 

-- 17 safe Rimma AID 34M -3 

874 7*50 09 27 3 BrtriMM ilD 17 — 

195 1«2 22 13.fi Biifiufara.— iJN 93 -I 

256 289.1 22 15.6 Biqmi STpwm «d EQ 

4S3 185.4 16 16.3 Bdnum A ltd 38 -I 

1 Ml 1.1 & CMyas AH 300 

209 392 22 1 Casket— I JQ 30>d -1% 

477 1637 42 14,2 C2w**to «□ 15 

3 102 - - Central Mdar -ttH 99m — 

•tlld 97 -1 


263 202 39 6.8 MWitMaj 

« S5 i-I —7 KT" ( 

22 102 2.4 34_( n., 

M7 7M 8.1 318 TmwMHi. Id 

3b 112 12 556 |aZ^ 


495 1384 42 22.3 
17 7.48 42 14.0 


TfllSpOC- 


£B*J If f.OO MU ThnaOH 

405 208 109 4.8 112 B2Efi in 

40 28 128 3.1 4> tSS ” 

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200 860 25 295 X55L??? 0 

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DIVERSIFIED INDUSTRIALS 


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280 

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42 -1 88 

77 

303 

20 

130 -3 134 

91 

698 

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328 — 404 

326 

5760 

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41d t k 43 

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205 

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90 

907 

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148 

470 

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47 

420 

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98 

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23 225 Royal <HCa__ItAD 280x1 -0 *350 232% 

- - Sedgwtak 4(d 142d -3 *222 142 

25 273 SkarxSaSXr Ld £WB -A *tlM £8% 

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542 lean 36 100 mv*. 

320 5990 61 15J M ^By 

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285 960 17 115 arawDeHta 

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499 2290 37 100 toconkw 

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1 tansy 5M» ILiND 

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5v4 2668 20 , *toas — I_ME29%d — 

m am vt tarruy Vartuns—iJJ 30Td -4 

6511168 66 
00 12X5 120 


319 
381 3tG 
548 424 

*332 415 

97 8! 

174 135 

182 163 

£34 £29% 


174 

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* Sntoifthtoto-.INn 14U *1 1 Wi <98% 1021 40 150 HemtogEnt ii£j ZOZd 


-1 145 

— 98 


-3 

287 

198 

-2% 38B 

305 

-2 210*. 

158 

-2 

138 

78 

-1 254 

180 


'66 HntZsabnd .AN 

- HewrahetV .n 

2-7 Uh Auer Gas —AJC 

- Wanants 

162 MSNUfleSjracn.AN 

- UatriMrS 

15.4 Northern tnra N 

- OdunuasA a 

n.7 Jtornrts. jj 

- Ofentto™ — — AN 

- ZwoPI 

44 _ °Cfcf? 

p ycftwe to-jici 
6.1 fcnsnu 

30 2120 4.5 PWtetoSljO 


124 

95d 

50 

110 

33% 

<10 

43 

£107% 

84 

78 

109 

58 

88 

5% 

251 


57 

37 

88 

*& 

381 

207 

no 

418 

4sm 

4*1 


148 

118 


— IBS 

123 

— 78 

— 131 

— 60 

M2 

73 

— £11* 

— 91 

— 104 

— 245 

— 58 

— 88 

— tt% 

258 

258 

-1 288 

— . SB 

— 45 

111 

*% 219 

4 <04 

— . 241 

-2 840% 

-1 542 

— 54 

—. 13 

— 201 

— S3 

— - 150 

— 148 




119 

91% 

48 

97 

» 

103 

40 
£107% 

81 

65 

190 

53 

70 

& 

210 

238 

87 

37 

89 

QOS 

333 

179 

433 

335 

41 

$ 

87 

128 

115 


65 127.1 
63 1330 

- 1090 

20 123.7 
00 610 
65 3170 -20 
68 33*5 13 

1.1 4864 -2 

150 

- 1820 208 

4028730 -20 
67 3630 155 


30 1368 64 
03 1002 50 


30 1113 19 
67 121.1 92 


80 

- 138 
10 1962 


42.7 

■4 


600 69 

- 965 50 

- 2565 33 
00 - - 
20 3267 164 

- 960 (31 

128 710-160 
U 40*5 130 
03 5565 7 j 
03 490 80 
00 2363 150 





•■■Ui 



FINANCIAL Times 


TUESDAY OCTOBER 


4 1994 










































































































































mg data lor tJie monitoring 01 targets, ana me rur mu nanmmy ui wbmu iMLnu K i,i K . 




















































































































































































































































































































38 


FINANCIAL TIMES TUESDAY OCTOBER 4 1994 


CURRENCIES AND MONEY 


MARKETS REPORT 

Trade deal lifts dollar 


The US dollar briefly climbed 
above the YlOO level in London 
trading yesterday as the cur- 
rency initially benefited from 
the weekend announcement of 

a partial US-Japan trade deal, 
writes Philip Caggtm. 

However, the dollar's 
momentum was halted by the 
National Association of Pur- 
chasing Managers report, 
which showed the prices com- 
ponent at a six year high. This 
hit the US Treasury bond mar- 
ket, which has been one of the 
main driving forces b ehind the 
dollar’s weakness in recent 
months. 

The dollar closed in London 
at Y99.82, almost a yen higher 
than Friday's close of Y98.97. 
Against the D-Mark, the US 
currency climbed to DM1J5573, 
from DM1.5515 on Friday. How- 
ever, the weakness of the Trea- 
sury bond market caused the 
dollar to give up some of its 
gains in New York trading. 

The pound was stronger 
against the D-Mark yesterday, 
helped by continuing uncer- 
tainty about the electoral pros- 
pects of Chancellor Helmut 
Kohl's coalition partners, the 
FDP. 

Sterling rose through 
DM2.4520, seen as a key resis- 
tance level by technical ana- 
lyst s, to close at DM2.4574 in 
London, up more than a pfen- 
nig from Friday's close of 
DM2.4468. However, the pound 
only edged up against the dol- 
lar, closing at SL578, from Fri- 
day's SL5770. 

■ The weekend announcement 
of a partial US-Japan trade 
deal relieved some of the wor- 
ries that had hypnotised the 
foreign exchange markets 
throughout much of last 
week's trading. 

The deal only covered the 
issues of government procure- 
ment, insurance and glass, and 
not the much more important 
automobile sector. 

Accordingly, the deal may 
have little impact on the US’s 
trade deficit with Japan. Fur- 
thermore, the US has said it 
will start to investigate Japan's 
replacement car parts market 
under Section 301 of Its trade 
law. 

Some traders accordingly 
doubted whether the deal 
would be strengthened in the 
long term. The dollar did rise 


Dollar 

Against the Yen (K per $} 

106 : — 



■ Pound In How York 


Oet 3 

— Latest-— 

-Pm. dosa- 

E spot 

10788 

10782 

1 M) 

10781 

10757 

3 77101 

10772 

10747 

i*r 

10624 

10602 


sharply in the morning, briefly 
passing the YlOO level, with 
the help of rumoured hedge 
fund buying. 

But signs that the dollar may 
not get any permanent benefit 
from the deal came in the 
afternoon when the dollar fell 
back on publication of the 
NAPM report. 

On top of the bad news on 
prices, a rise in the employ- 
ment component of the NAPM 
report strengthened expecta- 
tions that the non-Carm payroll 
figure, due to be published on 
Friday, will be strong. That 
will increase pressure on the 
US Federal Reserve to raise 
rates. 

Although higher short term 
rates are normally positive for 
a currency, that factor is far 
outweighed by the negative 
impact stronger economic 
growth has been having on the 
Treasury bond markets. The 
key 30 year Treasury bond was 
down half a point, to yield 7.86 
per cent, in London trading 
yesterday. 

"The dollar /Treasury rela- 
tionship may have weakened 
but we doubt that it has bro- 
ken and we look for further 
bond market weakness to drag 
the dollar lower” said Mr Avi- 
nash Persaud, currency strate- 
gist at J P Morgan in London. 

Mr Adrian Cunningham, 
senior currency economist at 
UBS. said, despite the uplift 
from the trade deal, “investors 
have got to overcome some 
nervousness regarding the dol- 


lar’s fundamentals.” 

However, Mr Mike Norman, 
publisher of the Economic Con- 
trarian Update in Geneva, 
argues that “we are in the pro- 
cess of seeing a major turn in 
the dollar.” He believes that 
this could be very important 
for world bond markets since a 
dollar rise would quell infla- 
tionary fears in the US. 

■ Most European currencies 
were stronger against the 
D-Mark, which, according to 
Mr Jeremy Hawkins, senior 
economic adviser at Bank of 
America “is going to remain 
soft until the election Is out of 
the way. At the moment, the 
polls appear to suggest that 
Kohl could have Some diffi- 
culty in forming a new govern- 
ment" 

The Italian lira managed a 
small gain against the D-Mark 
- closing at Ll, 005/DM from 
Friday's L1.006/DM - despite 
renewed fears about the pros- 
pects of Budget passage. 

■ In the UK money markets, 
the Bank of En gland provided 
cumulative help of £81 8m to 
relieve an £800m shortage. The 
Bank’s earlier forecasts of the 
shortgage had been £750m and 
£700m. Overnight rates moved 
within the range of 7 per cent 
to 4V4 per cent 

Short sterling contracts fell 
in the wake of figures showing 
a sharp jump in the annual 
rate of growth of MO, the nar- 
row measure of the money sim- 
ply. 

Although some analysts 
argued the figures were merely 
a statistical blip, markets evi- 
dently felt that the pace of MO 
growth, one of the Bank of 
En glan d's inflationary indica- 
tors, made a further rise in 
base rates mote likely. 

At the dose, the December 
short sterling contract was 
trading at 93 .16, indicating that 
markets expect a frill percent- 
age point rise in base rates, 
from the current level of 5.75 
per cent, before the end of the 
year. 

■ OWH CHWHBB 

M3 £ S 

Hmgary 171548 - 172214 H&OOQ ■ 108.100 
la 278103 - 276400 174803 - 175000 
HMD 0.4890 - 04706 02073 - 02381 

Ptbod 366532 - 367080 23238.0 - 232550 
Rntia <240.10 - 424480 2687.00 - 269000 
UAE 528B4 - 80010 30715 - 10735 


1 POUND SPOT FQRY' 

/ARD A 

.GAINST 

7H£ POUND 








Oct 3 


Ctosina 

Change 

Btifoffar 

Day’s Md 

One month 

Tiros mental 

One year 

Bank of 


mkJ-poW 

on day 

spread 

Ngh km 

Rate 

%PA 

Rate 

%PA 

rate 

KPA Eng. mw 

Braopa 

Austria 

(Scfe) 

170941 

+00766 

847 - 036 

170036 170205 

170142 

00 

172023 

0.4 


. 

1140 

Botfran 

(BR 1 

505278 

+0.1897 

800- 751 

500780 50.3210 

500476 

-00 

50.4628 

00 

601326 

00 

1108 

Danmark 

(DKr) 

"90250 

+00272 

198-304 

9.8340 90945 

9.83 

-06 

90414 

-07 

90561 

-03 

1180 

Hntond 

(FM) 

70447 

-0.0241 

396 - 489 

7.7330 7.8360 

a 

a 

- 

- 

- 

- 

87,i 

France 

(FFr) 

80825 

+00334 

778 - 874 

80883 £3616 

£3825 

00 

80783 

00 

80034 

00 

1102 

Germany 

(DM) 

2.4674 

+0.0106 

562 - 5B5 

2.4602 2A419 

2.4383 

00 

2.4534 

07 

2,42 

10 

1260 

Qmca 

tW) 

374084 

+1 478 

435 - 752 

380.730 373078 

- 

- 

- 

- 

- 

- 

— 

Ireland 

(HQ 

"1.0118 

-00004 

110 - 126 

10140 10103 

10117 

0.1 

10119 

-0.1 

1.0141 

-00 

100.4 

Italy 

« 

247030 

+1004 

879 - 193 

2*72.76 248001 

2478.70 

-3.1 

248701 

-2.7 

2S2&08 

-2.4 

750 

Luxembourg 

(LFr) 

500278 

+0.1887 

800 - 781 

500780 500210 

60.5470 

-05 

604828 

00 

501328 

08 

11£8 

Nethoriends 

B) 

2.7513 

+00106 

489 - 32B 

2.7548 2.7407 

2.7502 

00 

2.747 

06 

2.7107 

10 

1200 

Norway 

(MO) 

10.7267 

+0.0252 

235 - 359 

10.7439 ia7077 

10.7292 

0.1 

107327 

-0.1 

107337 

0.0 

■ 880 

PetUigd 

m 

250071 

+0.788 

113-420 

250432 210437 

2SB0O1 

-03 

255.181 

-70 


- 

- 

Spain 

(Pta) 

203063 

+0-5 

119 - 408 

203.425 202041 

203063 

-20 

204.343 

-0.1 

208.873 

-1.7 

880 

SwBdcn 

(SKr) 

110180 

+00208 

060 - 277 

110570 11.7672 

110368 

-10 

110834 

-20 

120868 

-2 A 

750 

Swkzariand 

(SFr) 

2.0430 

+0.0121 

418 - 442 

20*43 20285 

20403 

10 

20347 

10 

10827 

20 

1220 

UK 

(0 

- 

* 

- 

• 

- 

- 

- 

- 

- 

- 

800 

ECU 


10837 

+00038 

827 - 848 

1-2847 1.2706 

1084 

-02 

10842 

-0.1 

10781 

04 

- 


SORT 

Americas 

Argentina 

Brad 


Mexico 

USA 


W) 

ICS 

{New Pud) 


1.5778 

1-3460 

£1232 

£3581 

1.5780 


PaeMcMMcBa Eaatf Africa 


+0.0005 770 - 7E2 
-O.OOOG 440 - 480 
+0,0079 Ztl -242 
-0.0045 525 - 837 
+0001 775 - 785 


1078S 15737 
1.3482 1.3440 


£3840 633*85 


Australia 

Hong Kong 
Ma 
Japan 
Malaysia 
New Zealand 
PhBpptawa 
Ssucfl Arabia 
Singapore ESS) 

S Africa (Com.) (R) 
S Africa (Fin.) (R) 

South Korea (Won) 
Taiwan 0'S) 

Thailand (BO 


(AS) 2.1296 
(HKS) 12.1938 
(Fta) <19.4999 
(V) 157 JIB 
(MS) 44495 
fNZS) £6178 
408703 

bjhih 

2.3410 
58457 
8.7381 
128035 
41 £647 
39.4973 


-00016 288 - 308 
+4X0078 893 - 979 
+00412 783-215 
+1j44 419 - 613 
+00067 474- 815 
-00009 148 -208 
-02094 784 - 621 
+0005 180-225 
+00031 894 - 425 
+00213 427 - 487 
+4X0043 202 - 560 
+00 963- 106 
+01181 337 - 768 
+01117 789 - 177 


£1368 £1213 
12.2083 12.1632 
49-5450 490800 
167090 156000 
40624 40389 
£0215 £0133 
409710 407765 
50263 50053 
£3430 £3342 
5.6487 50257 
0.7825 6.7200 
1261.63 1257.47 
41. 381 Q 410476 
304740 303910 

t80R rate* tar Sw to. BUMS* Ipanda in On Pound 9pot table shew only tin feat ttree decfciM piece*. Fortran) nun am not toeoSy 
nrarftsr bur ere knp*M by curant kemst rate*. BtaOna Mn> caMtand by On Bank or Entpaid. Bin nraage 1KB - iti&BH. O0*r and 
dm and On Defer Stmt tafataa derived from THE WWRBU1ER3 CL06MQ SWT RATES. ~ 


2.1228 

00 

£1205 

06 

21108 

an 

10774 

00 

10788 

04 

10615 

1.0 

2.1295 

00 

21306 

-02 

21491 

-00 

121887 

04 

121886 

00 

121856 

CLO 

187.068 

3.4 

180131 

25 

180636 

4.4 

28217 

-10 

26296 

-10 

28917 

-10 

- 


- 

- 

- 

- 


880 

62,4 


1870 


vttuee ire rounded by On F.T. 


U On 

ftibotfi 


1 DOLLAR SPOT FORWARD AGAINS’ 

r : He DOLLAR 







Oct 3 

Ctooing 

mld-paM 

Change 
an day 

BWtotfor 

spread 

Day’s mid 
hlgli low 

One month 
Rote KPA 

Three months 
Rate %PA 

One year J.P Mwgan 
Rato MPA Index 

Europe 

Austria 

(Set# 

108585 

+0041 

570 - 820 

100875 108080 

100695 

CLO 

109593 

ao 

100846 

07 

104.0 

Batglum 

OFi) 

320200 

+0.1 

000 -400 

32.0670 31.6700 

MIB 

CLO 

3203 

-oi 

3209 

-02 

105.7 

Denmark 

(DKr) 

8.0896 

+0.0134 

980 - 010 

£1180 60790 

£1042 

-00 

£1155 

-id 

£1807 

-10 

1040 

Finland 

(FM) 

40446 

-00183 

42S - 483 

40857 40428 

4.8446 

00 

40436 

Ol 

40771 

-07 

81.1 

Fiance 

FFV) 

£3121 

+0.01 78 

107- 135 

50252 £2855 

5014 

-0.4 

£3143 

-00 

£3178 

-Ol 

106.4 

Germany 

(D) 

10873 

+0.0058 

570 - 575 

10610 10456 

10674 

-0.1 

10562 

03 

10498 

OS 

1080 

freeoe 

(Dr) 

237085 

+0.785 

360 - 410 

247.420 236000 

237085 

-10 

23808 

-10 

24078 

-1 A 

607 

kotand 

m 

10596 

+00016 

589 - 603 

10641 10546 

10594 

00 

10581 

04 

10384 

10 


Italy 

(U 

156500 

+50 

500 - BOO 

1569.75 166705 

1570.16 

-30 

1577.7 

-3.1 

16190 

-£4 

76.0 

Luxemborag 

(LFil 

32.0200 

+0.1 

000 - 400 

32.0670 310700 

32.02 

£0 

32.03 

-Ol 

3209 

-00 

105.7 

NeOtortanda 

(FI) 

1.7436 

+00057 

432 - 438 

1.7438 1.7354 

1.7434 

£1 

1.7424 

03 

1.736 

04 

105.4 

nOrnuy 

(NKr) 

£7996 

+00117 

978 - 013 

80250 £7766 

80048 

-00 

£8251 

-10 

80938 

-1 A 

950 

Portugal 

(E8) 

158-600 

+0.4 

550 - 650 

158020 157.670 

159046 

-40 

18047 

-4.7 

1650 

-40 

940 

Spain 

(Pta) 

J 28010 

+0036 

760-860 

129.120 128.440 

129.105 

-27 

129015 

-25 

13236 

-28 

808 

Sweden 

(SKr) 

7.4885 

+00084 

840 * 930 

70218 7.4819 

70037 

-24 

70366 

-25 

7.7186 

-3.1 

8003 

Swttzertraid 

(SFr) 

10947 

+00068 

943 - 950 

10B8Q 10869 

10934 

10 

10906 

10 

10781 

1 A 

1080 

UK 

« 

10780 

+0.001 

776 - 785 

10800 10740 

10774 

00 

10768 

04 

10815 

10 

880 

Ecu 


10283 

-aoo3 

286 - 298 

10340 10282 

10288 

0.7 

10278 

00 

10218 

08 

- 

SORf 

- 

1,48738 

- 

- 

• 

- 

- 

- 

- 

- 

- 

- 

Americas 

Argentina 

(Paso) 

00986 

-00003 997 - 998 

00998 00997 

_ 


_ 


_ 


_ 

Brazil 

ffffl 

0.8530 

-0.001 

520 -540 

00640 00620 

- 

- 

- 

- 

- 

- 

- 

Canada 

(C$) 

10455 

+00041 

452 - 467 

10466 10432 

10456 

00 

1046 

Ol 

1061 

-04 

84.7 

Mexico (New Pnao) 

30955 

-0.006 

830 - 980 

30960 30930 

30865 

-04 

3.3903 

-00 

£4057 

-00 

- 

USA 

m 

- 

■ 

- 

- 

- 

- 

- 

- 

- 

- 

95-8 

n, ..in „ #»rae-B 0 w— «■- ‘fif.li.ta 

AustTBia (AS 10486 

-00018 

482 - 499 

10523 10468 

10489 

-00 

10506 

-03 

10679 

-06 

880 

Hong Kong 

IW) 

7.7373 

+0L0D01 

270-275 

7.7275 7.7270 

7.727 

ao 

7.7279 

ao 

7.7428 

-02 

- 

Inda 

(Ra) 

310688 

+00083 

860-725 

310725 310650 

31.4538 

-30 

310988 

-29 

- 

- 

- 

Japan 

<Y) 

99.8200 

+005 900 - 500 

100.100 98.0800 

9907 

£0 

90.03 

£2 

90485 

£4 

1490 

Mstaysia 

(MS) 

26682 

+0002 

657-687 

25887 20818 

2557 

40 

20467 

30 

26192 

-21 

- 

New Zealand 

(NZS) 

1.6680 

-00016 678-603 

10603 10667 

1.66 

-0.7 

1.6618 

-07 

1.6671 

-05 

- 

PhBppfem 

(P«®o) 

260000 

-00 

600 - 500 

28.1600 2£850Q 

- 

- 

- 

- 

- 

- 

- 

Saudi Arabia 

m 

3.7616 

+00008 515 - 520 

3.7620 3.7515 

3.7531 

-04 

£7572 

-08 

£7758 

-OB 

- 

Sfnaopore 

(S* ) 

1.4636 

+0.001 

830 - 840 

1.4840 1.4815 

10822 

1.1 

1.4803 

09 

1.4735 

07 

- 

S Africa fComJ CFO 

30778 

+00113 

770 - 785 

30808 30710 

30933 

-60 

£6216 

-40 

£6983 

-3.4 

- 

3 Africa (FK) 

IP) 

40700 

- 

GOO - 800 

40050 40600 

40037 

-00 

40625 

-8.7 

- 

- 

- 

South Korea 

(w«ti 

798.700 

. 

600 - 900 

798000 798000 

801.7 

-40 

8060 

-30 

823,7 

-Ol 

- 

Taiwan 

(T» 

260070 

+0.057 

020 - 120 

260120 26.1605 

28027 

-09 

28067 

-09 

- 

- 

- 

TMtand 

(EH) 

26.0300 

+0055 

250 -350 

260350 240800 

25.1025 

-80 

2503 

-30 

26.71 

-27 

- 


tson rate far Sep to BMftttier apraede in Hie DoOer Spar tattte ahow ratty me but Ha dectato pacm. Forered rtaae ara not cfeecdy oumdto the merit 
bi* ore knpfad bycunroHaraatnM.UK, Hands ECU ras quoted In UScunncy. JP.MoganwM IndkasSepSa Baas manga 1960-100 


CROSS RATES AND DERIVATIVES 


EXCHANGE CROSS RATES 

Oct 3 BFr DKr FFt DM 


n 


NKr 


P*a SKr 


SA- 


CS 


Ecu 


Belgium 

Denmark 

France 

Germany 

Ireland 

Italy 


Nonray 

Portu ga l 

Spain 

Sweden 

Switzerland 

UK 


(BPr) 100 
(DKi) 52.49 
'(FFr) 8027 
ff>M) 2058 
OO 4097 
0) £045 
0=1) 1036 
(NKr) 47.13 
£a) 20.19 
(Pta) 24.66 
(SKr) 42.78 
CSFr) 24.73 
(0 5052 
ICS) 2300 
(9 32.02 
(Y) 32.08 
39.3B 

Frendi Franc. 


US 

Japan 

Ecu 

Draitati Krone, 


■ P-MAHK PUTURU (IMM) DM 125,000 per DM 


1005 

10 

11.48 

3.917 

9520 

0390 

£499 

8079 

3.847 

4.737 

8.150 

4.711 

9025 

4034 

0099 

8.111 

7.602 

Krone. 


1809 
0709 
10 
£411 
0291 
0339 
£047 
7.619 
3350 
4.128 
7.097 
4.103 
5382 
3048 
5312 
5322 
fl 333 
and 


4063 

£553 

£931 

1 

£430 

0089 

0.893 

£292 

0082 

1309 

£080 

1303 

£457 

1.157 

1057 

1.580 

1.915 

Kronor 


£001 

1.060 

1306 

0.411 

1 

0041 

0366 

0043 

0.404 

0498 

0856 

0495 

1011 

0476 

0641 

0042 
0788 


4889 £446 2132 4953 4020 2338 4044 1079 4302 £124 3110 £540 

2568 
2947 
1005 
2443 
100 . 

8970 
2304 
9873 
1216 
2091 
1209 
2470 
1183 

1565 1.743 £793 1580 128.8 7.484 1395 0034 1345 1 

1568 1.747 £806 1580 128.0 7.498 1397 0636 1348 1002 

1925 £144 8355 1950 15&4 9305 1.592 £779 1.655 1330 

Be ttfc Belgian Franc, van. Escudo. Urn and (Mate pe 100, 


CMS EUROPEAN CURRENCY UNIT RATES 

Oct 3 Ecu can. Ren Change 96+/- from 96 spread 

rates agrdnatBai an day can, rata 


Dtv. 

v weakest tod. 


2058 

11.14 

2590 

211.1 

1227 

2123 

1039 

2206 

1039 

1830 

1033 

featsnd 

0808628 

0791706 

-0002535 

-209 

£29 

£282 

1279 

2980 

2424 

1409 

2437 

1.193 

2533 

1083 

1870 

1031 

Netharianda 

218672 

2152S3 

+0.00138 

-201 

600 

1.120 

4.383 

1010 

8270 

4007 

0832 

0407 

0684 

0642 

64.10 

0022 

Belgium 

400123 

380224 

+4X0244 

-1.72 

409 

2721 

10.80 

2470 

2010 

1108 

2021 

0969 

2100 

1081 

1550 

1066 

Germany 

104864 

102213 

+000168 

-101 

406 

Olll 

0.434 

1013 

8027 

0478 

0083 

0040 

0086 

0084 

8077 

0052 

Fhaice 

603883 

606831 

+000386 

030 

278 

1 

3.897 

9095 

7306 

4093 

0743 

0364 

0772 

0874 

6706 

0488 

Danmark 

7.43879 

703281 

-000131 

109 

1.77 

2566 

10 

23£4 

1808 

11.02 

1.908 

0933 

1.980 

1-472 

1460 

1.107 

Portugal 

192084 

191763 

-0017 

101 

106 

1.100 

4085 

100. 

8102 

4.720 

0817 

0400 

0849 

0831 

6296 

0013 

Spain 

154060 

159:014 

-0145 

£09 

000 

1054 

6078 

mi 

100. 

5.812 

1.005 

0492 

1.046 

0777 

7701 

0631 







2329 

9077 

2110 

1721 

10 

1.730 

0047 

1.798 

1038 

133A 

1088 

NON HIM MEMBERS 





1047 

£247 

1225 

99.48 

6.781 

1 

0489 

1.039 

0772 

7709 

0828 

Greece 

284013 

293028 

+0001 

1078 

-604 

2751 

1072 

2500 

2002 

1101 

2043 

1 

2123 

107B 

1570 

1083 

Italy 

179£19 

193202 

+4X84 

7.77 

-404 

1096 

5049 

1170 

95.71 

5063 

0982 

0071 

1 

0.743 

74.19 

0604 

UK 

0786748 

0782082 

-0003382 

-060 

£71 


9901 

too 

1220 


0313 

0815 

1 


WW HITUWB (IMM) Yen 123 per Yen 100 



Open 

Latest 

Change 

High 

Low 

EsL vol 

Open bn. 


Open 

Latest 

Change 

Fflflh 

Low 

Eat voi 

Open bn. 

Dec 

0.6455 

0.8418 

-0.0033 

0.8488 

0.6407 

29088 

72070 

Dec 

10213 

10079 

•00069 

1.0264 

10051 

24,512 

48,150 

Mar 

0.6417 

0.8426 

-00033 

0.8427 

00417 

90 

3051 

Mar 

1.0132 

1.0156 

-00074 

1.0250 

10132 

131 

2737 

Am 

- 

00468 

- 

- 

- 

100 

574 

Jun 

- 

1.0329 

- 

- 

- 

5 

447 


14 

13 

-2 

-9 

-10 

-22 


Ecu conM ran eat by me Bacpaai Oraraittatfon. Curandaa mein descanting raUhe oMngSi 
Aaroentageaftrawasav far Sac apoaWwotonge denote a weak dwreney. Ctergartas shows Me 
mda b a w aaei tara apraeda; lha parcarmga d ltauw a bataraan Bu actH mefcat and Eai canH raM 
far a cutency. red the uaubnun pannUad pon ran taga davtaOon of Vie ctnemyi inetad rat* bent Oa 
Ecu rote, 

(17/9*93) Staring end Man Urn suspended bran 6U At^ntmant craadotad by Bia FtoancM Hmae. 
■ nnJBWUW SI c/somows E31350 (cants per pound) 


■ SWISS FRANC PUTURU (IMM) SFr 125.000 per SFr 


■ STBRUNQ PUTURU PMM) £62000 pra£ 


Dec 

0.7790 

0.7730 

•00053 

0.7800 

07710 

14,648 

33081 

Dec 

10788 

10744 -0.0002 

1.5788 

10724 

5011 

32098 

Mv 

0.7735 

0,7767 

■0.0075 

0.7782 

0.7735 

72 

661 

Mar 

10720 

10720 

10720 

10700 

8 

274 

Jim 

- 

0.7800 

- 

- 

0.7800 

4 

S3 

Jim 

- 

1.5650 

- 

108SO 

1 

8 


Strike 

Price 

Oct 

- CALLS ~ 
Nov 

Dec 

Oct 

— PUTS — 
Nov 

Dec 

1000 

701 

702 

703 

- 

003 

026 

102S 

5.08 

522 

£58 

- 

018 

004 

1060 

271 

£19 

£77 

aio 

004 

129 

1073 

nt» 

108 

207 

247 

106 

222 

1000 

015 

0.73 

107 

4.74 

£04 

£73 

1.825 

- 

024 

071 

722 

504 

805 


Pravtoua rttfn wL Cafe tW41 Puts 14JI72 . Proa, de/a span ut, CMs *81097 Puts 305,739 


WORLD INTEREST RATES 


MONEY RATES 

October 3 Over 

flight 

One 

month 

Hi roe 
mths 

Six 
ml ha 

One 

year 

Lamb. 

biter. 

□la. 

rate 

Repo 

rate 

Belgium 

4!b 

*9 

5H 

5fl 

64 

7.40 

400 

- 

week ago 

4* 

-4g 

SH 

5» 

84 

7.40 

400 

— 

France 

64 

54 

5% 

Gri 

84 

5.00 

- 

£75 

weak ago 

5% 

54 

5% 

Sfl 

64 

5.00 

- 

8.75 

Qarmany 

4.15 

405 

£18 

£23 

£63 

5*00 

400 

405 

week ago 

4.52 

4.96 

505 

£23 

£63 

6-00 

400 

4.BS 

Mend 

4tt 

GU 

84 

84 

7ri 

- 

- 

025 

weak ago 

44 

S'A 

84 

84 

7H 

- 

— 

826 

Italy 

84 

8U 

84 

84 

10 

- 

700 

8-20 

week ago 

84 

6V& 

84 

94 

101* 

- 

700 

823 

Netherlands 

404 

500 

522 

£38 

£75 

- 

525 

- 

week ego 

4.B4 

6.00 

£12 

503 

5.72- 

- 

G.25 

— 

Switzerland 

3>» 

3i 

d<A 

41* 

41* 

8.62G 

300 

- 

week ego 

3Tli 

39 

■«4 

41* 

4W 

aaw 

300 

— 

US 

4% 

5 

84 

sa 

6M 

- 

400 

- 

week ago 

4% 

5 

64 

5H 

07i 

- 

4.00 

— 

Japan 

ZM 

2H 

2K 

24 

29* 

- 

1.75 

- 

week ego 

2lt 

2H 

2!i 

24 

21* 

- 

1.73 

- 

■ S UOOR FT London 

Interbank Firing 

54 

Sri 

61* 

64 

_ 

_ 


week ago 

- 

54 

5Vi 

Bfl 

64 

- 

- 

- 

US Dollar COa 

- 

404 

£22 

6.50 

£08 

_ 

- 

- 

week ago 

- 

4.84 

5.03 

5.35 

£93 

- 

- 

- 

SDR Linked Da 

- 

34b 

34 

31* 

4 

- 

- 

- 

week ego 

- 

3% 

34 

31* 

4 

- 

- 

- 


ecu Unfed Oa odd rates: 1 ntth: sis. 3 imhx 3V 0 mis thk 1 yaer «*. S ueofl face-toe* Bring 
■raaa ei eiiarad rasa far Slftn quoted to Ilia mew by law u Nranc s benia m Him each woridr-o 
day. The banka aw Banhen TobL Bonk d Tokyo, Barokaya and Manorial Waaoran t tor. 
uanMnHM ter me dameedc Moray Ifetaa. U3 % COa and SDR Unfed Deposes ffW 


EURO CURRENCY INTEREST RATES 

OetS Short 7 days One Those 5bc One 

term notice month months months year 


Morin Franc 

411 

-41 

411 

■4H 

4ll 

4il 

Bl, 

- 5V. 

sll 

-sft 

6ft- 

■ 6ft 

Dental) Krone 

57, 

■5J, 

5V 

■ 5*2 

6ft 

ft 

ft 

* 8*2 

7J| 

-74 

TV 

■74 

D-Mark 

5- 


4». 

■41 


41 

5ft 

-5ft 

5ft 

•5ft 

54 ■ 

54 

Dutcn Guilder 

5.'. 

■ -*12 

5. 1 * 

-4(3 

B - 

4* 

5*4 

-54 

54 

-54 

511 ■ 

■ Sft 

French Franc 

s*» 

-5U 

Sft 

■■6ft 

V. 

5ft 

SI4 

-6ft 

57, 

■ 54 

84 ■ 

-64 

Panugueae Esc. 

9*4 

- a 

9*1 

-9fa 

B4i 

9*t 

10H 

- IIP, 

104 

- 104 

104 ■ 

- 104 

Spanish Peseta 

7«; 

ih 

7&- 

-73, 

7S* 

7»2 

a - 

■Th 

ft 

-B4 

8ft- 

- 9ia 

Sterling 

el, 

, 

3% 

■ s*2 

5ft 

5i r « 

8- 

ft 

ft 

-84 

7ft- 

■7ft 

Swiss Franc 

*\ 

37, 

41, 

■ 3* 

311 

312 

4ft 

■ 4ft 

44 

-44 

44- 

44 

Con. DoSor 

4 s 

4fi 

4’i3 • 


5- 

4 \ 

5ft 

-5ft 

Sli 

-5U 

«H 

■8ft 

US Ootor 

411 

4« 

Ail - 

■6H 

5,’. 

412 

ft 

■ft 

54 

-54 

5ft- 

-6ft 

Damn Urn 

9 - 

7*2 

ah ■ 

' 7-, 

8*4 

ft 

8^ 

-84 

all 

-811 

912 

-9H 

van 

21* 

-2ft 

2ft 

■ 2ft 

2ft 

2*4 

2h 

■2ft 

2*2 

-2ft 

211- 

‘ft 

Asian SSng 

=fa 

■iz 

2*1 

■2h 

3ft 

3ft 

3ti 

-3,*. 

4 - 

34 

4ft- 

■4ft 


Snort m rasa ora coS lor bib US Debt and Van. others: two days' node*. 


■ THRU MONTH HBOW HJtTURU (MAT1F) Pane Werbank fllfered rate 



Open 

Sett price 

Change 

High 

Low 

EsL vol 

Open btt. 


.. W-09 

94.06 

-0.02 

94.09 

94.05 

7,753 

48050 


9302 

93.59 

-003 

93.63 

93.57 

6.7B6 

33048 


9322 

93.19 

-003 

8323 

93.17 

3.487 

25018 

Sep 

9201 

92.86 

■0.04 

9201 

92.65 

3286 

19,845 

■ TIBI— MOWTH.BURQPOMLAR (IJITEf 81 m points of 100% 




Open 

Sett price 

Change 

Ugh 

Low 

E&L vol 

Open ML 

Dec 

- 

9399 

•0.08 

- 

- 

0 

2123 

Mar 

- 

9301 

-0.07 

- 

- 

a 

1435 


- 

9320 

-0.07 

- 

- 

0 

274 

Sep 

- 

9200 

-ao? 

- 

. .•■ . 

0 

52 


■ THRU MONTH BUROMAIIK 

FUTUHto 

• [UFFE) - DMIrn potato of 100% 



Open 

Sett price 

Change 


Low 

Eat. vol 

Open bit 

Dec 

94.68 

94.84 

-0.03 

9409 

94.63 

19032 

188411 

Mar 

9408 

9*03 

-004 

9408 

9402 

11278 

169822 

Jun 

83.88 

93.79 

-006 

9308 

9£77 

10043 

107271 

Sap 

93, *9 

83.42 

-£08 

93.49 

93.41 

8220 

ggggg 

■ THRU MONTH BUROUKA MTJtATB PUTUmS (UFFE) UOOOm pobite of 100% 


Open 

Sett price 

Change 

Mgh 

Low 

&*. vol 

Open btt. 

Dec 

8080 

9009 

■007 

9002 

9068 

4S1B 

32215 

Mar 

90.08 

8908 

-009 

9008 

8905 

1865 

16360 

Jun 

B905 

89.42 

-009 

8906 

89.42 

1159 

15707 

Sep 

89.13 

8909 

-£10 

89.13 

8903 

356 

16201 

■ THRU 

MONTH IURO DIM FRANC PUTURU (UFFE) SFrtm pobite of 100% 


Open 

Sett price 

Change 

high 

Low 

EsL vol 

Open btt. 

Dec 

95.81 

9502 

-£02 

9502 

9808 

2962 

23899 

Mar 

9505 

S£24 

-£03 

8125 

9501 

853 

12084 

Jun 

9A05 

94.88 

- 

9409 

9403 

.586 

6686 

Sep 

94.68 

9407 

-002 

9403 

9406 

135 

961 

■ THRU MONTH BCU PUTURU (UFFE) Eculm points of 100% 



Open 

Sett price 

Change 

Mgh 

Low 

Eat vol 

Open bit 

Dec 

93.65 

B£82 

-0.03 

93.68 

9300 

1370 

7500 

Mar 

S3. OS 

9£04 

-4X02 

9308 

83.01 

1400 

5803 

Jim 

9206 

9202 

4X06 

9208 

9201 

461 

2811 

Sep 

92.13 

82.11 

4X04 

92.15 

92.11 

38 

1038 

* UFFE MUta traded on APT 







■ THHO MOUTH BUROPOtLAR (ftM) Sim points of 10095 



Open 

Latest 

Change 

Mgh 

Low 

EsL vol 

Open btt. 

Dec 

94.04 

9403 

-002 

94.05 

94.03 

130060 

485.483 

Mar 

9305 

93.87 

- 

9307 

03-85 

102027 

415078 

Jun 

9306 

9308 

- 

9307 

9305 

81035 

292072 

■ U> TffMSURY DU RfTURU (IMM) Sim per 100% 



Dec 

9401 

9401 

4X02 

9401 

94.60 

1003 

19084 

Mar 

94.19 

9400 

- 

8400 

94.19 

1,618 

9,782 

Jim 

- 

33.82 

- 

- 

9302 

288 

2099 


Al Open BM Dpu ara tor mvtoua day 
■ ttUROMAKX OPTTOWgfUFg DMImpofataol 100% 


Strike CALLS PUTS 


Price 

Oct 

Nov 

Dec 

Mra 

Oct 

Nov 

Dec 

Mar 

9450 

£15 

£18 

£22 

£15 

001 

004 

£08 

£42 

9473 

0.02 

0.00 

0.09 

£07 

£13 

ai? 

000 

£58 

9500 

0 

□01 

£03 

£03 

£38 

007 

009 

000 


Eat roL toft, CM b 4ffS Putt Pn nfaua (fay’ll Opal K. Ofe 189390 Pm 13040T 

m BUBO SWISS IWMC OPTIONS £m) Sft- impalntt of 10096 


Strike CALLS PUTS 


Price 

Dec 

Mar 

Jun 

Dec 

Mar 

Jun 

9660 

£18 

0.13 

£08 

£08 


£70 

9S7S 

005 

£07 

004 

£18 

ass 

£91 

9600 

n rw 

£04 

£02 

£40 

£80 

1.14 


E*. veL SB, Cad 0 pub a Premia day's open ml, cafe 1870 Pub MB 


UK INTEREST RATES 


LONDON MONEY RATES 

Oct 8 Owen- 7 days One Uvea Stx One 

night notice month months months yaer 

Interbank Staffing 7 - S’, - S'a 5ft - 5H 8-6 ll 6 ^ - 8ft 7& - 7* 

StadhgCOa - - 6U - 6H 6« - 5£ 8>j - ft 7h-th 

TtaamayBBe - 6fl - 5*t 5li - 5* 

BenkEHfa - - 611-6* 6% - ESa 8^-6% 

Local authority daps. 4H - 4» Si - 5, 1 , 6,'a - 6ft 6fi - 6U S& - 6/« 7&-7i 

DNoouit Market daps 8V - 5 5% - (P* .... 

UK dealing bonk bore lendhg rale 5% per cent from September i£ 1994 


Up to 1 


1-3 


3-0 

months 


M 


9-1 2 
months 


Certs of Ten dep. (£100000) 1>2 4 3l» 3% 3*2 

Cara oTTta dap. indwCIOOOQO la 7 *3 pc- Pnpoata wM afe w n breed W. 

An, tandar rats of dacowit &4710Wi ECOD&isd rate Ms. Enwtnraooai. Maks is> day Sap 3£ 
IBB*. Agatd rot far parted OB 28. IBM io No* as, IBM. Monas n B n 7JMpa Mama rata (or 
oorfad Bap 1. IBM to Sap SO, IBS*, Schama IV* VB-JSSpo. Rntncs Howe Baas Ms too bom Set 


■ TW— MONTH 8TIWHWQ FUTVBIi QJFFE) CgOODOO ppkia of 10046 



Open 

Settpricta 

Change 

Mgh 

Low 

EsL vol 

Open btt. 

Dec 

9303 

93.16 

4X04 

9304 

93.14 

24428 

165306 

Mar 

8203 

9204 

-£oe 

9206 

9200 

21570 

80403 

Jun 

91.70 

9102 

-005 

91.70 

9109 

6881 

51993 

S«P 

9103 

91.19 

-001 

9103 

91.16 

M90 

52280 

Traded on APT. A, open knraai Spa. 

■re tv pravtaua toy- 





■ 3»WIITaTWeUHaOimOBt»(LlFFE)ESOaQQO pokes Of 10QW 
Str»e CALLS — — PUTS 


Price 

Dec 

Mar 

Jun 

Dec 

Me r 

Jun 

9300 

nan 

£11 

£18 

£19 

007 

104 

9328 

001 

£07 

£11 

£30 

108 

1.74 

9380 

£11 

£04 

008 

045 

100 

1-96 


EsL wL tataL Cato 20088 PuH 5100. Pieukwa day’s ooan W- Cato 285343 Puts 100718 


BASE LENDING RATES 


% 

AdomA OompBiy. 5.75 

MgdTndBak >025 

ABBerk £75 

•Horny Arabacher £75 

BankofBerodfl....^ £75 
Banco B8»o Vbsaya- £79 
Bank of Cyprus - £75 

Bark at mam —£78 

Bank of bids..- £78 

Bark Of Sectoral 5J7S 

Bardcy3 Bonk £73 

BffiBkoflWEBSt... £25 
«6rewiSWay&CDlM075 
CLBankNeotartod-. £75 

CObenkNA 0.75 

Ctydeedate Bank £75 
The CooperaUvo Bar*. 5,78 
Ootns&Co — „. — £78 

Ci«B LyorvolB £75 

Cypme ftpUar Ber* -£75 


% 

DiranLwia £75 

Boatar Bark United — £75 
Fbiandel& Gen Bark- £5 
•Hobdt Heiffing A Co _ £75 

Gfaofatffc — £75 

•GuMnees Mehon £78 
Habfa Bank AG Zurich . 5J5 

•HamtsasBarffi -£78 

HemUe&OenbwBk.&75 

«HB Samuel — £75 

CHoareaco— £75 

Hontfrang 4 Shanghai 535 
Ji * a n Hodge Ba nk — £76 
•Uopoki doaeph 4 Sans £75 

LbydP Bonk — £75 

Mos*TO| Bark Ltd £75 

MdndBar* £75 

• MotrtBeridng 6 

NaNVBsbnhBter- £75 

•n—Bwshera £76 


94 

* Ftediughs Guarantee 
Corporation Untied la no 
fangarauUmbBdas 
abarMnginAjBan fi 
Royal Bk of Scadand _ £7S 

•Smbh 8 Wftnan Secs . £75 

T38. — — £75 

•UffiMBkafNNnB- £78 
Urtty TVubI Bank He __ £75 

WWemTnjB £75 

VMesway Lffidaw — £?£ 
YorkBMreBank .£75 

• Members of Lantfan 
Investment Banking 
Asaadakm 

’ biadmtnWraflon 


MONEY MARKET FUNDS 


Money Market 
Trust Funds 


ConOsACo 
MBSHM. loan MSAMB 
Mb Csm*» Mart to CM i 
maewtamraipwi 
tow nug waMi annul 4.730 



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3.79 *31 I Ull 09 


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a Sj SSts SfflJ WB OTrtA 11 071 -WC 3323 

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imMHTM>feaq.la*ailin39r . oti-wkb 

H1CA.02400-) 1 4375 L2B 1 M6| 

Uoyto Bank - ImestHMfld Account _ 

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nOtLOOOinOawra-. BJS U1 U1 M 

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nOOOO^ i LOO L7B 1 LOOl TSalf 


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■iqataounHauM-tLto sail are u* 

E2WK»-f2*ft8M-_| *.03 LOO 4.07 UE> 
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BratUys_Prto» Accoant HJ0A. ^ 

2.50 108 LEO) 09 

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ElOOXH L2S 2 M 3J9 (Hr 

E3BP00+ L73 LSI U»1 Or 



PW 

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2.49 

muMttw 

noooocM.*®- — 
KSjOOO-e49fl99 

330 

430 

430 

323 

330 


E3tM»Ht4e^99 

oojopo-eauaa — 
cuuno-ciaara-^- 

0300-49399 

930 

430 

330 

230 

3.70 

3J9 

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138 


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Rbb Brottara Unlta£ Bankera 

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MK-I4W 3-58 I *43 t» 



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mu — _ I £76 -I -I Warty 

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United Trad Book Ltd (toraortr 1X0 

1CMtCM8«rtaMn.UliHBi«IHnL 0/1-2590034 
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n0300-UOd»roodea_| 330 830 41018-408 

£2IU8M-iraar— I 839 419 I -I VMrfy 

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120 OmanOdSk tonflon erarfos ,071-3*20000 

Spade Acc. — ™_1 4125 334 I £22 1 MM 
£10.000 and abM I 5378 403 1 4*8 1 MW 

Western Thai High Mores* CtnqaoAcc 
nai4aqca*W.RySBunn.i 18E , 0732Zi*141 

£18300*. 825 80* I 835 Ob 

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Bade raw tacaaWi&aa CHt noa raw a a nMaa d ta 

Me atari (f Manail af haul paM Otar w 

sraa i ywr. X u apoodad feaai Haw. M to n gaia ry 
M aasen intaiaat U andtad to wa occaiaL 


CORPORATE IDENTITY 

DEEP STAMPED 



Send yow company teteftwad • SlicK Pins • Cuff Links - Key Rings 
and logo for a FREE DESIGN ■ Tie Clips • Enamel Badges 




Quality PROMOTIONAL GIFTS 


Manhattan -Windsor 

Steward SL, Birmingham Bl8 7AF, England Fax: 021-454 1497 


Contractor! 
HJA. Oowarmnant 


to 

rant 

r 


LEGAL NOTICES 


SLOUGH ENERGY SUPPLIES LIMITED 
NOTICE UNDER SECTION 6(3) OP THE ELECTRICITY ACT 198? 

Take notice dm Slough Energy Supplies Limited bos applied (to a generating licence, by 

re fe rence to lecacni 4 (1X») and 6(t)^) of the Etoridiy Act 1989. In the to Bowing terms: 

I. Full name of die appHeanifsfc-SJougb Energy Supplies Limited 

Z Address of fee tppUcani(s). orb the case ofa body cwpome, die registered or principal 
office;- 234. Both Road, Slnntft. Berkshire, SU 4EE 

3. Where the applleiat is a company, fee M names of fee current Directors end fee 
company’s reg is t e red number;- Sir Nigd Mobta. Roger WUHam Carey, Derek Robot 
WBmo, Hu^i Liridarer Thomson, David Edmond Frederick Simons, Philip Norman 
Jackson. Registered Number 24745 14. 

4. When a holding or 20 per cent or more ofthe shares ofan applicant Is held by a body 
cotponta or partnetsinp or an tmmanponted enodatioii carrying on a trade or bwiftM! 
with or whhnfa riew to preBt, fee renne(B) and addreasfes) or*e hoider(i) of ouch shares 
shaO be ptovideifc- Slough Estates pic, 234 Bath Road, Slough, Berkshire, SLI 4EE. 

f. Desfaed data Horn which fee Heenee ■ to take effect;- 1st ApriL 19W. 

£ The number of Bcnaanog stations intended to be operated isodor the licence (if gnmed);- 

One 

7. A suffidetadesotiaian adequately specifying dwactaffim proposed location* of three 
sutionL Descriptioiii or proposed locatiore must be suflieient to make dear die nature 
and extent or the pr op osed development;- The existing power station at Edinburgh 
Avcnae, Trading Esia 


£ A deicriplianorhtwihOK stations wilLia each can, bo (toiled or driven;- The aitai 
ewBta of 2 boilen fired by gu/aUteel/refuM tferiwd fW, 3 boflera fired by gMtafl. 
1 gaa-toibiae driven bjr gas/oil and 1 waste-beat boiler (associated wife the gaa-nntrine) 
fitted wife supplementary burners fired by gas/oiL 

9. The dale when my propojftj seaeratog iutims are expeded to to ctimmiHioDctt- 
The station is In coomisska at » fee date or this application. 

10. The capacity and type of each unh within fee generating station (MW)-.- Gaa-tmbira - 
23 MWind Cam Tutbo-ahecdetoreeL respectively, 4, 14, 14, wd 35 MW. 

11. A Staremew of fee extent ftfany) to which fee applicant wosiders il neeesaaty for pgwoa 
under Sdtedule 3 (compulsory acqubMoo of Und etc.) and under Schedule 4 (other 
powers etc.) to fee Act to be gives fereugh the heenee for which be is applying:' The 
eppGcut beteby applies for such points In foil (considering fee same necessary for H» 
operations pursuant to the tieance applied for). 

1Z Derails of any licences held, applied far or being applied for by fee applicant in 
mpeet of fee generation, transmission or supply of electricity;- Second Tier Supply 
Licence granted on 26di March 1991 to supply an area at Slough, extended to ad di t ien al 
premises in England and Waks with eflfect Horn 1st November 199Z and mortified by 
bmxpomtliig the powers ind rights under schedules 3 and 4 of fee Act wife e®** 
from life December 1993. 

Signed for and on behalf of fteappbanf this 28* day of September 1994 

Dr. PN. Jackson 

Note A' map showing fee site of fee station fa lodged at Iba office of fee 

Director <jeoerai of Hectrieliy Regulation at 3<V3 1 Friar Street, Reading. Berkshire. 
*nd fa Available for m apoctfon by fee public between 10 ajn. and 4 pan. on any 
wotting day. 















Mi, i: 



FINANCIAL TIMES TUESDAY OCTOBER 4 1994 


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WORLD STOCK MARKETS 




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930 

907 

3.07B 

1J73 

1212 

010 

673 

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416 

291 

1,035 

345 

959 

484 

3.600 


-9DU0D 1.750 ZS 

—101,270 935 0J3 

-2 994 BOO i* 

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530 -4 702 523 45 

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130 -35022450 120.10 

359 -31 404 3S3 4.7 

45050-1150 850 08.10 85 
435 800 403 75 

277 JO -220 307 221 12 
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-155 7570 5.180 05 
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-7015501,480 U 
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-1 260 17S 44 
+1 813 564 _ 
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-30 1503 1533 ZJ 
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-1 BIB SIS 
+4 970 " 


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Bras lA 
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zM 378 ^; z 8 


(JOB 24.1EO 
IHMn 2.863 


(0Ct3/K0 


MPA 830 
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Cotton 6,760 
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EAsttl 100 
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BSB 170 
JyafesR 376 
tltBlB 1560 
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_ 427 307 3.7 
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— 426 330 2.1 

— 1550 flSO 04 

-9 386 262 34 
-278381 488 07 

+1 737 440 1.1 

— 015 505 04 

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146 

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5050 

510 

135 

140 

148 

240 

228 

567 

101 

64 

84 

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101 

230 

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+1 16410260 15 
+1 178 121 15 

— 105 80 — 

+ JO 4940 3540 13 

+2 233 141 25 

— 17.40 041 — 

-50 5850 45 1 4 

-3 706 510 2.0 
+2 150 100 0.7 

-2 247 145 14 
-1 260 145 14 
_ 258 200 04 
-8 200 10C1 04 
+2 578 287 05 
+250 1 or 68 — 
-4 104 56 14 

+50 102 54.10 14 
-JO 5740 . 41 — 
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+1 244 175 25 
+40 31 18 — 

-.10 2040 12 _ 

+140 129 69 — 


Baynv 413 
B*Mor 070 
BeflKr 28BJ0 

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CotKnP 849 
Cntmztak 30540 
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PLW 407 

740 
478 
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725 

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HokEm 1471 
HnkeP 58S50 
Hrtfc 335 

Hochtf 974 

H-CM 33140 

rtzam 016 

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Kraut BOO 

KHlot 49340 
KHO 12140 
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15301.140 04 
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-50 149 100 44 

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+50 288 208 1.4 
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-1 305 190 2.1 
_ WUD . 130 3.7 
-240 91 73 2.7 

-2 91 72 25 

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470 378 1 4 
387 295 13 
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— SMD0I (Oct 3 / Kronen 




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-1740 485 348 10 
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+1 I486 734 74 
+42 MB 370 34 
+140 40835120 _ 
„ 737 WS)1M 
-190 8.160 5.000 0.7 
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-9 7*943220 35 
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+6 362 90S 64 
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B Comm 3.730 -1MBJB83 3J80 6J 
BNnzAO 1690 -6034851341 — 
Bmm 1.700 -801*501.700 14 

14840 -ISO *11 78 — 

20,750 -260 29450 2DJD0 14 
9450 -230 11*50 8,110 — 
2405 -103,100148* IS 

1,730 -801912 1402 — 

1489 -8 2496 UBS 4.1 

1.130 -22 24101472 — 
1000 -20 2420 1450 4.1 

10.400 -40013274 9,555 _ 
1473 -9 24841488 — 

6,400 -190 7430 W1 1J 
3465 -1154420 2.119 14 
5446 -126 7450 3479 84 
11,100 -26617Ja010A20 6J 
1J2D -28 1485 l iOO 2.1 
3B.0X -950*4.7233^ 09 

4.130 -105 4400 1675 — 
28400 -60030^015300 1 J 

1780 -140 
10J0O -0OQ 
1315 -10 
11385 -125 
6J15 -80 

10,630 -698 

13496 -305 iSS0 11170 14 
1430 -38 14*9 870 „ 

2400 -90 3.140 1415 _ 

4440 -M 8.100 3410 14 
1425 -88 34861470 _ 

22400 -1400 34450 22100 14 
9430 -18511100 8^8 12 
8J30 -16019.184 7150 14 
878 -16 1486 <ag _ 

4.720 -115 6450 *488 11 
4460 -40 7J00 4.146 _ 

3400 -86 4410 2478 _ 


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-2 93 68144 

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-3 680 615 14 
-1 BBS *38 14 
-140 197 15 04 

_ 194 144 04 
—14010850 95 9.7 

-14010660 79 0.7 

—2 439 2BZ 14 
-1 437 200 1.1 
-6 134 01 34 

— 134 02 24 

-140 110 78 7.0 

+7 430.451 7,7. . 
' -'40 M 9840 Of. 
-140 311 137 3.1 

S 312 178 3.1 
-40 660 135 3.1 
-40 715 162 8.1 
-2 372 17 10 

-40 165 1* U 

-140 166 109 1.7 

— 166 102 £4 

-1 168 89 18 

-3 184 125 _ 

-140 188 127 34 
_ 143 9940 11 
+40 141 840 10 
-40 73 3940 _ 

+40 19640 9740 14 
-2 Z33 129 12 
-4 475 351 14 
-1 480 350 14 

-2 144 86 ZJ 

— 110 M 3.1 

-40 122 8150 SJ 
-40 126 70 64 

-40 199 108 V 

-A ITS 105 5.7 


_U20U00 _ 

-6 737 488 _ 

— mo 991 04 
+101460 976 _ 

+20 1,270 B91 ._ 

— 1480 1 470 — 

-28 74+ 66S 14 
+10 1.790 9*0 — 

-2 534 402 1.7 

— 8400 ■» 

— 64*0 4470 04 
-201450 1.020 — 

-ID 1430 1,000 - 

-2 811 500 14 

+10 1400 1440 _ 

+5 829 410 0.0 

— 513 380 14 
-2 870 MO — 

-13 BBS BBS — ... 
-101,8001480 0.8 — 
+11 801 415 — — 

+110 3440 2.410 — — 

-8 1.220 842 4J — 
-2 741 43S — — 

+10 1420 1430 — — 

—70 3400 2400 — 39.1 

— 1J10 1,020 14 — 

-20 011 315 — — 

_ 462 337 14 _ 
-1* 907 041 — — 
+4 603 490 — — 
+2D1J40 1.040 0L5 — 

+5 788 671 1.1 — 
—10 2470 1670 — — 

=B8£S= = 

+40 14EO 1410 _ _ 
+8 904 700 14 — 

+1 898 701 ._ 

-1 625 410 — 

-* see 3*7 _ 
-1014701,420 — 

-10 1.490 ijm as 
+30 2400 1.700 — — 
-10 1410 1J00 — — 

— 1420 BBS — — 

-221420 BOO— — 

—9 910 651 — — 
+3 570 415 — — 
— 1470 093 — — 
+20 2420 1460 — — 
+3 S27 345 — — 

-481480 74* — — 

— 865 B97 14 — 

— 1,120 051 — — 

— 1.710 1480 _ 634 
-3014701430 0.6 — 
+30 *4M 3470 0.6 — 

-3 706 545 14 — 

—6 00 sgg _ 

+1014101430 — — 

+10 1480 1480 — — 

-10 1.100 983 — — 
-90 4.9*0 3.000 — — 

+4 TUB 621 09 — 
+20 2.450 1 420 — — 
-2 603 445 — — 
+30 24602400 — — 

— 738 595 1.1 — 

-3 613 275 — — 

+11 585 360 — — 

+31440 719 — — 
+10 1470 BOO — — 
-110 2400 1460 — — 
+201,100 841 — — 
+2 706 514 _ — 
— B33 785 — — 

— 1440 888 — — 

-2 700 420 04 — 
+31450 936 — — 

-IB 639 440 — — 
-3 734 602 1.1 — 

♦3 640 577 — — 

— 625 438 — — 

-17 7TO 826 — — 
+101,130 793 — — 
+7 560 307 14 — 
-1 950 

+1 14*0 
-60 r — 

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+8 1,1*0 I — — 

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-10 24*0 1J 

-20 1.12 ; 

-10240 1410 — — 
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814 04 — 

— 1408 1483 04 — 

+3 877 804 — 

— USD 1.130 — — 
-1 335 2S0 — — 

-1* 950 740 — — 
+20 2.4801.700 — — 
+20 2.780 2,160 — — 

•17 997 732 _ — 
+* 7*9 BBS _ - 
+15 DBS 646 — 

-4 787 861 — ... 
-12 573 425 1.7 ._ 
—6 523 316 — — 

♦10 USD 1410 — — 

-8 645 400 — — 
-40 3400220 - - 
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+1 655 373 J J — 
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+102460 2J80 _ - 

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+101.230 788 — — 
+10 1440 086 04 — 
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— 24201460 — ._ 

+5 580 *29 — — 

-18 BOO 779 14 — 

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„ 2,910 1J20 14 _ 
-2420 1.700 _ _ 
+20 14201400 _ _ 
+10 1.220 900 1.1 — 
+10 34*0 2460 — — 
+13 *90 711 — — 
+2 BAH 897 — 

+10 862 SS5 — 

+13 732 6S7 — — 
+1 792 582 0.7 — 
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+3 Br!2 480 

— , 593 338 — , — 

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+10 1J70 142O — 

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+B GO* 394 — — 
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+1 600 407 — _ 

+3 316 _ _ 

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— 1430 1.1*0 — — 
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+11 fSBC *53 
+8 BBS 032 
-1 400 301 

+10 1420 1,100 
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+3 409 370 

+0 453 337 

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Tool 
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SundJri 430 
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Sumin 346 
3Uml*tM 869 
SurnOsa S22 
Sumftt 050 
SumRW 970 
SUOIDB 1480 

sunwn 786 

SuwW 14*0 
TDK 4.410 

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TsaoPh 1420 
TUBS 594 
TtonSh 773 
Tmw 1450 
TWoQl 1.180 
TcnSN 866 
Tslta SSI 
TMfca 740 
Tekkas Mi 
ToaBM 747 
Tunw 426 


912 
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3.150 

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1,700 

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606 

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1430 

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812 

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TojnTn 

TuynTB 

Toyoba 

TaaSki 

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YtactuC 

YmataM 

YBsnSec 


YMlKds 

YmTrSn 

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VmnLnd 

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+10 2460 2,-00 

-81.110 776 

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— U0O 1.130 

<■10 1460 1.120 
-11 C36 *50 
+6 810 411 
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_ B23 481 
+10 1490 1,110 
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+40 5,460 5, *90 
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+10 2.290 1420 
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+10 1,100 837 
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— 475 300 
-6 485 288 

-191430 851 
-5 3» 262 
+4 1410 064 
-2 373 *32 
-B 734 811 
-101,120 BIB 
♦10142D1490 
-12 616 674 
+40 14201450 

— 8.028 3,780 

— 749 810 

+30 2410 1430 

+1 72Z 570 
+1 862 679 
— 1450 1.070 
+20 1440 14B0 
+1114*0 85* 
-6 608 *00 
+6 626 618 
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+6 851 988 

+3 655 387 
—2 720 602 
-4 993 870 
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+1 536 326 

-I 587 *15 
-ID 1490 1.120 
+3 5B2 *21 
+10 1,720 1 JEO 

— 2,0201410 
+30 2400 1470 

— 3440 2400 
-10 3.460 2.740 

-7 570 *48 
-1 70S 520 

+10 2.750 2 JOO 
-70 2.140 1420 

— 780 *50 
+4 829 657 

-11 730 640 

— 1450 1.480 

+101460 l.im 

-1 768 STB 

— 878 870 

—20 1 JO0 1400 

— 754 *33 
+18 B05 765 

+8 41* 285 

— 2490 1,900 
+2 696 *21 

+30 24601J30 

-7 754 515 

— 733 524 
+20 3.400 2400 
+20 2J5B 1.7BD 

-2 627 330 
+40 1450 965 
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-11 630 345 

+2 432 285 

3 418 272 
1.600 635 
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+10 1.430 030 
-2 909 820 
-2 1410 502 
+20 245014*0 
-60 1410 1450 
1JSD 800 
14501.110 
1 2490 1450 


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TNT 2J0 
TMCllU 440 
UMmr 8.10 

WMng 740M 
WssKO 643 
WatfTr ZJ7 
wane 4.17 
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+ 2.74 1.91 — 
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-42 842 740 £6 
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+20 520 an 14 
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HONG KONG (pet 3 /HJCS) 


- 10 
3240 
122S 
3710 
39.40 
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2349 

1640 

1040 

4J5 

3840 

8625 

14.1a 

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10.10 

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BEAato 

crayp 

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Cntbr 
ChiEb 
cats 5 
Crtfert 
DFtom 
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IOC 
Hurt 
HSOIIDB 
HsibCn 
Hottnv 
KHILM 
HKChB 144681 
HKSnm 1145 

MCW 3340 
HKHs 24.70 
MUM 19 

hMDIA 19.40 
WTd 1BJ6 
Hop** 745 
HltcMY 3840 
Hysan 2t.7Srt 
JartoM ioao 
JM att 65 
JSvat 3120 
mfiuaisjsifl 
MandOr lojo 
NswUM 2045 
FBDuA 38 
SHKPr 96J5 

ShmuBr 1240 
EluaE *45 
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ShM 8025 
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WMock 1645 
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1760® CAE 
140120 QruMa 
8000 CtnOp 
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1209* CamBSH* 
187730 C am oc o 
301988 CtolMOk 
468063 CanOcc 
472379 CanPwx 
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68478 Cantor 
2830 CanTng 
764 CanBan 
2675 Catonr 
16D12* cracao 
1 07000 CM06 
82758 Co mn co 
690 OnMB 
31SS83 Cants 
386009 Cotcan 
£0745 Coo 
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15000 DentnA 
2000 (Man 
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11700 OomkiT 
22360 Domtar 
1B90 DllPlBAa 
7924 DundBA 

900 Unpin 
811® an B 
3600 emeu 
181 15 EurNev 
2300 FFI 
10700 FUrln 
2100 RUM A 
360 Forts 

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13200 FaOM 
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9570 SnTH 
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21732 SaenC 
19236 SUM 
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83350 Tratrfl 
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158270 THUS* 
43 Terra 
383827 Thomsn 
482108 TorDam 
£o8i60 TraoPx 
116119 Tmsfl 
18150 Tnnac 
8204 mac 
563 UAPA 
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125888 UtdDotn 
1900 UnM 
6817 Vfcstn 
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21280 GeacC 
14732 OiKtsA 
29120 Saras 
372DB UdStr 
123*06 ewic 
2200 HBStA 
03525 Haw«Sd 
35350 H«*»l 
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48657 Labaflx 
611505 LOtowA 
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206870 Modmr 
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-8 970 706 2-1 
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40*67 ADtoE 
8011 ABNS8 
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23806*0 AmBsn 

77® Ansa 
39915 Anna r 


138® BCSuoA 
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263447 BCE 
075® BCE Mb 
190® B8R A 

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2179® RngOS 
4070 ReedSt 
®>B* Ren Ed 
Repoo 

373® Hod 

746® 

52570 
341441 DDyBkC 
1681® RoyOrti 
5® ScoHP 


14% +%l. 

261. +btM, 26b 

-saw 

BW«| 12 

320 310 

+%san, 20b 

43 *2 
tab +bn*% 18 
5% S5% 5% 

10% +% *ioq io>i 
17% sSi 17b 
13% *brn* 13 

?& 

20% +)] 520 20b 

3’a +%g^ 

44+1% |U% 43 

39% — % MO 1 * 30% 
S>2 S6>; 0% 

5b 55% 51] 

ii% —>! 51 S iS 

25 uS 24b 
27% «3b ZT% 

15 SIS 15 
21% +%S2iV 21% 
10% +% ns% 10% 
10% si Ob 10% 
22% +%SS% 22 
9% 99% B 

0 s& ah 
1* -% SI* 13% 
3* +2 34 32 
19% -% S20 19% 
*6% -%W — 
11 -bill 
34% CM 
12% -%D7fl2 . 
6% *% S6% H>. 
475 -■ 480 475 

20% -beii.20% 

& ^ 


48^£lS 

10% — % Sb% 19% 

13% +%in3%i3% 
isb -J.rsJ i9b 
34 34 31 

0% +bSB% 8% 
® 00 58 

4® +fi 465 455 
43b +»] **3b 43 
22b ~b »a% 22 


50578 DmnrtB 

iae® Bucnp 
32420 CamHe 


4® Cnssssrc 
4® GTC 8. 
HBpA JCodU 
427® MtHWI 
180® Name* 

258 DOCStA 
6250 UDIVB 
17EB6 warn 


AFRICA 

SOUTH AFRICA (Dd 3 /R®d) 




absa 10 
AECl 27 

MSod <21 

Amcw! 245 
AngAm 240 
AmaoU 483 
AIXMH 124® 
Banow 30 
BeMm 30.5(1 

BufW oa 

CNAGH 3.90 
DeBCar 10250U 
Ooalto 7.® 
Drtofn 07.75 
El® 13 

Etondfi 34 50 
Enam 36® 
FNuflk 19.75 
FraM 73.75 
Qmca 14.05*0 
OFSA 120 
Harmny 46 
Htbto 24.75 
HfreM 33 
■SCOfl 4.7441 
101 .® 
ioan 

Ktma 76 
NoolQ 71J5 
LSMJ9 ® 
MMOOk 16 
Kodcor 30 
PHaOM 71 
PranGp MO 
Randfn S4® 
Rmt»4>23X0» 
BirnxCn 16 7041 
RiudPI 118 
Snfflon 10J5 

f+rUJiCG 18 
SAflIBw 84X0 
SAMlAm 51 
SLHs 3225 
Son* 143 
7%Oar 405 O 
TngHul 41 
VReeta 477 
WArea 7426 
W Deep 222 
WMdl 62 


• /- Man Im YU 

-jo iofl* am 4 3 

29 17® 2.1 
_ 12a 03X0 oa 

— 255 115 20 

_ 264X0 162X0 1 B 
„ 506 3*4 26 
.... 140 1® IX 

+U5 57 28X0 .. 

-XS 31 20 75 2.7 
SJ 42 5.1 
... 4J0 3X5 IX 
+ .79 12125 97 0.4 

-.10 10JS 6® 2.5 
+4f5 73X0 48 3X 

.. 14J5 7J5 39 
-.50 35 22-50 2.0 

•SO 42 M 4.] 
-J5 23.50 10.75 3.7 

- jb aa 53.75 53 

•10 1435 7.04 1.0 
1® B7.® IX 
.... 47 23.25 . . 

— J6 28.75 IB. 70 X5 
34 16 IX 

+.13 4.® 2.15 1 3 
-® 104 65 1 4 

._ 123 78 IX 

... 84X0 63X0 3X 
+X0 75 41 ?X 

... 1® 79 IX 

♦ J5 22 15 K ... 

— 36 26 1.9 

_ 01 50X0 7.3 

-05 7.7S 4.75 ae 
-ZJ5 5BX0 37 BO M 
-J5 3675 23.50 IX 
_ MXO16X0 IX 
_ 120 72 1 4 

-J5 13X0 8J0 ... 
+ J6 20 15-26 3.1 

+XO104XI 79 1.9 
+1 M 20.30 IX 
__ 37 27 2.4 

_ 1M 102 20 
+J5 H 40 l.S 
__ *5.25 23J5 20 
-1 4® 3® 20 

+U5 74X0 33 4 J 

_,22isa 101 zx 
BO 44X0 3 J 





■ TOKYO- MOOT ACIWM STOCKS; Monday, Oetotoar 3. 


IS -b *13 13 
1994 


moies - PBcn cn Hi papa m m omm m »a 
IMMaort toitoPMn nMyhduatM 
priort. M0BAI1M n Ur 1664. scopl ton 5 
Mnnai (daw. I DooBogt Mpmtod. n £» 

OMtond. n Ex ooff hftto a B rtgto* «a Ex M. 

FT FREE ANNUAL REPORTS SERVICE 
Itau ctn aaBn oto curaranmharanpatf or ag 
nraiiBHrtlf tonMaNn 
FIJ1B5 RraOSl 710 0770 ppoa 2* kum knoutog 
■UkaoMur n OBI 77D H22. ■ (am hn MAH ta 

UK. M +44 ai 770 3770 or m +*4 Si 770 3822 

Bffoa n M sort on *■ nd mMo tm, Mftrt ■ 



Stocks 

Closing 

Change 


Stocks 

Closing 

Change 


Traded 

Prices 

on day 


Traded 

Prices 

on day 

Nippon Steel 

9Jm 

388 

-2 

JAL . 

aim 

735 

2.1m 

NKK - 

3.8m 

287 

-5 

Sumitomo MU Ind 

2.1m 

345 

-5 

Kawasaki Start 

3.7m 

445 

-3 


1.9m 

781 

+19 

Mttsubianl Bee 

3.1m 

713 

+11 

Hitachi _ — 

1.9m 

964 

+8 

Mitsubishi 09 

2.8m 

noo 

+30 

Toshiba «... 

1.8m 

745 



INDICES 


Gawd (3712)77) 


AlOrdnerieaT IfliWI 
AIHM10(V1 m 


QtAAMhflPQIZM 
TlBdBS hds»CfUB1| 


BEL20 fl/l*01) 

Brad 

BDWY» e9fl»Q 


: i: r- 


1 mts+vm) 

Composfcf (1975) 
PHMoS <W/SS 

CMS 

PGAGhi pi/12/BQ) 

Ds uiiarS 

CDpsnhwnSEpn/KJ) 

ffitwLnvavizm 


S8F 250 (31/12/9® 
CAC *031/12/571 


FAZ AMWP1/12A8) 

QMIMHtNBWIrtfflCT 

MXp0rt2«7rt 


Aheia S31/12QQ 
Ho® HD® 

teq SWD01/7/B4) 

Mk 

fiSESma(l67fl 

jumcmuioMa 

Mmd 

saonaHNW} 

My 

ama Comm u (i«3 
MBSoiwsIHrtfflfl 

■NPM 

Wrtto 225 (1E«49) 

JAM 300 n/iwsp 
2d S6dui (VlfiS) 


Get 

3 

Sep 

30 

Stp 

28 


.4001 __ 

Htfl 

-lien 01 

la 

M: 

20534JB4 : 

2037700 2S47DJ0 180 

17150® 

20309 

2028.7 

35306 2340X0 3/2 

1557 JO 

1071X 

1074X 

1072X 

1136.10 3/2 

904® 

30052 

389X4 

400.12 

460X6 272 

39862 

106896 

1070.13 

107225 

Iffjgft i t/2 

ton® 

136194 

137S.11 

1377X1 

1542X6 02 

13B3J4 

M 

348400 

5*4260 

881 WOO 13a 

3800® 

M 

4121X5 

4146X5 

4250X9 W 

329808 

M 

495420 

4982.10 

4809® 23/3 

388900 

M 

2069X6 

2079,79 

2182X9 1/2 

188848 

M 

5088.7 

50960 

508970 30/B 

3001® 

347X3 

348X1 

348X3 

<15.79 272 

347X3 

1BB2X 

18880 

1B82X 

197200 472 

1801.10 

131X2 

1287X9 

1262X8 

■was® 272 

1291X2 

ISSZX3 

I679LZ5 

1378.18 

2368X9 2/2 

UB2X3 

62 

76422 

773X7 

80&Z7 18/S 

757X1 

to 

2177X0 

2293X0 

2466X0 2/5 

2149X0 

to 

anus 

2043X8 

291.11 18« 

H6BX2 

B50.19 

651X8 

B4&24 

1194X8 im 

886X7 

94B2.48 

852124 

970021 1220108 VI 

83004* 

4338.40 

4281X0 

4358X04901X6 27/9 

345400 

48790 

«707 

48724 

612X8 S/I 

440J2 

182*35 

164831 

1851X4 2082.16 2 W1 

116414 

06774 

679.77 

900X7 

6(7.17 IK 

588X8 

10B1X 

1101.0 

max 

131600 IK 



Oct 

3 


S» 

30 


Hfl 


-WM 


low 


US INDICES 


Sep 

30 


&» 

a 


Sep 

28 


1994 

Opt UM 


Sffra Eonmfladaa 
Nat Low 


PC Jtor 1878) 


cbs moaned b* 
C8SAIShr|aldB9 


3/10 


3rt 


2MJ 


Cep- 40 (1/7/86) 

Muwgr 

0®SShN2fl/83 

da® 

l CDna (Z/T/89 

Jd 

BTA (1977) 

Stogmaa 

SESAB-S®ra(2W75 
Sadt AM® 

JSE GoU (2B/B/78) 
JSEML (28W7RI 

MS awa 
KflraBOnpBHftW" 

Spsb 

MBMSEC9Q/12AE) 







1 ultimas 

3843.19 

3R403 

3878.18 

397038 

35B3X5 

3878® 

4122 

« 

Z748.11 

Z717X1 

28B1.17 8/2 

1067X3 2014 





Pl/1) 

(4H) 

(31/1*4) 

{7/7/321 




C4J8 31/1 

408X0 21* 

Hum Bonds 

96.71 

36X8 

97® 

105X1 

86.43 

109177 

54® 

4270 

4£ftt 

4300 



(21/1| 

(ISfil 

(IB/IIK3! 

(1/IOTTJ 

pRR 7 

2685 

270.1 

294X0 31/1 

25700 21* 

TCBOrtOt 

1491X9 

1483X4 

1502X6 

108229 

V483X4 

188228 

12X2 









(W2) 

(26® 

9®B4) 

(6/7/32) 

2077X3 

20663 

2072X3 

M36X4 3/2 

1946X1 n/7 

IHM 

181 J5 

180® 

17175 

227® 

175X5 

25BJS 

TO® 










(3711 

0W» 

(31/8/93) 

fW/32) 

104025 

1044X6 

1048X7 

1211,10 28/2 

nan 21* 

DJ tad. Day's htoh 309100 BBOOM 1 Low 382609 0834.78 ) (Thooratart*) 



Days high 3875J8 {3878.18 ) Lh 383801 (80*700 1 (Aauff*} 



29150 

290834 

2867X6 

3808X7 4/1 

2507X3 9/3 

OtaoMitord awl 
Cmpostto t 

Poon 

462X8 

48224 

464X4 

WM 

438X2 

4S2® 

4J0 









072) 

(4/4i 

CM 0 

(1W33 

28810 

2882X 

29906 

328X0 18/2 

2812® 2M 

kdnttMV 

548.18 

5*7.42 

5SD.18 

680X3 

510X5 

580X3 

162 









(IS® 

(£1MJ 

(199/94 

(2UG/92) 

579X3 

57208 

57721 

841X1 4/1 

■WW UK 

(Mndri 

4112 

4S.18t 

43X1 

48X4 

41® 

46® 

BX4 










(14® 

(4M) 

(28/9199 

(1/10/741 

VOSS* 

24410 

2*260 

2S3TO 7/9 

1740® 14/2 

mSECtmp. 

265X2 

255.15 

256X7 

287.71 

24114 

267.71 

4.48 

6305OV 

62940 

82870 

075700 13* 

8446® 1® 




CU!) 


(2®B9 

(2SMW2) 






/tauUdVai 

458X1 

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45820 

487® 

422X7 

487® 

29X1 

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10SL5D 

1031X5 

160*23 1/TO 

655X7 2* 





V* 

(28® 

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(9/12/72) 





NASDAO tap 

784JB 

759X* 

780.02 

803X3 

88170 

803X1 

54X7 

294X9 

297.46 

gqnffl 

366X1 51/1 

291J3 en 




(iBfiO 

(2V8) 

(18/3/99 

(31/10/72) 


■ RATIOS 


SBC Grnd (1W57) 894.1 D 


20IB 











Sep 30 

Sep 23 

Sep 18 

Yeerago 


T2I1® 

142134 31/1 

1W7J7 1877 

Dow Jones tad. Dfv. Yield 

2.76 

2.76 

zm 

2X5 

905.17 

91322 

109329 31/1 

880.10 13/7 


Sep 28 

Sep 21 







S 6 P tnd. Dtv. ytald 

2X9 

241 

a.37 

2X1 

7191.13 

7101.13 

701.0 3(119 

6194X3 18/3 

S A P M. P/E Tte® 

20.76 

20.64 

20X1 

27X2 





■ STANDARD AND POORS 800 MDKX FUTURSS S500 tffrws Indux 

1*8171 


175323 4/1 


Open Latest 

Change 

rtgh 

Lew Eat voL OpentaL 





Deo 463.16 464.16 

+090 

464J0 

462.80 W.12S 200^05 





Mar - 468X5 

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- 

“ 

423 7J78 

2B825X 

26211X28883® 13/1 

T296UD 2V3 

Jun - 47035 

- 

- 

* 

88 2,104 





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M raafl* 6272 64(60 2/B 


SUM AM 


1969103 1056181 19B1S.12 21GESL8I 13« 

aaa 28&3B mm aui m 

lsmoo 1576X0 157627 T7TZJS 1M 

2236.11 224057 223063 254185 6/7 


inn 

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173BBJ4 4/1 
28822 Afi 
M4R97 4 n 
TS7133 VI 


BantJokSErptM/ra 

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CTQBSunJWH 

gunk 100CB/10/9Q) 1300X2 131893 T330SB 1940,10 31/1 130UB 21* 

Em lto-100(2B*«| 1153.10 11BL33T 11Ea*0 13HJI1 VI 11430# 21* 

Xtunoni (3V12*a 334X7 S3&43 3BD.1B S/l 29328 21/3 

EM«S Bnutfmm 1B8L7B 1BBX3 188.18 WIJB 2Sfi MUB Z1« 

■ »«»•-*« STOCK MDAX FUTURK* (MA7TF) 


■ HW YORK ACT1VH STOCKS ■ TBADOIQ ACTTVTTV 

FfUBf 



Open 

Sett Price Chenge 

High 

Low 

EsL voL Open InL 

Sep 

1877 A 

18532 

-17.B . 

1890* 

1856X1 

Z6X30 

16,071 

Oct 

1884.5 

1680.0 

-4.5 

1890.0 

1867.0 

18X01 

25,405 

Dee 

ian.0 

1888.6 

■AS 

188&0 

187BLD 

121 

378 


TaWoraa 

usw 

BMC 

PhBp Monte 
Gen Mans 
Compaq 


Opai Innraai nomea tar pravie® «tay. 


lURIMMO 
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Nat Med 


traded 

3L71SLX0 

3.708^00 

3X37.400 

3X13,400 

3J05.600 

3.1*3.600 

3,139X00 

2372X00 

2.731X00 

1588,100 


Close 

pries 

B2M 


Chengs 
on day 
+4* 


• VUuns (nflon) 

sap 30 Sep 29 Sep 28 
New YUt SE 291X02 302.110 329X43 
Arm 31459 24X43 21.433 




MASn/U) 

Z71095 

260ffiS_Z77jm 

61H 

+1K 

KYSE 




48» 

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U» 

2X54 

2,860 

32H 

+ra 

Hrn 

1266 

883 

1X97 

2544 


feat 

347 

1289 

7» 

6ft 


Unrangad 

723 

722 

888 

44ft 

+44 

vrnim 

65 

43 

52 

17M 

+M 

Maw Lows 

73 

94 

74 


1 



► PULSE 


Hutchison 

Telecom 


Keeping an eye out for you. 


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mg data lor Uie monitoring 01 targets, ana Die iur mu iiiumnny ui whsih julajhiuk. pm.n.t & .i. b 



40 


FINANCIAL. TIMES TUESDAY OCTOBER 4 1994 


4 jm dose Octobers. 


NEW YORK STOCK EXCHANGE COMPOSITE PRICES 


im 

M* InMt' 

17% ; 12%AAR 

jtViAalubm 

78% 57% AMP 
72% 50% ME 
5 3$AflX 
38% ASA 
3i$ zftttm. 

18% ii 1 ! AHtuPr 
0% 17% ABM tod 
16% 11%AqAnln 
31 22% ACE US * 

12$ 9% ACM Bn In* 1.09110 
10% 7%MMCMpgx 380110 
10% ri 2 ACM E*1 ao » 096 no 
12 6% ACM Gw Sax 1.09127 
11% 8% ACM Man x 1.0813.1 
OACMUpagdi 0.72 37 
8% AoneOv 0 44 3.2 16 124 
6% tons Bod a I8S 

Z3AC0TS4 
5% Mm 



9% 

« 

29% 

13% 


•ns. h at 

Mr N E 100i Htfi 

a«8 3.7Z1 734 13 

atS 1.1 39 491 17% 

1.99 22 ZB 1270 77% 

90 4329 
13 GO 

2.00 3.8 34 723 52 . __ 

17G 2.4 1811Q2BU31$ 31 
OSD 14 II 94 19% 14 

052 U 94 21 20 

27 144 015% 1 

0.44 1.8 Jl 548 2fi 

399 
119 
415 
238 
134 
29 


12% 12% 

» 
51% 51% 
3% 3% 
52% 52% 
31% 


i Pm. 

> Ore» 

A 

-1 

A 


0B) 22 13 3100 27% 27% 27% 
030 25 2 333 10% 10% 10% 


19% 11% Annan 125 322 19% 

19% 16% AosnaEnr 0.48 19 0 233 17% 
84 48%AdMtero 100 5.4 1973 604] 

30011.3 11 WS3 30% 


31% 16%MiMe 
8% 5 AMS ftp 

20 iSAdrahcx 
58% 40% Aegon AM 
95% 44% Mm. 

38% 25% Altoe 
22% 18% Aflmnui 
4 1% Aten Inc 
50% 30$ AkPrCx 
39% 24 AUDnc Fit 

28% 19% Akgaahc 
17 u% Atooaaa x 
29% 21% AfeTcn 
18% 13% Alaska At 
21% 16% Alany tot 
17% 13% ABM 
25% iftAfcQfi 
22% 17% ACuhr A 
30% 25% ARBfl 
27% 19% AtaWl 
65% 49$Ak08 
30% 23% Alatfrewn 
22% 14 AknAl 

24% 17 Atogh Lud 

28% 19% f**f 
22% 13$ Alton Cwix 
28 20Alogai 
4% fi Allon 
27% 17% Alms CRp 
10% 9 Ainu Q 

27% 21% AH Mah 
40% 33% AUSg 
29% 24 AIM Op 
7 4% AfKBtB 
35 21% Aluan 
67% 64%Alcn 
30% 20% Ain Co A 
11% 7% AmGnlncx 096 135 
B% 6% API Praetor 325 34 25 



8% 6% Amnfia 
25% 20ABC3SM 
52% 44 Armteto 

9% 8% AmAflJRx 
31 20% Am tart* 

37% 29% AmBmd 
25% 18% Am Bus Pro 050 3.8 14 
B B% Am Cap Inc 065 65 
20% 16% Am Cap Bd 
23% 19% Am Cap CV 
99% 42% AarCyan 
37$ 27% AraBPw 
33% 25% AmEiprx 
30% 24$Am6enl 
9% 

27% 


aiB 31 9 29 5% 

aiO 0.9115 61 17’ 

1.47 35 12 25 57! 

2.78 6.0 7 3750 

346 14 14 1064 34% 33% 

088 40 14 5707 21 20% 20 

1 8 2% 2 

396 31 25 886 49% 

330 1 0 14 1QS2 24% K24 24 

47 273 27% 2B7g Z? 

1.94 11.7 12 16 16 15% 15% 

8211 28% 29% 28% 

320 12 34 316 16% 16% 16% 

035 2.0 23 556 17% 17% 17% 

030 14 1572 14% 14% 14% 

OS 10 15 290 23% 22% 22% 

328 13 16 226 22% 21% 21% 

344 >3 23 3094 29% 

330 1.1 72 8093 27 

130 13 43 1087 82% 61 _ 

370 23 4 52 2fi7 a 26% 

0.10 36117 524 20 19% ZD 

048 2-2 20 938 21% 21% 21% 

144 31 10 3330 20% 20 20% 

316 38 17 44 20% 20% 20% 

0.44 1.7 16 1148 26 25% 25% 

1 HI IS % II 

1.64 73 22 60 21% 20% 21 

318 1.9 64 3% 9% 9% 

390 40 13 12 22% 22% 22% 

OE7 2.0 7 4180 35 31% 34 

086 £3 19 2927 27 26% 26% 

25 2682 6% 6% 6* 

12 967 31% 31% 31 

140 1.9134 4100 86% 84% . „ 

37 3106 20% <t20% 21% 

456 7% d7% 7% 

15 7% 7% 




306 1.1 13 591 ?4 7% 

352 11 15 189 23% 22% 
040 10 48 3279 47% 46' 
024 £7 48 87, 

310 34 3418034 26% 25 
2.00 54 10 1301 36% 

14 22% _ . 
185 7% 7% 



1 54 94 30 
1.08 54 0 
1.B5 1.9 57 2536 99% 
240 7.7 16 1288 31% 
340 20 1310138 30% 

1.16 40 24 2B45 27% 

5^ Am Go« kit 0 77 125 221 8% 

22 Am Mi Pr 2J0 133 8 461 23% 


63 17% 17% 17% 
18% 19% 19% 



20% 16% Am Hatton » 046 35 11 12 18% 
65% 55%AmHame 192 44 12 4566 80% 
2% 2% Am Hotato 075330 6 20 2% 
81 7 a Amins 346 05 15 4259 89% 


11% 7Am0ppksx 1.00 118 
30 23%AmPramx OB8 14 
34 IBAmPmB 040 14 
8% 7% Am ted B 044 56 
27% 21 AmSnrx 348 14 

22% 18 An MV » 1.25 37 
32% 26 Am IMP 

43% 36% Ante* 

43% 34% Amman he 
17% 11% Ametak 
61% 50% Amoco 
9% 6% Angara 
4% 3%Amretne« 

34% 29% Arasauttl 
4% 2% Among] 

58% 42% AnsduM) 

33% 23% Analog 
29% 24% Angelica 
55% 47% Anffedl 
29% 25% AW PjwPT 
34 19% Antonm 
16% 14% Antnony h 
35% 30 AcoCp 


6 6% ♦.77 

22% 22% -1% 

KiS *3 

4, 

7% 7% 


203 7% . 

136 28% 28% 28% 
9 272 25 24% 24% 

5 23 7% 7% 7% 

7 4153 25% 24% 24% 

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OS £4250 8 2% 2% 

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308 14 X 8% 9% 

OS 1.1 40 538 54 53% 53% 

1.76 30 10 2888 5ft 54% 54% 
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OS 20 21 32* 17% 17 17 

053 £1 310 17016% 17 

14 278 3% 3% 3% 


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7 652 14% 14 14% 

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0.18 13 10 31 14% 14% 14% 

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l» 379 9.1 2 42 8% 8% 6% 
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20% lft MadgomSt 106 £4 8 46 1ft dlft 16% 

20$ lft Moore Cup 394 £0 28 1118 18% 18% 18% 

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0 22 10 19 52 12% 12% 12% 

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ft 

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37% X%MrbB 
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77% 15% Myon Latex 020 08 X2549 X X% 253 



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63 4ft ttaeco 
37$ 2ft McnOi 
30$ 23% Kastea 

lft 10% KMPl 

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18% 13% WHS 
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372 £1 6 39 

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62 91% 82 

59% 58% 99 

33 32% 33 

23% 22$ 2ft 
13% 12$ 13% 

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38% 38% 38% 
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28% 27% 27$ 
21 % 20 $ 20 $ 

5% 5 5 

% % % 
29$ 29% 29% 
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18 17 IB 

43% 43% 43% 
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11% 11% 11% 
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20 % 20 20 % 
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29$ 15% Oektaa 
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102 30 10 8*48 X% 25% 

400 70 2 57 57 

1.88 £3 14 3761 61% 50$ 

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1.12 30 33 3377 34% ‘ 

„ . _ 315 37 13 1227 2ft 

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366 3Q3ntaey£12 £12 0.7 


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20% 13% Pal 
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35% 22$ Part Ben 
6% 4$ ParxDr 
46% 34Partth 
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10% 7%PailatPr 
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56% 45%Pnz0d 
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29% x%mttx 
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82% 47% PMtUr 
35% X%PM1 
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11 10 % 10 $ 
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31% . 

2ft 10% Placer Dow 
27$ lftFhkvRK 
13 BPtoybuyB 
32% 21% Plan Creek 
24% 15% PogoPirm 
35$ a%Ptam 
41% 2S% PIcyMn 
46%37%peyam 
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15% 10% fatecinc 
15$ 11%R»lLgeF 
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4 ft 38$ tall/ 

31$ 24% PrvLB 
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004 00656 1327 26% 2ft 
10 21 8% 8% 
1.72 7.1 12 485 24% 23% 
312 36 27 831 21% 20% 


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10$ 9%ftXrenteY 075 70 


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1.44 3.5 34 3482 uC 41 

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028 10 22 4233 24% 23% 

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194 7% H7 

211 12 11% 
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£28 £0 17 1722 7ft 75% 
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27 % 20 %njCupx 
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a% 14 % Rate 
17 % 3 FhxsneCp 
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114 

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48 

IS 34 14 
4 

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23 21% 21% 21% 
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277 U19 18$ 19 

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67 1ft 19% 15% 
2187 64 63% 63% 

915 44% 44 44 

1362 6% 8% 8% 
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7U1 7% 7% 7% 

1902 36% 35% 38 

ID 31B 318 31B 
478 8% 6% 8% 
1511 30% 30% 30% 
358 43$d4ft 43% 
410 2ft 2D 20% 
449 1ft lft 1ft 
579 25% 24% 24$ 
1984 57% 56% 57% 
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73891121% 27% 21% 
40 2% 2% 2% 
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349 22% 21$ 2)3 


3228 ft 
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441 

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41 




FINANCIAL TIMES TUESDAY OCTOBER 4 1994 


4 pa dose October 3 


NYSE COMPOSITE PRICES 


UM 

MfcD low Sack 


UN Ik 

Mi % t IBS M0 


lam Qua* a. 


Conttaorf torn previous page 

Sft SWWSQp 7 180 6 5% . j, 

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41% 31% SensrarflP 

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16% 14% StaClDSa 1.48 82 TUX) 15* 15ft itf 

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134 a84 75 n 1lft«l% 11? 

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1.12 5.7 11 135 19% 19% 19% 
1 riDO 7 7 7 

IDO 19 11 3224 35% 34% 34% 
33 2554 26% 25% 28 


29%9mW 
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20% 17% Store Pac 
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24% llftSkySna 
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160 07 24 41% 41% 41% 


a 19% SIMM 
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19% 15% SoumiQvy 024 IS 15 
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44% 36% SUNk 
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25% 20% Standi 
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29% 24% SBLFadJft 
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AMEX COMPOSITE PRICES 


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Financial Timas. Europe's Business Newspaper. 


NASDAQ NATIONAL MARKET 4pmdosaOcODer3 


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42 


WORLD STOCK MARKETS 


FINANCIAL TIMES 


Tuesday October 4 1994 


AMERICA 


EUROPE 


Dow eases as 
NAPM data 
set the tone 


Wall Street 


OS stocks were easier inclined 
yesterday morning as Investors 
reacted to further evidence of a 
resilient economy, unites 
Frank McGurty in New York. 

By 1pm, the Dow Jones 
Industrial Average was off 2.36 
at 3,840.83, while the more 
broadly based Standard & 
Poor's 500 was down 1.74 at 
460.97. 

The Nasdaq composite was 
3.30 weaker at 760.99, while the 
American SE composite 
receded 0.30 to 458.51. 

Volume on the Big Board 
was unimpressive, with just 
143m shares traded by early 
afternoon. Declining issues 
outnumbered advances by 
1,264 to 725. 

The negative tone of trading 
in the first session of the new 
quarter was set by the monthly 
survey conducted by the 
National Association of Pur- 
chasing Management. The 
trade group found that busi- 
ness activity continued to 
accelerate in September. Its 
overall index climb ed to 58.2 
per cent, from 56.2 per cent in 
the previous month. 

In an even more worrying 
development for the inflation- 
sensitive bond market, the 
prices index climbed to a six- 
year high while the employ- 
ment component of the survey 
reached its strongest level 
since December 1988. 

As a consequence, Trea- 
suries backtracked after pick- 
ing up some early ground. 
Those gains were struck after 
the dollar firmed on news of a 
partial accord reached by US 
and Japanese trade negotiators 
at the weekend. 

However, the relief on trade 
could not offset the anxieties 
over monetary policy. For most 
of the morning, stories closely 
followed the declines in bonds, 
as investors in both markets 
saw the day's economic data as 


MARKETS IN PERSPECTIVE 


dtoiga to local money t 

% eSanga 

■tofioat 

Kdwnso 

(oUSSt 


1M 

4 fete 

1 Yaor 

Mol 

IBM 

Bfeft Of 

IBM 

ant of 
IBM 

Austria .... 

-1.91 

-6.61 

+3.61 

-10.77 

-6.52 

-086 

Belgium ... 

-1.36 

-7.65 

+1.70 

-10.61 

-5.02 

+184 

Denmark — _... 

-0.65 

-3.77 

+0.58 

-980 

-4.89 

+188 

Finland 

+188 

-3.60 

+35.50 

+2282 

+36.55 

+4584 

France — 

-2.05 

-6.77 

-886 

-15.71 

-1181 

-6.00 

Germany — 

-3-50 

-886 

+2.96 

-12.11 

-7.71 

-1.63 

Ireland ,. — 

-1.36 

-6.34 

+12.43 

+0.03 

+3.78 

♦ia 60 

Italy 

+1.37 

-0.30 

+11.96 

+11.44 

+14.72 

+2289 

Netherlands 

-an 

-4.54 

+7.53 

-5.85 

-188 

+582 

Nonway ....... — ... 

+a59 

-6.76 

+9.73 

-1.78 

+2.10 

+8.83 

Spain 

-0.64 

-1.96 

-0.76 

-1089 

-6.55 

-089 

Sweden 

-185 

-4.41 

+7.96 

+185 

+586 

+1284 

Switzerland 

-2.62 

-4.65 

+4.32 

-12.47 

-580 

+0.95 

UK 

-a 30 

-6.41 

-0.45 

-11.19 

-11.19 

-584 

EUROPE 

-1.14 

-550 

+186 

-984 

-094 

-080 

Australia 

-0.06 

-482 

+4.12 

-686 

-4.13 

+2.19 

Hong Kong ......... 

-182 

-3.02 

+28.43 

-19.85 

-24.81 

-19.85 

Japan 

■0.44 

-3.63 

-288 

+8.76 

+15.05 

+22.53 

Malaysia 

-3.83 

-0.62 

+35.15 

-9.96 

-11.25 

-5.40 

New Zealand 

•0.41 

-4.04 

+10.96 

-181 

-084 

+6.33 

Singapore 

+1.97 

+1.71 

+16-80 

-584 

-382 

+2.84 

Canada ...» _.. 

-0.73 

+0.10 

+1482 

+380 

-4.44 

+1.86 

USA 

+0.73 

-1.71 

+0.66 

-0.52 

-6.67 

-082 

Moxico 

-3.94 

+0.96 

+46.35 

+3.74 

-11.11 

-584 

South Africa 

-1.44 

-3.84 

+55.53 

+16.11 

+9.44 

+16.65 

WORLD INDEX 

•080 

-386 

+1.67 

-1.16 

-1.40 

+5.10 


t BMMl on Sapfenabxr 30. ISM CopjrloN, The Brand* T*aae Unfed. Oobfanan. Sacha 0 Co, 
■nd NafWaat Saowttaa United. 

Mexico and Malaysia were the strongest performers 
among World Index constituents in the thira quarter of 
1994, each rising by 28.5 per cent; but last week they put 
on the weakest showing with falls of 3.9 and 3.8 per cent 
respectively, and in Malysia’s case, profit-taking was the 
main reason. In Mexico, the biggest single depressant 
was the assassination of Mr Jose Francisco Ruiz Mat- 
thieu, a senior ruling party official; this, says For- 
eign & Colonial Emerging Markets, has swung investor 
focus back to the issue of internal political reforms. 
Senior bourses in continental Europe shuddered as poor 
half-year results from Alcatel Alsthom threatened the 
theory that cyclical stocks still had something to offer. 
Germany, with a heavy cyclicals influence, led the way 
down with a fall of 3.5 per cent in local curency terms. 


French stocks in focus move against the trend 


more evidence to support sus- 
picions that the Federal 
Reserve was poised to lift inter- 
est rates for the sixth time this 
year. 

Near midday, the Dow indus- 
trials demonstrated a measure 
of independence. The index's 
min or comeback was mostly a 
reflection of the continued 
strength of Alcoa. The stock, 
which added $1% to $85%, has 
climbed steadily in recent 
weeks in parallel with raw 
material prices. 

In semiconductors. Micron 
Technology dropped $l'/« to 
$33% and Texas Instruments 
gave back $1% to $67%. The 
setbacks followed the release 
of the third-quarter results of 
Advanced Micro Devices. AMD 
declined $1% to $28% amid 
apparent disappointment with 
net income of 86 cents a share, 
a 41 per cent improvement on 
the 1993 period. 

On the Nasdaq, CareNetwork 
surged $13% to $24 after 
Humana agreed to acquire the 
Milwaukee-based health main- 
tenance organisation in a deal 
valued at $123m. 

Information America jumped 
$1% to $5% on an agreement to 
merge with the privately held 
West Publishing. 

Canada 

Toronto was weaker at noon in 
response to lower precious 
metals issues and the US 
National Association of Pur- 
chasing Management data. 

The TSE 300 composite Index 
fell 11.89 at midday to 4342.29 
in volume of 19.1m shar es. 

Gold prices, under pressure 
from the strength of the dollar 
and Friday’s weaker closing, 
picked up from early lows, but 
at noon the precious metals 
index was still 51.42 lower at 
10,905.78. 

Among actively traded 
issues. Laidlaw “B" was C$% 
higher at ($10% but Rank of 
Montreal lost C$% at C$23%. 


The NAPM index of manu- 
facturing activity in the US 
gave European bond markets 
an uncomfortable afternoon, 
confirming an established 
mood of concern, some pessi- 
mism and a general lack of 
appetite for investment in most 
equity markets, unites Our 
Markets Staff. 

PARIS was already con- 
cerned with the lack of scope 
for further Interest rate reduc- 
tions, and with worries such as 
the future of the politicians 
Messrs Longuet and Leotard, 
said Mr Michael Woodcock. 
French market analyst at 
Nikko Europe, as the CAC 40 
index fell a further 26.42 to a 
new 1994 low of 1R5283. 

However, the stocks of the 
day mostly ran against the 
trend. In this category. Credit 
Lyonnais certificates delivered 
a rebound of FFr42 or 108 per 
cent to FFr430 after a high of 
FFr462, and a meeting last Fri- 
day between the chairman of 
the bank, Mr Jean Peyrelevade, 
and marke t analysts. The lat- 
ter said Mr Peyrelevade had 
been more positive about 
promised state support 

Thomson-CSF, which owns 
19 per cent of Credit Lyonnais, 
rose FFr8 or 58 per cent to 
FFr147. At the same time, 
Chargeurs, the textiles group 


Crtfdit Lyonnais 

Share price (FFr) ■ 

900 



SouccFrQvMl 

and former CAC 40 constituent 
which -owns 17.5 per cent of 
BSkyB, shot up FFr77 or 68 
per cent to FFriJ297 on the lat- 
ter’s flotation plans. 

On the downside, LVMH con- 
tinued its correction, losing 
FFr80 at FFr842 as trading in 
its Au Bon Marche. Finandfere 
Agache and Arnault et Asso- 
ci€s subsidiaries was 
suspended ahead of an 
announcement; and Pernod, 
with results due after hours, 
dropped FFr12 to FFr291. 

ZURICH'S attention 
remained glued to the forth- 
coming battle between UBS 
and Mr Martin Ebner’s BE 


Bank, and the SMI index , also 
taking its lead from lower 
bourses elsewhere, fell 34.9 or 
L4 per cent to 2,4998. 

UBS bearers declined SFr30 
to SFrl.170 and the registered 
shar es, which have five times 
the voting power of the bear- 
ers, slipped SFr20 to SFT283. 
Late in the day, the Zurich 
prosecutor’s office said it 
would launch a preliminary 
inquiry Into the possibility of 
insider trading in UBS shares 
before the hank announced its 
plans for a capital restructur- 
ing on Friday. 

BE Vision, the investment 
company controlled by BE 
Bank, dipped SFrlOO to 
SFrl800. Other so called BE 
shares, in which BE Vision has 
substantial holdings, extended 
Friday's losses. Roche certifi- 
cates gave up SFrl55 to 
SFr5,630 and Zurich Insurance 
was SFr37 lower at SFrl ,150. 

Swiss Re registered picked 
up SFrlS to SFr644 in contin- 
ued response to its decision 
to sell its direct insurance 

holding s 

Bearers in El via, suspended 
an Friday on the news that the 
group was being sold to Ger- 
many’s Allianz, rocketed 
SFrl, 555 or 80.1 per cent to 
SFrS.475. Allianz has commit- 
ted itself to offering Elvia’s 


I FT -SE Acl 

:uanes Sha 

ire Indices 



Oct 3 

Houly chanees 

Opaa 

iun 

THE EUROPEAN SERIES 
11.30 1200 1200 1450 1&00 Obso 

FT-SE Biteack 100 
FT-SE Bnkadc 2D0 

131 AS 
1301-38 

131202 

1369.32 

131187 131207 1310.15 
I3B1J1 1360.10 1358.82 

1311-00 

1389.48 

131124 1309X2 
138035 1357.88 



Sap 30 

Sap S Sep 28 

SfiP 27 

Sep 26 

FT-SE Emfcadi 100 
FT-SE Ekratm* 200 


131493 

1359J8 

133058 134681 

1375.17 138674 

134034 

138139 

1333.05 

1380.99 


Bzm looa carom; wnr »oo - isnst a o ■ uau 2 inttv too - uua ax ■ issaia t am 


minority shareholders a maxi- 
mum price of SFr3,915 per 
bearer share. 

MILAN saw selling acceler- 
ate as the day progressed on 
the view that with the budget 
proposals now published, and a 
largely positive string of six- 
month corporate announce- 
ments now concluded, all the 
good news was now in the mar- 
ket, and political clouds could 
soon be gathering. 

The Comit index foil 12.03 or 
18 per cent to 667.74 following 
last Friday's 18 per cent drop. 

Fiat led the decline with a 
L189 fall to L6.480. James 
Capel, which upgraded the 
stock after last week’s substan- 
tially better than expected half- 
year results, commented that 
in spite of the strong perfor- 
mance of the shares this year - 
up by almost 40 per cent 
against the Comit index — the 
price appeared to be well 


underpinned by fundamentals 
and could move ahead in the 
short term as analysts raised 
their forecasts. 

Banks continued to be hit by 
continuing gloom over their 
poor first-half figures. Banco di 
Napoli fell L182 or 118 per cent 
to Li.498, further hurt by spec- 
ulation that it might be about 
to launch a capital increase. 
BCI lost L156 at L3.730 and 
Amhrovento was 1819 down at 
L4,166. 

AMSTERDAM was lower on 
bond market weakness and 
London’s performance and the 
AEX index shed 3.49 to 398.78. 

Scattered issues bucked the 
trend, however, with Royal 
Dutch Petroleum up 80 cents to 
FI 188. helped by the firmer 
dollar. 

ENP BT closed 80 cents 
down at FI 5180 and brokers 
expected it to come under fur- 
ther pressure today following 


news after the market closed 
that a proposed merger with 
Ivan Allen, of the US, was not 
going ahead. 

MADRID’S bond and equity 
markets did better than most, 
the general index for the latter 
falling 2.77 to 294.69. Dealers 
said investors were very ner- 
vous about trends in other 
bond markets, and concerned 
that the real time Ibex equity 
index would break positively 
downwards through support at 
3,125. after which they thought 
it mi gh t fall to 3,000. As it was, 
the Ibex bottomed at 3,121.41 
before recovering to 3.149.08. 

TEL AVIV surrendered 1.8 
per cent on profit-taking but 
this meant little after two days 
of gains, especially Sunday’s 3 
per cent advance following the 
announcement of a partial lift- 
ing of the Arab boycott by six 
Gulf countries. Turnover was 
low at ShklSlm as the Mish- 
fainim index finished 3.41 off 
at 189.71. 

ISTANBUL foil 1.7 per cent 
on missing signatures from 
three government ministers of 
Turkey’s draft privatisation 
bilL The index dropped 45186 
to 26,373.67 after a gain of 4.1 
per cent last week. 

Written and edited by William 
Cochrane and Michael Morgan 


unargeurs, me textiles group ana mt Martin toners aa tea ltsen to onenng uma s price appeared to De wen tner pressure toaay iouowmg uoenmne ana Nucnaw Morgan 

ASIA PACIFIC 

Telecom pressures Nikkei as Taipei remains at high 

month. Payments for the stock up T$2 to T$105 and China Wales keeping most large KUALA LUMPUR finis] 

Tokyo by investors who won the lot- trxsces rebased Development rose T$2 to T$153. investors away. The All Ordi- lower after a volatile sess 

tery for the public offering are 12 0 HONG KONG’S Hang Seng naries index closed 28 firmer which saw prices moving r 


A further and accelerated 
decline in Japan Telecom 
depressed market sentiment 
and. in spite of a moderate rise 
for the Nikkei 225 average, 
trading volume registered its 
third lowest figure this year, 
writes Emiko Terazono in 
Tokyo. 

The index ended 8682 firmer 
at 19,650.03 after a high for the 
day of 19872.53 in the morning 
session and a low of 1987L01 
in the afternoon. Share prices 
improved on a higher futures 
market, but most investors 
remained inactive. 

Volume totalled 158m shares, 
against 225m. Dealers and pub- 
lic funds held the sidelines, 
and corporate investors were 
also absent. Many brokers, 
hurt by the low trading activ- 
ity, are hoping for some activ- 
ity over the next few weeks. 
Mr Yasuo Ueki at Nikko Secu- 
rities commented; “It could be 
the calm before the storm. It is 
time share prices went either 
up or down.” 

The Topix index gained 2.11 
at 1879.00, while the Nikkei 300 
edged up 0.56 to 288.95, but 
declining issues led rises by 
471 to 428. with 248 stocks 
unchanged. In London the ISE/ 
Nikkei 50 index was 0.67 firmer 
at 1896.63. 

The decline of Japan Tele- 
com to a new low since its list- 
ing on September 6 depressed 
investor confidence. The stock 
was finally Y110.000 off at 
Y3.87m after falling to a low 
ol Y3.83m. 

The stock’s performance is 
crucial to investor confidence 
ahead of the listing of Japan 
Tobacco shares later this 


month. Payments for the stock 
by investors who won the lot- 
tery for the public offering are 
due to be made a week from 
today; but traders expect many 
investors to waive the pur- 
chase if Japan Telecom keeps 
on falling 

Japan Airlines slipped Y12 to 
Y735 following reports that the 
company win record Y45bn in 
unrealised losses in the first 
half due to forward exchange 
rate contracts. 

Automobile shares gained 
ground on strong car sales. 
The Japan Automobile Dealers 
Association said car sales in 
September rose by 6.4 per cent 
from a year earlier, their 
fourth consecutive gain. 
Toyota Motor advanced Y20 to 
Y2.050 and Honda Motor added 
Y20 at Y1870. 

Mitsubishi Electric rose Yll 
to Y713 after an upward revi- 
sion of its earnings estimate 
for the current year, while Mit- 
subishi Oil put on Y30 at 
Y1.100 on projections of dou- 
bled profits from a year earlier. 

Former state owned compa- 
nies were lower. Nippon Tele- 
graph and Telephone receded 
Y9.000 to Y871.000 and East 
Japan Railway Y7.000 to 
Y478.000. 

In Osaka, the OSE average 
moved up 1IJL5 to 2189688 in 
volume of 19m shares. 

Roundup 



Financials drew interest 
after four major banks raised 
interest rates in response to 
the central bank’s tight grip on 
liquidity since July. ICBC was 


up T$2 to T$105 and China 
Development rose T$2 to T$153. 

HONG KONG’s Hang Seng 
index fen below 9800 at the 
dose, with investors depressed 
by the outlook for interest 
rates and the state of the local 
property market 

The index lost 28.75 at 
9,492.49 in turnover that dwin- 
dled to ffltja aihn, the lightest 
since July 4, and compared 
with HK$482bn on Friday. 

Cheung Kong declined 50 
cents to HES37.10 and Sun 
Hung Kai Properties dipped 75 
cents to HK$56.75. 

SINGAPORE saw sustained 
buying by foreign fimds which 
took the Straits Times Indus- 
trial index 15.89 higher to 
284882. 

SYDNEY was mixed in very 
low volume, with the Labour 
Day holiday in New South 


Wales keeping most large 
investors away. The All Ordi- 
naries index closed 28 firmer 
at 2,0308. 

Trading activity was domi- 
nated by News Corp, 9 cents 
lower at A$8.47 following its 
announcement of an issue of 
limited voting preference 
shares. 

The resources sector was 
aided late in the session by a 
strong performance from the 
oil and gas sector as shares in 
Woodside Petroleum moved 
ahead 20 cents to A$580 after 
it reported a hydrocarbon find 
in the Dampier sub-basin, off- 
shore western Australia. 

WELLINGTON saw late 
demand for Telecom after an 
otherwise quiet day. The 
NZSE-40 Capital index rose 
10.93 to 2,07783 as Telecom 
picked up 8 cents to NZ$585. 


KUALA LUMPUR finished 
lower after a volatile session 
which saw prices moving in a 
wide range. The composite 
index closed 2.41 off at the 
day’s low of 1.127.35, down 
from a high of 1,136.63. 

MANILA edged higher on 
bargain hunting among issues 
newly included in the index, 
and other second liners. 

The composite index firmed 
7.66 to 2.915.9 as volume 
increased to 2.7bn shares. 

BOMBAY returned to posi- 
tive territory on sustained 
speculative buying after last 
week's downturn, which was 
triggered by the outbreak of 
plague. The 30-share BSE index 
closed 58.46 or 1.6 per cent v 
ahead at 4839.46. The market 
lost 175 points last week fol- 
lowing the Surat plague, which 
had claime d 50 lives. 


Pacific Rim markets were sub- 
ject to mixed influences. Seoul 
was closed for a public holiday. 

TAIPEI posted a second 
straight four-year high in 
active trading, led by finan- 
cials and foods. The weighted 
index climbed 48.63 to 7483.75 
in turnover of TS64.l6bn. 


Golds face testing week 


Selected industrials attracted 
interest in otherwise lacklus- 
tre Johannesburg trading, 
with gold shares expected to 
face a testing week if bullion 
fails to rally. 

The overall index was 4 
softer at 5,672, industrials 
added II at 6890 and golds 
receded 17 to 2,425. 

De Beers moved ahead 75 
cents to R10280 as its climb 
continued, but Anglos finished 


unchanged at R240 and Gen- 
cor dipped 10 cents to R14.65. 

Barlows was R1.60 better at 
R3085 after announcing plans 
for a S75m bond issue to inter- 
national investors and saying 
tbat it expected strong full- 
year earnings growth. 

Group Five and Group Five 
Holdings reversed Friday's 
steady gains, relinquishing 20 
cents and 15 cents at R4.80 
and R4.60 respectively. 


IfT-ACTUAJRIES WORLD INDICES 













JoWlv compiled by The Financial Times Lid.. 

Goldman. Sachs & Co. ana NatWesi Securities Ud. in conjunction with tne msonfla at Actuaries and the Faculty at Actuates 

NATIONAL AND 

















REGIONAL MARKETS 



- FRIDAY SEPTEMBER 90 1994 — 



THURSDAY SEPTEMBER 29 1BB4 

—— DOLLAR INDEX 

Fains It parentheses 

US 

Day's 

Pound 



Local 

Local 

Gross 

US 

Poind 



Local 



Vm> 

show number o f linos 

Dollar 

Change 

Sterling 

Yen 

DM 

Oarency 

% eng 

Dhr. 

Deter 

Sterling 

Yen 

DM Currency 52 week 52 week 


of stock. 

Index 

“6 

Index 

Index 

index 

Index 

an day 

Yield 

frxto* 

Index 

Index 

Index 

index 

High 

Low 

tepprox) 

Australia (69) 

... 17083 

-0.4 

16032 

106.63 

137.56 

153.28 

-OJ 

382 

171.10 

16051 

108.58 

137.58 

153.76 

189.16 

142.60 

14250 

Austria (16) 

.. 184 32 

-0.3 

173.28 

115.31 

148.67 

14060 

aa 

1 08 

184.B3 

173-33 

115.08 

148J7 

14054 

19659 

167.46 

169.48 

Belgium (37) 

....134.66 

-as 

154.80 

103.01 

132.81 

129.62 

0.1 

4.25 

16552 

15434 

102-89 

132.81 

• 12051 

177.04 

146.42 

146.42 

Canada |T031...... 

138.31 

-0.1 

130.03 

86.53 

111.56 

134.35 

-03 

2-50 

13052 

129 20 

8655 

11154 

134.® 

14551 

12054 

121.72 

DenmoiM331. 

... 250.62 

0.1 

235.61 

156.79 

202.15 

207.45 

0.4 

1.43 

250.42 

234.03 

155-33 

20159 

20069 

275.79 

229.78 

23051 

Pin and £41. 

17981 

0.5 

168.57 

112.18 

144 63 

183.00 

0.3 

0.77 

178.37 

16758 

111.07 

14357 

182.39 

161.70 

11004 

11073 

France (97) 

...185.41 

-0.1 

155.51 

103.48 

133.42 

137.37 

0.3 

3-22 

165.51 

15550 

103.05 

133.03 

13658 

18557 

15954 

167.68 

Germany (58) — 

.... 137.96 

-i.e 

129.70 

8641 

111-28 

111.28 

-1.3 

1.85 

14026 

131.53 

8753 

112.74 

112.74 

15040 

12753 

127.03 

Hong Kang (561 .— 

....332.19 

-1.6 

388.70 

245.35 

316J4 

389 07 

-1.8 

3.12 

399.17 

37452 

24865 

320.86 

39651 

60656 

30003 

306.07 

Ireland (14) 

...204.84 

-0.9 

192.58 

128.15 

165.23 

185.25 

-0.6 

345 

208.63 

183.77 

128.66 

166.09 

18858 

21650 

167.75 

107,75 

Italy (59) 

.... 83.88 

-2.0 

78.85 

52.47 

07.66 

97 72 

-1.6 

1.58 

8560 

8057 

53.30 

68.81 

99.35 

97.78 

67.88 

7357 

Japan (4691 

....159.58 

-0.4 

15003 

99.84 

128.72 

99.84 

00 

0.77 

16058 

15031 

BO 80 

12084 

99.80 

170.10 

12454 

15254 

Malaysia (97) — 

..J59.S7 

-0.4 

526.06 

35007 

451 JS 

552.61 

-0.5 

1.52 

562.07 

527.08 

34956 

45150 


62153 

417.16 

417.16 

Moots (19) 

.. 2262 50 

-1.7 

2126.98 

Ul 

h 

1824 94 

6411.81 

-1.8 

152 

2302.16 

215850 

1433.46 

1860.46 

8561.77 

2647.08 

166153 

168153 

Motherland (27) 

...-209.S1 

-0.6 

196.96 

131.07 

168.00 

166.17 

-0.3 

3.47 

210.73 

197.61 

13152 

16959 

166.61 

21019 

18450 

18450 

New Zealand (141 — 

72.21 

-aa 

67.89 

45.18 

58.25 

63 68 

-0.6 

3.75 

72.77 

6854 

+5-31 

68.40 

64.03 

77.69 

5022 

6950 

Norway (23) ....... 

.... 18550 

-0.7 

TB3.78 

122.30 

157.65 

180.12 

-0.4 

1.04 

19004 

104.58 

12266 

15652 

1805E 

211.74 

16552 

189.55 

Singapore (44) 

...37757 

-aa 

355.34 

236.46 

304 86 

258.22 

-1.0 

1.63 

38087 

35755 

23752 

30653 

28080 

38057 

29456 

29013 

South Afnca (59) - 

...311.63 

-04 

232.96 

194.96 

2S1J6 

290.34 

08 

221 

312.87 

293.39 

18451 

251.48 

28058 

31454 

202.72 

20751 

Spam tog 

... 138 81 

-as 

130.50 

86.84 

111 97 

135.21 

-0.5 

425 

140.07 

131.35 

6752 

1 12.59 

13593 

155.79 

12858 

13087 

Sweden 061 ...821.78 

-02 

206.50 

138.75 

178.69 

245.59 

-0.2 

1.63 

22258 

208.46 

138-41 

178.68 

248.16 

23155 

175.63 

189.96 

SwtoBrtnno (47) ... 

....161 G6 

-1.3 

151.97 

101.13 

13039 

129.06 

-09 

1.38 

163.63 

153.63 

102.01 

131.68 

13058 

17656 

13955 

13955 

united Kingdom (2<M>— .... 

.... 144.11 

0.7 

182.48 

121.44 

156.58 

182 48 

0.9 

4.17 

192.79 

190.79 

120.05 

154.97 

18079 

21456 

181.11 

18450 

USA (5161... 

...188.83 

0.1 

177.61 

118.19 

15239 

188.93 

0.1 

2.88 

188.77 

177.01 

117.54 

151.73 

18077 

19004 

178.95 

187.70 

EUROPE (717) 

... 168.22 

-0.3 

158.14 

105.24 

13569 

14861 

oo 

313 

168.76 

15855 

105.08 

135.65 

14854 

17858 

104.78 

156.15 

No«lefll6) - 

216.63 

-0.1 

203.70 

135 56 

174 76 

204.92 

0.0 

1J5 

21660 

20350 

135.00 

17457 

20454 

222.18 

173.19 

17957 

Pacific Basin (748) 

169.30 

-as 

159.17 

105 92 

136.56 

110.78 

-0.1 

1.03 

170.19 

159.60 

10557 

13650 

110.93 

17088 

134.78 

15757 

Euro-Paafte (1485) ...... 

..168.72 

-0 4 

158.82 

105.55 

13809 

12008 

-01 

125 

169.46 

156.91 

105,52 

13551 

126.19 

175.14 

143.68 

168.76 

North America (819) 

...185.76 

o.i 

174.65 

116422 

149.85 

185.15 

a.i 

zee 

185.64 

174.08 

1 15.S9 

14952 

105.02 

192.73 

175.87 

183.62 

Europe Ex. UK (Sl3) 

150.64 

-as 

141.62 

94.24 

121.51 

128.82 

-06 

2.52 

152.01 

142.55 

94.65 

122.19 

129.57 

156.12 

13554 

137.64 

Pacific Ex. Japan (279) — 

,_26336 

-1.0 

247-53 

164.76 

212.43 

234.40 

-1.0 

2.77 

265.91 

249.36 

16557 

213.74 

230.89 

29651 

20062 

206.62 

World Ex. US (164S) — 

....170.71 

-0.5 

16048 

10880 

137 69 

129.92 

-ai 

1.96 

171.47 

16080 

106.77 

13753 

13004 

17065 

14558 

157.05 

World Ex. UK (1957) 

._ 173.94 


163.52 

10682 

14030 

144.84 

-01 

2.08 

174.58 

163.69 

108.59 

14031 

14453 

17059 

15556 

164^7 

WotM Ex. So. Af. (2102) ... 

....174.86 

-03 

164.39 

109.39 

141.04 

147 06 

oo 

228 

175.31 

164.40 

109.16 

14092 

147.12 

18003 

15854 

166.10 

World Ex. Japan (1692) 

—18035 


17019 

11058 

150.31 

176.45 

-ai 

zsz 

186.68 

175.07 

11655 

15006 

17855 

18550 

175.80 

175.60 

The World Indoi (2181) — ... 

._ 175.73 

-0.3 

165.20 

109.94 

141.74 

148.12 

0.0 

2.28 

176.18 

16551 

109.70 

141.62 

14016 

18050 

15855 

16858 


CcovnsN. Tho AbkM TVtim Limited. Oohknan. Sadis and Co. and N&Wmi Secuntes Unted. 1M7 

BoMHusnl ch eng ae wWi affect HhMC: AtHfion: San Fo Pacific Odd (USAA Carafldiom e hw ige I’lD/St hang iftnnya Onoda CanM Co n CNdiliu Onodi Camara Cap (Jopaf. i/tf mt a&a 
iranUtaHs to Mi Mm 


Introducing the J.P. Morgan Commodity Index 

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But using the wrong commodity index can cloud 
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Thai’s why it makes sense to follow the new stan- 
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Based on historical da la. JPMCI returns track 
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Expsaw Return 







The J PMC! can significantly enhance your risk/relurn 
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JP Morgan 


T? - C ’**“r fete-* nJ 



I 


★ 

I FINANCIAL TIMES SURVEY 


WORLD CAR INDUSTRY 



Opel/Vauxhafl TTgra: sot to enter a new niche m Europe 


T he US will overtake 
Japan this year to 
become the world's top 
vehicle producing nation for 
the first time since 1979. The 
existing order is hanging rap- 
idly, and the world's car- 
makers are having to cope 
with an era of unprecedented 
upheaval, as the anto industry 
becomes a truly global busi- 
ness. 

Japanese vehicle output has 
declined under the impact of 
three successive years of reces- 
sion in the domestic market, 
falling from 13.5m in 1990 to 
lL2m last year. 

At the same time US produc- 
tion has grown from 8 Am In 
1991 to 10.9m last year in 
response to the strong recovery 
In North American new vehicle 
demand. The diverging trends 
have continued this year. 

Alongside the chang in g for- 
tunes of the two leading produ- 
cing countries, however, 
another important develop- 
ment Is taking place. 

Japanese vehicle manufac- 
turers have transferred more 
and more production out of 
Japan during the past decade, 
first to North America, and 
more recently to Europe and to 
south-east Asia, contributing 
to a significant shift of produc- 
tion capacity. The new ascen- 
dancy of the US as a vehicle 
production force owes much to 
the Japanese vehicle makers 
themselves. 

The Big Three US car pro- 
ducers General Motors, Ford 
and Chrysler have themselves 
restructured in drastic fashion 
in recent years to regain world 
competitiveness. Their for- 
tunes have revived, but their 
domestic hegemony is under 
challenge. About 15 per cent of 
US vehicle production is now 
coming from Japanese car- 
makers’ plants (either wholly- 
owned or in joint ventures) 
compared with none little more 
than a decade ago. 

Japanese carmakers now 
operate 11 assembly plants and 
three engine plants in North 
America. Honda is one of the 
main US car exporters. Since 
the early 1980s the Japanese 
have built In the US an auto 
industry larger than that of 
Britain Italy or Spain and 
almost the size of the French 
industry. S imilar developments 
are under way in Europe. Japa- 


Tuesday October 4 1994 

Kevin Done finds that, as the existing order begins 
to disintegrate, vehicle producers are being forced 
to embark on radical restructuring of their operations 

Car producers race 
for global presence 


US and Japan: vehicle production 


MKon units 



0 _J I I I 1 I l I 1 I I I I 1 I L_ 

1979 9081828384858697 68 89 90 91 92 93 94 

F an wa t 


Warfd;in©tor vehicle 
prodtrctioo 1093 



nese producers currently 
account for about a quarter erf 
UK car production. Last year 
Nissan became the leading UK 
car exporter. 

Economic pressures and the 
appreciation of the yen are 
hastening tha Japanese expan- 
sion overseas, and in recent 
weeks both Toyota and Honda 
have announced plans to 
expand further their produc- 
tion bases in North America. 

Honda is increasing its car 
assembly capacity in the US 
and Canada from 610,000 to 

720.000 a year by 1997. and it 
will begin assembly in Mexico 
next year. It is planning to 
increase its exports from the 
US and Canada to more than 

150.000 a year by 1999. 

It is already unchallenged as 
the leading US car exporter to 
Japan, s elling four times more 
US-built cars in Japan than its 
nearest American rival. GM, in 
the first seven months this 
year. Honda does not disclose 
the cost differences between its 
Japanese and its US-built cars, 
but it admitted recently that 
“at the current exchange rate 
the North American vehicles 
are far more profitable". 

The race for global scale in 


Sounc AuunaUva Nm Data Camr 

the auto industry has been 
engaged in earnest, and the 
challenge is eliciting dynamic 
and surprising responses, that 
are breaking accepted moulds 
in the world Industry. 

Ford, the world’s second 
largest vehicle maker, has 
embarked this year on a sweep- 
ing restructuring of its global 
organisation in the most radi- 
cal shake-up in its 91-year his- 
tory. By the end of December it 
plans to have merged its Euro- 
pean and North American 
automotive operations and its 
automotive components group 
into a single operating unit. 
Ford Automotive Operations. 

The restructuring is aimed at 
Optimising Ford's resources, at 
eliminating the duplication of 
effort in Europe and in North 
America and at preparing for 
future growth. The group is 
seeking to achieve “the lowest 
possible coefficient of bureau- 
cratic drag.” says Alex Trot- 
man, Ford chairman and chief 
executive. He claims that the 
Simplification of engineering, 
purchasing, and technical and 
other processes will substan- 
tially reduce operating costs 
and could lead to savings of at 
least $Zbn-$3bn a year by the 


end of the decade. 

The Volkswagen group, 
Europe's biggest vehicle 
maker, is also going through 
corporate turmoil, as it seeks 
to staunch record losses and to 
shed its unenviable position as 
the highest cost producer in 
Europe. 

In a radical restructuring of 
its new car development and 
engineering operations it is 
planning to reduce the number 
of basic chassis platforms - 
from which all its car ranges 
are derived - from a present 
total of 16 to only four by the 
early years of the next decade 
In order to cut costs and sim- 
plify its global manufacturing 
activities. 

The strategy will embrace all 
four makes in the group, 
Volkswagen, Audi. Seat and 
Skoda, and will eventually 
have a big impact on its global 
manufacturing operations from 
Germany to Spain, the Czech 
Republic, Brazfl. Mexico, China 
and South Africa. 

Mercedes-Benz, perhaps the 
world's most prestigious maker 
of luxury cars, has embarked 
on a fundamental realignment 
of its new product strategy. By 
the late 1990s the company will 


have launched a range of 
vehicles into new segments of 
the world market including a 
four-wheel drive sport/utility 
vehicle to be assembled in a 
new plant in the US. a small 
family car, sized between a 
Volkswagen Golf and a Ford 
Fiesta, and most surprisingly a 
micro compact car, a two-sea- 
ter car for urban commuting 
that it is developing in a joint 
venture with SMH, the Swiss 
maker of Swatch watches. 

Inevitably the restructuring 
in the world auto industry is 
also leading to new alliances 
and mergers, although the 
progress is not always smooth. 

In a further concentration of 
the European auto industry 
BMW of Germany took over 
the Rover group, the leading 
UK vehicle maker, from British 
Aerospace earlier this year in 
an £800m deal, which has dou- 
bled its production volume. 
The much-heralded alliance of 
Renault, the French state- 
owned carmaker, and Volvo of 
Sweden collapsed, however, 
leaving both companies to look 
for other partners. 

In the scramble for global 
position the world's leading 
carmakers are al so having to 
fight to establish a presence in 
the world’s newly emerging 
markets. 

The industry is united in the 
view that the Asia Pacific 
region holds the brightest pros- 
pects, and automotive sales in 
Asia (excluding Japan) are 
expected to triple daring the 
next IS years. 

According to Mr Trotman 
around 80 per cent of the 
world's population lives out- 
side the traditional automotive 
markets of west Europe. North 
America and Japan, but the 
number of cars and trucks sold 
in these regions represents 
only about 8 per cent of the 
world’s totaL 

For a long time the US 
vehicle makers - as well as the 
Europeans - neglected Asian 
markets allowing them to 
become largely the preserve of 
their Japanese rivals, but 
belatedly they are seeking to 
regain lost ground. 

General Motors of the US, 
the world’s leading vehicle 
maker, for example, is using 
Opel, its German subsidiary to 
spearhead its expansion into 
international car markets out- 


IN THIS SURVEY 

Overviews: 

Forecasts; Europe Page 2 

Japanese in Europe ...Page 5 


North America Page 7 

Asia Page 8 

Features: 

Automotive trade, EU Mock 

exemption Page 2 

Retail Page 3 


Germany in the US Page 8 

New European models 

Page 10 

Electric vehicles Page 11 

Markets: 

Germany Page 4 

France Page 5 

The UK, Italy, Spain ...Page 6 
China, Japan, South Korea, 

Mexico, Brazil Page 9 

Sweden Page 10 

Profiles: 

Ford, General Motors, 

Chrysler .....................Page 7 

side North America and in par- 
ticular into Asia. Assembly of 
Opel cars began in Taiwan last 
year, production has started in 
Indonesia this year and will 
begin in India in the third 
quarter of 1995. 

The world's leading vehicle 
makers are queueing up to 
establish assembly projects in 
China, where Volkswagen of 
Germany and the PSA Peugeot 
Citroen group of France have 
stolen a lead. In general, the 
European car industry has 
been far more parochial and 
dependent on its home market 
than its US and Japanese 
rivals, but it, too, is now on the 
move with new production pro- 
jects under development in the 
US, Latin America and Asia. 

For now, it is the Big Three 
US carmakers, GM, Ford and 
Chrysler that are earning 
record profits, while their 
European and Japanese rivals 
struggle to emerge from losses 
and recession. Behind the fluc- 
tuating trade cycles and vola- 
tile financ ial returns, however, 
all three regions’ carmakers 
are struggling with the same 
issue of how to build a global 
presence in the world car mar- 
ket. 



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a better finish? That’s why the engineers of a renowned worldwide car 
maker insist on environmentally-friendly paints, which reduce 
solvent content significantly. But they wanted a safer, more efficient 
application system, too. ABB Paint Finishing designed and installed 
manual and robot spray booths with advanced ventilation control. 
Recirculating air is continually scrubbed clean of paint residue, 
which is extracted for recycling. This complex environmental control 
system has reduced solvent emissions by about 1.4 kilograms per car, 
without compromising paint finish quality. 

ABB also serves the automotive industry with robotic systems, 
drives, Quintus fluid cell presses and test rigs. As a leader in electrical 
engineering for industry and transportation, and in the generation, 
transmission and distribution of power, ABB is committed to 
industrial and ecological efficiency worldwide. We transfer know-how' 
across borders with ease. But in each country, ABB local operations 
are decentralized and flexible. That means we can respond swiftly 
yOll can. and surely to environmental challenges which stretch the limits of 
the possible - like getting a better paint Finish while using less 
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I 


„ig data tor me monitoring oi targets, nnu oie fur tun jiHuuuug u« immu |m«.mbhiis. 



FINANCIAL TIMES TUESDAY OCTOBER 4 1994 


II ★ 

WORLD CAlT INDUSTRY 2 


G lobal car sales could 
rise by 6 per cent or 
more this year as 
Europe pulls out of recession 
to join the expanding markets 
of North America, Latin Amer- 
ica and the Asia Pacific region. 

Car sales worldwide fell to 
33.1m in 1993, the lowest level 
for six years, but according to 
DRI McGraw-Hill, the automo- 
tive analysts, demand has now 
moved into a period of recov- 
ery. 

After three successive years 
of decline, global car sales are 
forecast to rise to 35.3m in 
1994. The main impulses for 
growth hitherto have come 
from the US, where sales of 
cars and light trucks are now 
in the third year or recovery 
and are forecast to rise by 12 
per cent this year to more than 

15.5m. 

New car sales in western 
Europe fell by more than 15 
per cent last year to 11.45m, 
the sharpest annual decline in 
the post-war period, but the 
tide appears to have turned 
with sales rising by an esti- 
mated 6 per cent to 8^17m in 
the first eight months of the 
year. 

In Japan carmakers have 
been locked in a protracted 
recession with new car sales 
falling for three years in suc- 
cession from 1991 to 1993. Reg- 
istrations after the first seven 
months of 1994 were still 1.9 
per cent lower than in the cor- 
responding period a year ago, 
but in recent months there 
have been fragile signs that 
the bottom of the recession has 
also finally been reached in 
Japan. 

No&l Goutard. chairman and 
chief executive of Valeo, the 
leading French automotive 
components group, believes 
that prospects are positive for 
the world auto industry. 


While global sales are at last improving, the Asia Pacific region holds the most promise, says Kevin Done 


East offers best outlook for growth 


"In 1994 we are in a new 
phase, and we anticipate 
strong growth," says Mr Gou- 
tard. 

"We believe that by 1995-96 
the American, European and 
Japanese markets will be in a 
unique situation with all three 
converging on a path of strong 
growth. Asia Pacific will join 
as a fourth important region. 
There will be four markets in 
high gear." 

The latest study by DRr 
McGraw-Hill forecasts that a 
sustained period or growth is 
in prospect with worldwide 
new car sales rising gradually 
to reach record levels through- 
out the second half of the 
1990s. Sales are forecast to rise 
by 3 to 5 per cent in each of the 
next five years, rising from 
35.3m this year to 42.6m in 
1999. 

However, much of this 
growth will originate outside 
the traditional car consuming 
nations of west Europe, North 
America and Japan, with 
South Korea. China, Thailand, 
Latin America and east Europe 
offering the best outlook for 
growth for the 1990s and 
beyond. 

The world's leading car- 
makers are united in the view 
that the Asia Pacific region 
holds the brightest prospects, 
and automotive sales in Asia 
(excluding Japan; are expected 
to triple during the next 15 
years. 

According to Alex Trotman, 
chairman and chief executive 
of Ford, the world's second 


World car sales forecast (OOOs)* 



1090 

1994 

1996 

1996 

1997 

WORLD 

33.134 

35JZ53 

30377 

38/142 

39/103 

West Europe 

11,450 

12,181 

12,743 

13,692 

14,362 

Germany 

3.194 

3,215 

3,306 

3/125 

3.638 

Italy 

1,890 

1,858 

1.948 

2,075 

2.191 

UK 

1.778 

1,978 

2,074 

2^36 

2/303 

Prance 

1,721 

1,989 

2.051 

2,184 

2,302 

Spain 

743 

649 

887 

1,056 

1,054 

East Europe** 

1,334 

1,366 

1/172 

1,550 

1,675 

Turkey 

443 

252 

287 

331 

420 

North America 

9,441 

10245 

9,950 

9,779 

10,150 

US 

8,702 

9,424 

9,044 

8,822 

9.147 

Japan 

4,199 

4.203 

4.396 

4,628 

4.7BO 

Asia Padflcf 

2348 

3,155 

3.509 

0831 

4,027 

South Korea 

963 

1.072 

1.167 

1,256 

1,316 

China 

430 

481 

61B 

758 

791 

Lathi America 

1,887 

2,051 

2,068 

2,216 

2,404 

WORLD (netJtt 

33J387 

35.059 

36/154 

38,530 

40203 

West Europe 

11,372 

12,102 

12347 

13/323 

14,208 

Germany 

3,794 

3,946 

4.085 

4,310 

4,391 

Franca 

2,836 

2,996 

3,138 

3,332 

3.384 

Spain 

1.505 

1.661 

1,778 

1,801 

1,808 

UK 

1,375 

1.433 

1,585 

1,840 

1.918 

Italy 

1,117 

1213 

1.314 

1,457 

1,556 

East Europe** 

1,800 

1,780 

1.920 

2,100 

2^94 

Turkey 

348 

234 

258 

297 

378 

North America 

7,329 

7,961 

7.968 

7,758 

8/)42 

US 

5,982 

8,745 

6,750 

6,463 

6,660 

Japan 

8,499 

7,942 

8.266 

8,723 

9,018 

Asia Padficf 

2807 

3,154 

3J542 

3,914 

4/342 

South Korea 

1.512 

1,791 

1.962 

2.150 

2,389 

China 

241 

210 

335 

451 

563 

Latin America 

2^14 

2,423 

2/339 

2,603 

2,651 


1983 actual 1894-1997 forecasts 
tlbcfexsng branbio dot**) carting 
-TnamUno CommanweaMi at indanmdent 3uaa 

Japan 

Stun; Oft wend Car Industry Foracmt flRparr - August 1994 


largest vehicle maker, about 80 
per cent of the world's popu- 
lation lives outside the tradi- 
tional automotive markets of 
western Europe, North Amer- 
ica and Japan, however the 
number of care and trucks sold 


in these regions represents 
only about 8 per cent of the 
world's total. 

Some of tbe fastest growth is 
forecast for China, where the 
world's leading carmakers, 
such as General Motors, Ford, 



Traffic in Bangkok: Asian automotive sales am expected to rise rapidly 


Toyota and Mercedes-Benz are 
vying to win approval for new 
vehicle projects in order to 
catch up on the lead taken by 
Volkswagen of Germany, the 
Peugeot group of France and 
Daihatsu of Japan. 


New car sales in C hina have 
already jumped from only 

78,000 in 1990 to about 430,000 
last year, but the latest DRI 
study forecasts that sales could 
jump to lm by 1999. 

This will be mirrored In a 


rapid build-up of car produc- 
tion in China with output ris- 
ing from 44,000 in 1990 to moro 
than 700,000 by the end of the 
decade, according to the DRI 
study. 

South Korean carmakers led 
by Hyundai, Kia and Daewoo 
have also developed an ambi- 
tious strategy for further 
growth in tbe coming decade- 

DRI forecasts that car pro- 
duction In South Korea could 
jump by more than lm units in 
the next six years from 1.5m in 
1993 to 2.64m in 1999. 

New car sales in the domes- 
tic car market are expected to 
jump from 963,000 last year to 
1.45m in 1999, but domestic 
expansion will be supple- 
mented by Korean carmakers 
pursuing aggressive growth 
plans overseas both through 
strongly rising exports and for- 
eign-based vehicle production. 

In the world's developed 
markets the DRI report fore- 
casts continued steady recov- 
ery in west Europe for the rest 
of the decade, cautious expan- 
sion in Japan but a slow-down 
in North America during the 
mid-1990s. 

The pick-up in west Europe 
has been patchy this year with 
sales rising strongly in France, 
Spain, Scandinavia and the 
UK, whereas Germany and 
Italy are still struggling to 
throw off the grip of recession. 

New car registrations in Ger- 
many, the biggest market in 
Europe, were still running 
slightly lower than a year ago 
after the first eight months of 


the year with a decline of 0.4 
per cent. Worryingly, sales 
declined year-on-year by 4.9 
per cent in July and by 531 per 
cent in August 

Both the German and Italian 
markets are forecast to emerge 
from recession next year, how- 
ever, and sales in west Europe 
are forecast to rise by 5 to 7 per 
cent a year in each of the four 
years from 1994 to reach a 
record level of 13.7m In 1996 
rising further to 15m by 1999. 

In the US. with car and truck 
sales already in their third 
year of recovery, opinions dif- 
fer over when the market will 
peak. 

Ford is currently forecasting 
total US car and truck sales of 
around 155m in 1994 compared 
with 14.2m last year and the 
nadir of 125m in 1991. 

The previous peak of 16.3m 
was reached in 1986 and David 
McCammon. Ford vice-presi- 
dent and treasurer, insists that 
“the cycle still has several 
years to go. We are early In the 
cycle in the US - still in the 
first half of the cycle, in my 
view, and in Europe we're just 
at the beginning of the recov- 
ery”. 

Such optimism has not been 
shared by US financial markets 
In recent weeks, where the 
share prices of the big three US 
carmakers have fallen sharply 
to their lowest level for the 
year amid fears about rising 
interest rates. 

The latest DRI forecast sug- 
gests that North American car 
sales wifi, suffer small declines 
in 1995 and 1996 after rising by 
8.5 per cent this year. Care are 
expected to continue losing 
market share to light trucks - 
pickups, sports/utility and mul- 
tipurpose vehicles - which 
now account for more than 40 
per cent of all US light vehicle 
sales. 


Fast-expanding South Korea has joined Japan as a source of worry for western carmakers, says Kevin Done 


US auto Industry 
■Jantiary-December 1993 



Volume 

(Units) 

Volume 

Change^ 

SnraM 
Jan-Dee 93 

Stanro 
Jan-Dee 92 

CAR SALES 

0518.000 

+3.7 

100.0 

100.0 

Imports 

1,844,000 

-7.5 

21.7 

24.3 

Japanese makes 

2,481,000 

+0.4 

29.1 

30.1 

-of which US-buiit 

1,265.000 

+9.0 

14.9 

14.1 

Japanese derived* 

24389.000 

+0.2 

34.0 

35.2 

European makes 

308.000 

-6.9 

3.6 

4.0 

CAR PRODUCTION 
-of which Japanese 

5,982,000 

+04 

100.0 

IOOjO 

US-buHtf 

CAR SALES BY 
MANUFACTURER: 

1.516,000 

+7.0 

25.4 

25.0 

General Motors** 

2.909,000 

+2.3 

344? 

34.6 

Ford** 

1,878,000 

+5.7 

22-1 

21.6 

Chrysler 

834.000 

+22.7 

9.8 

8.3 

Toyota/Lexus 

742,000 

-2.4 

6.7 

9 J3 

Honda/Acura 

716,000 

-6.8 

8.4 

9.4 

Nlssan/lrrflnit) 

482,000 

+16.5 

5.6 

5.0 

Mazda 

260.000 

+4.7 

3.1 

3.0 

Mitsubishi 

168.000 

+7.8 

2.0 

1.9 

Hyundai 

109,000 

+02 

1.3 

1.3 

BMW 

78.000 

+18.8 

0.9 

0.8 

Volvo 

73,000 

+7.4 

0.9 

0.8 

Mercedes-Benz 

62.000 

-22 

0.7 

0.8 

VoikswagerVAudl 

56,000 

-35.8 

0.7 

1.1 

Saab (GM) 

19,000 

-29.0 

0.2 

0.3 

Jaguar (Ford) 

13,000 

+46.7 

0.1 

0.1 

Porsche 

3,700 

-9.4 

0.0 

0.0 

Alfa Romeo (Rot) 
UOHT TRUCK 

14300 

-53.1 

0.0 

0.0 

SALES 

54398.000 

+15.5 

100.0 

100.0 

Imports 

TOTAL CARMJGHT 

389.000 

-2.9 

72 

8.6 

TRUCK SALES 

134317,000 

+8.0 

100.0 

100.0 

General Motors** 

4.667.000 

+6.1 

33.5 

34.1 

Ford** 

3,562.000 

+11.6 

25.6 

24.8 

Chrysler 

2.048,000 

+19.5 

14.7 

1343 

Japanese makes 

3,212.000 

+2.4 

23.1 

24.3 

Toyota/Lexus 

1.033.000 

+09 

7.4 

7.9 

Mssan/lnflnlti 

NORTH AMERICAN 
CAR & TRUCK 

688.000 

+17.2 

4.9 

4.5 

PRODUCTlONff 

13,095,000 

+11.6 

100.0 

100.0 

-at which US 

10,854,000 

+11.1 

82.9 

83.1 

■or which Canada 
-of which Japanese 

2.241.000 

+1342 

17.1 

16.9 

NthJtm.builtT 

2.150,000 

+6.6 

16.4 

17.2 


inckdn Japanese motiiw cfco Japaww derived on Mid under GU. Ford A Chryeter cadges, 
imports and US-Mt. 

“CM oxaiiOCH Sot* Ford mrtKtes Jaguar 

rtnduOw- l&Jacurav, lore vennres managed by Japanese produem. 

TTtndudm mettum and hum irudii 
Snute AjTUJrr-Xhm Nam 


Over iba Un 89 yean BEN — Motor 
md Allied Trades Benevolent Fund 
bn cared Tor tena of iknuigdi of 
people. Not Jual direct employees 
and pensioners of our industry, but 
their dependants too. young and old 
alike. 

During that lime there have been 
many changes. Different companies 
have come and gone, union* evolved 
beyond recognition and the welfare 
slate has been in continual flux. 

But one thing bis remained 
constant — the care and attention 


BEN has given to those who look to 
u* for support, whether it be 
emotional or financial (inelnding 
residential and nursing care). 

So why the BEN'elcphanl? It's a 
symbol of our momory: how we 
never forget those who worked in our 
industrial, sad will always 
remember that many people will 
need our help in the future. 

Now that's worth shouting about. 

If you would Like mere news about BEN. 
please call ua on 0144 20191. 


Time for this 
little elephant 
to blow its own 


trumpet 



MOTOR AND ALLIED TRADES BENEVOLENT FUND 

Lynwood • SunninghiU • Ascot • Berkshire SLS 0AJ 
Tel: 0344 20191 • Far. 0344 22042 

neflMM«d Cnanty ttu 287877 


T he automotive industry 
is already providing fer- 
tile ground for trade con- 
flict between Japan on the one 
hand and the US and tbe Euro- 
pean Union on the other. Now, 
however, South Korea has 
become a new source of con- 
cern for western carmakers. 

The US trade deficit in auto- 
mobiles and automotive parts 
with Japan remains high and 
rose to a record $33.4bn last 
year accounting for 56 per 
cent of the total US trade defi- 
cit with Japan. The ElTs trade 
deficit with Japan in motor 
vehicles - Ecu5.12bn (£4.02bn) 
- accounted last year for 20.4 
per cent of the its total trade 
deficit with Japan. This was 
almost offset, however, by a 
£cu4.3bu surplus on vehicle 
trade last year with the US. 

While recent developments 
such as the strong increase In 
sales of imported cars in Japan 
this year, increasing purchases 
of US auto parts by Japanese 
vehicle makers - both for 
their US and domestic assem- 
bly plants - and tbe continu- 
ing fall in the volume of Japa- 
nese vehicle exports, suggest 
that the trade imbalance 
between the US and Japan 


T he European car industry 
is in tbe midst of hectic 
transition, as the Euro- 
pean Union moves to become 
an open car market by the end 
of the decade. 

All restrictions on car and 
light commercial vehicle 
imports from Japan are due to 
be removed at tbe end of 1999, 
and carmakers in Europe are 
being forced to act quickly to 
close the competitive gap 
behind their Japanese and 
North American rivals. 

The pain and dislocation of 
transition has been com- 
pounded by the severity of the 
recession that struck tbe 
industry with full force last 
year, as west European new 
car sales fell by more than 15 
per cent to ll.4m, the lowest 
total for eight years and the 
biggest year-on-year decline in 
the post-war period. 

Four of the Big Six volume 
car producers in west Europe, 
the Volkswagen group of Ger- 
many, PSA Peugeot Citroen of 
France, the Fiat group of Italy 
and Ford of Europe, were in 
loss last year, while profits fell 
sharply at Renault of France 
and General Motors Europe 
(Opel in continental Europe 
and Vau xhall In the UK). 

New car sales have begun to 


A MAJOR 
DEVELOPMENT 
IN THE 

BIRMINGHAM 

AREA 

TO IMPROVE 
YOUR 
STATUS 


Msva i rum 1 1 hie luring sinrl ccrf.ini 
servite jct'ior business^ 
inuTjjn^ in UiniuiH;hiiin 
' 4 ii nuw .qiptv iur die liggirc kick 
nfgrjm .vnhr.inctf .iv.ulahk- ill 
Ocil Rriiain. 

For farther information contact 
The Business Location Service on 

021 235 2222 



Fertile ground for conflict 


World 1 s top 10 vehicle makers 

Rank 

Manufacturer 

Passenger care 

Total vehicles 

1 

General Motors - US 

4.989938 

6,865.828 

2 

Ford - US 

3.685,415 

5,74434 

a 

Toyota - Japan 

3,649.640 

4,487,891 

4 

Volkswagen - Germany 

3,119.997 

335.696 

6 

Nissan Japan 

2,222,985 

2,898.185 

6 

PSA - France 

2,252,121 

2,437,726 

7 

Renault -France 

(.929,856 

2.26431 

8 

Chrysler - US 

727.928 

1,982.676 

9 

Fiat - Italy 

1,557,556 

1,800,400 

10 

Honda - Japan 

1,629.666 

1,762,197 

3ow»r AflKhCjn Autarnotikt Mbnafactunart Assodatfan J 


could be reduced, in practice 
the problems remain intracta- 
ble. 

During the eight years that 
the US Commerce Department 
has been keeping records on 
trade in vehicles and parts, the 
US automotive deficit with 
Japan has proved resistant to 
all efforts to reduce the Imbal- 
ance. The deficit, which 
totalled $32.6bn in 1986 fell 
slightly to $30.8bn in 1990 but 
by last year it had risen again 
to S33.4fan. 

The inclusion 15 months ago 
of automotive components in 
the framework trade talks 
between the US and Japan has 
yielded little otner than 
increased tension between the 
two sides. The US deficit in 
automotive components trade 
with Japan rose to $U jzbn last 
year, a tenfold increase from 
the 1981 level. 

Japanese carmakers warned 
recently that they would urge 
the Japanese government to 
pursue Gatt actions including 
rights to compensation and 
sanctioned retaliation, if the 


US were to impose sanctions 
under the Super 301 trade law 
in the case of a breakdown in 
the framework trade negotia- 
tions. 

William Duncan, general 
director of the Japan Automo- 
bile Manufacturers Associa- 
tion (JAMA) in Washington, 
said that the short-term conse- 
quences of an auto trade con- 
flict would mean “economic 
disruption, loss of employment 
and ultimately slower growth 
and higher consumer costs'*. 

The US auto industry ou the 


other band has called on 
Washington to take whatever 
steps it deems necessary to 
prod Japan to open its market, 
but it has recently stopped 
short of calling for sanctions. 

“We would like to see an 
open market in Japan, and we 
want the consumers in Japan 
to have the same opportunities 
consumers in America have." 
said Andrew Card, president 
of the American Automobile 
Manufacturers Association, 
last month. 

Japanese carmakers have 


resisted calls for the setting of 
numerical targets in trade 
between the US and Japan. “I 
feel there is no need for tar- 
gets, because I have no doubt 
that if the US auto parts are of 
high enough quality, reason- 
ably priced and with good 
delivery records, then Japa- 
nese automakers will buy 
them,” said Tatsuro Toyoda, 
president of Toyota and chair- 
man of JAMA in a recent 
interview. 

Tbe US believes that Japan 
gave a commitment during the 
visit by former President 
George Bush to Tokyo in Janu- 
ary 1992 to buy $19bu worth of 
automotive components - 
$4bn for imports and $15bn for 
purchases by Japanese vehicle 
plants in the US - in the year 
to the end of March 1995. 
JAMA maintains, however, 
that the figure of $i9bn was 
based on the voluntary plans 
of individual carmakers and 
was not a government target 
Total purchases rose last year 
to $15J5bn and have doubled in 
the past four years from 


Kevin Done follows developments in the European car industry 


A formidable challenge still 


flicker back to life this year, 
and the financial performance 
of the industry is starting to 
recover, but the underlying 
challenge remains formidable. 

Several of the first wave of 
Japanese car plants in west 
Europe - built by Nissan, 
Toyota and Honda - have 
started production, adding to 
existing overcapacity and a 
fourth Japanese plant - a joint 
venture in the Netherlands 
between Mitsubishi Motors and 
Volvo of Sweden - is due to 
open next year. 

The share taken by Japanese 
carmakers in west Europe may 
be down this year - to 11 per 
cent in the first six months 
from 12.4 per cent in the corre- 
sponding period a year ago - 
as their price competitiveness 
has been battered by the rapid 
appreciation of the yen, but it 
is likely to be only a temporary 
respite. 

Japanese carmakers’ west 
European market share is still 
forecast to rise to more than 15 
per cent by the end of the 
decade, and their presence in 
those European markets that 
have previously operated with- 
out restrictions on Japanese 
vehicle imports, serves as a 
constant reminder of the 
threat 

In the Netherlands Japanese 
carmakers controlled 25.9 per 
cent of the new car market last 
year, for example, and in Fin- 
land 38.5 per cent 

Competition for the Euro- 
pean carmakers is also grow- 
ing From new sources, most 
notably South Korea and 
North America. 

Kia Motors is to become the 
First Korean carmaker to 
assemble passenger vehicles in 
Europe in a project to build up 
to 30,000 vehicles a year in Ger- 
many. 

Kia established sales 
operations in many European 


markets for tbe first time last 
year, and it will be followed in 
1995 by Daewoo, the third larg- 
est Korean vehicle maker. 
Hyundai, the leading Korean 
vehicle producer, says that it is 
aiming nearly to double its 
European sales from less than 

100.000 last year to 189.000 by 
the end of the decade. 

North America is also 
becoming a growing source for 
vehicle exports to Europe both 
from the big three US car- 
makers and from the expand- 
ing Japanese production base 
In the US and Canada. 

A recent study by the Econo- 
mist Intelligence Unit forecast 
that North American and 
South Korean manufacturers 
would almost treble their sales 
in west Europe by 2000, with 
US import sales rising to more 
than 250.000 and South Korean 
sales increasing to 325,000 by 
the end of the decade. 

The market share of the tra- 
ditional European car produc- 
ers is forecast to fall from 85 to 
79 per cent during the period. 

European carmakers are 
fighting back, however, and 
are in the midst of a period of 
for-reaching restructuring. 

Partly under the pressure of 
last year’s heavy losses they 
have taken action in order to 
improve efficiency, often with 
drastic reductions of their 
workforces. 

Volkswagen of Germany, the 
leading European car producer 
which suffered a group loss of 
DMt.94bn last year, had 
reduced the workforce at its 
six domestic plants (excluding 
Audi) in the past three years 
by 27 .000 to about 102,000 by 
the spring of 1994. 

Higher productivity and 
reduced sales volumes mean it 
still has about 30,000 surplus 
employees. For 1994 and 1995, 
VW is operating a pioneering 
agreement with the German 


West European new car registrations 
January-August 1994 


Volume 

Volume 

Sham (%) 

Share (%) 


(Units) 

Ctange{%] 

Jan- Aug 94 

Jan-Aug 93 

TOTAL MARKET 

8,517,000 

+OQ 


100.0 

1000 

MANUFACTURERS: 

Volkswagen group 

1,369,000 

+4LS 


16.1 

16-3 

- Volkswagen 

882,000 

+1.8 


10.4 

10.8 

- Seat 

224,400 

+16.4 


2.6 

2.4 

- Audi 

222,000 

+1.8 


2.6 

- 2.7 

- Skoda* 

41.000 

+11.8 


0.5 

05 

General Motors# 

1.094,000 

+6.1 


12J3 

13X1 

- Opel/VauxhaU 

1,048,000 

+4.4 


12.3 

105 

- Saab” 

36.000 

+35.3 


0.4 

0.3 

PSA Peugeot Citroen 

1.083,000 

+11JJ 


12.7 

12.1 

- Peugeot 

651,000 

+10.3 


7.6 

72 

- Citroen 

432,000 

+13.5 


5.1 

4.7 

Ford group# 

1,004.000 

+543 


11.8 

11.8 

- Ford 

997,000 

+53 


11.7 

11.7 

- Jaguar 

7,000 

-9.9 


0.1 

0.1 

Flat group## 

946,000 

+64) 


11.1 

11.1 

- Flat 

738.000 

+10.1 


8.7 

03 

- Lancia 

119,000 

-4.5 


1.4 

1.5 

- Alta Romeo 

78,000 

-10.S 


08 

■ 1.1 

Renault 

918,000 

+08 


10.8 

10.5 

BMW group 

543,000 

+5.8 


6.4 

04 

- BMW 

269.000 

+2.7 


32 

33 

- Rover 

274,000 

+8.9 


32 

3.1 

Mercedes-Benz 

286.000 

+34.5 


3.4 

2.7 

Nissan 

275,000 

-4.5 


32 

3.6 

Toyota 

219,000 

-4.1 


2.6 

2.8 

Volvo 

137,000 

+17.5 


1.6 

1.5 

Mazda 

127,000 

-105 


1.5 

1.8 

Honda 

121,000 

+8.1 


1.4 

1.4 

Mitsubishi 

84.000 

-17.2 


1.0 

1.3 

Suzuki 

52,000 

-24.8 


0.6 

09 

Total Japanese 

&27.000 

-7.4 


ioa 

12X 

MARKETS: 

Germany 

2,219,000 

-0.3 


26.1 

27.7 

Italy 

1,284.000 

-2.5 


15.1 

16.4 

France 

1,207,000 

+T4.7 


15.2 

14.1 

United Kingdom 

1,443,000 

+9.8 


16.9 

16.4 

Spain 

620,000 

+20.4 


7.3 

6.4 

•vw fleMr Ji per cent ant mnagamM eonmi at SHotta. 
ifajiiilw as Mpe rfotf tram us an 4 sob ai western Gurnee. 

-cunaas SO nor cenf and irmgtmtit eanbal of Aj&vneefe. 

Sowee AGEA European AuMikMs MtnitacMcn tosaeuBani esUmatea. 


trade unions, however, allow- 
ing a sharp cut in pay and 
working hours (to a 28A hours 
week) in order to stave off even 
more radical job losses. 

Ford of Europe, has reduced 
Its workforce (excluding Jag- 
uar) by is per cent with the 
loss of 15.100 jobs since late 
1992. Mercedes-Benz, the car 


and commercial vehicle subsid- 
iary of Daimler-Benz, Ger- 
many’s largest engineering 
group, cut 14,700 jobs from its 
domestic workforce In 1992, a 
further 11,000 last year and it 
is planning to cut another 8,000 
jobs this year to bring its work- 
force to 151,000 by the end of 
1994. 


$7. 12ba in the year to March 
1990. 

In. Europe, meanwhile. 
Japan is seeking to raise its 
quota for car and light com- 
mercial vehicle exports to the 
EU as a result of higher than 
expected demand in Europe. 

In March, Tokyo and Brus- 
sels set a guideline under the 
joint monitoring scheme 
allowing Japanese vehicle 
exports to the EU to rise by 0.4 
per cent to 984,000 in 1994. In 
tbe first eight months, how- 
ever, new car sales in west 
Europe have risen by 6 per 
cent, and Tokyo now wants to 
raise the level of its ship- 
ments. Direct Japanese vehicle 
exports to the EU fell last year 
by 18.4 per cent to 980,000 
under the impact of the deep 
recession in the new vehicle 
market 

Concerns are also being 
voiced in Brussels and Wash- 
ington over growing imbal- 
ances in vehicle trade with 
South Korea, which Is increas- 
ing greatly its domestic pro- 
duction capacity. 

Last year imports accounted 
for only 0.19 per cent of 
Korea's car market. Hyundai, 
the leading Korean carmaker, 
alone plans nearly to double 
its European sales from less 
than 100,000 last year to 

189,000 by the end of the 
decade. 


The cost-cutting measures 
along with a modest improve- 
ment in new car sales are help- 
ing the industry to improve its 
financial performance this 
year. New car sales in west 
Europe in the first eight 
months rose by 6 per cent to 
8.5m. After three successive 
years of losses Ford’s Euro- 
pean automotive operations 
(excluding Jaguar) achieved a 
net profit of $353m in the first 
half of 1994 compared with a 
loss of 847m in the correspond- 
ing period a year ago. 

The Volkswagen group cut 
its loss in tbe first half this 
year to DM209m from a loss of 
DMLGbn in the same period a 
year ago, and in the second 
quarter alone it returned to the 
black with a profit of DMi33m 
compared with a loss of 
DM342m a year ago. 

Volvo of Sweden, which is 
busy selling off most of its non- 
automotive businesses In tbe 
wake of the break-up of its alli- 
ance with Renault, increased 
its group operating income to 
SKr4.47bn in the first half this 
year from only SKrlGGm a year 
ago. Its car . operations alone 
jumped from an operating loss 
of SKr70m in tbe first half lost 
year to a profit of SKrl.475bn 
in the first half of 1994. 

Restructuring is) continuing 
to lead to a further concentra- 
tion of the industry in Europe, 
most notably with the takeover 
earlier this year of Rover, the 
leading UK carmaker, by BMW 
of Germany. 

Restructuring is also taking 
on new forms, however, as car- 
makers move, for example, to 
dispose of in-house compo- 
nents operations to outside 
suppliers to allow themselves 
to concentrate on the core 
operations of the design, devel- 
opment and assembly of 
vehicles. 

Fiat has agreed recently to 
transfer a components opera- 
tion with, more than TOJ 
employees to GKN, the UK 
automotive components sup- 
plier, and it is .also selling It* 
Sepi seat-malting operations to 
Lear Seating of the US for 
$L60m. 





nr 




FINANCIAL TIMES TUESDAY O CTOBER 4 1994 ★ 

WORLD CAR INDUSTRY 3 




E uropean carmakers and importers 
f 1 * quandary about what 
long-term form they would like the 
reta i ling of their products to fa>i«» 

The upcoming European Union verdict 
on whether to continue the industry's 
block exemption from normal EU competi- 
tio n rule s, and which permits the industry 
to restrict sales to exclusively franchised 
dealers, may yet impose its own structural 
ch an ge on car retailing in Europe. 

But even if Brussels were to decide to 
extend the exemption for another 10 years 
and leave its terms largely unchanged, 
commercial pressures are building which 
are thems elves expected to bring substan- 
tial restructuring of the estimated 100,000 
manufacturer-franchised outlets through 
which new cars are sold throughout 
Europe. 

The commercial pressures have much to 
do with the need to cut the costs involved 
in both the distribution and retailing of 
vehicles. 

In the past 10 years, most European car 
makers have concentrated heavily on 
reducing manufacturing costs and raising 
production effi c i e ncy as the msm mpanc 
of seeking to get on tarns with Japanese 

competition. 

Much of the fat has now been cut out of 
man u facturing. But large and unnecessar y 
overheads persist in distribution and 
retailing because of the fragmented nature 
of reta il i n g, not least wide differences in 
practice between individual countries. 

Most manufacturers are starting to 
address the problems, through “lean” dis- 
tribution systems which are at least short- 
ening the supply pipeline to dealers. 

The important questions for the future. 


Change is being sought in the way cars are sold, says John Griffiths 

Large overheads persist 


as seen by the manufacturers, are how 
many dealers should there be and how 
huge and powerful rem individual doctor 
groups be allowed to grow? 

On the one hand, the manufactures 
know there are too many small and ineffi- 
cient dealers scattered throughout Europe. 
They welcome the efficiencies and invest- 
ment capability of large dealer groups. 

On the other, they have no wish to see 
big retailing groups hold sway over the 
manufacturers as with, for empte, the 
supremacy of the big supermarket rhaftre 
in food retailing. Some kind of new bal- 
ance needs to be struck. 

Throughout most of Europe, the market 
is served by more than 90,000 dealers, 
many of them small individually owned 
d e a le rs known in the industry as “mama 
and papa" businesses, hi France, and 
population distribution contributed to 
the development of one of the most frag- 
mented retailing infrastructures, with a 
first tier of the "mama and papa" dealers 
outnumbering thw main dealerships by 
more t h a n four-tonne. The two-tier dealer 
structure itself represents an inefficiency 
but is entrenched in the system through- 
out Europe. 

The UK. however, also has a band of 
large, financially powerful public groups 
- some owning about 100 outlets each - ea- 
ger and willing to invest sums in the busi- 


ness far beyond those which could be con- 
templated by the “mamas and papas". 

The biggest, the Lex Service group with 
more than 120 outlets covering most major 
franchises, accounted for nearly JL5 per 
cent of all UK new car sales last year. 

Furthermore in the UK the two-tier sys- 
tem is haing disman tled This s umm er, for 
example, the Rover Group announced that 
ISO of its small dealers would have to go as 
the result of a move to a single-tier dealer 
network by the middle of 1997. The net- 
work is to be based primarily on Rover’s 
existing main dealers. 

T he main dealers will be required to 
set up "satellite" sub-dealerships in 
areas previously occupied by the 
s mall independent retail outlets - invest- 
ments relatively easily made by the big 
dealers groups and with the outlets bene- 
fiting from the group's overall economies 
of scale. 

With retained profit per car shrinking 
under the pressure of competition, as 
Europe moves towards a completely open 
market for new cars at the end of the 
decade, maximising sales per outlet is 
becoming of ever greater importance. 

By that yardstick, Europe as a whole is 
remarkably inefficient compared with 
North America, where new car prices are 
well below European levels. Europe's 


100.000 franchised dealers last year sold 
some 11.4m new cars, an average of 114 
each. Their roughly 25,000 US counterparts 
sold 13m - an average 520 per outlet. Even 
allowing for last year being a relatively 
poor one for Europe while the US was 
recovering, the contrast is a stark one. 

The UK already occupies a half-way 
house between Europe as a whole and the 
US. This year, total UK sales are likely to 
reach slightly short of 2m - well below the 
record 13m of 1989, but enough to provide 
the country's 7,400 franchised dealers an 
average of nearly 270 cars per outlet 
As an annual survey by the trade jour- 
nal Automotive Management of the UK’s 
biggest dealer groups - many of them pub- 
licly owned - shows, the big have steadily 
been getting bigger. Their combined turn- 
over topped £l5bn for the first time last 
year and they are estimated by Automotive 
Management to have accounted for 37.5 
per cent of all new car sales last year. 

While many small, individually owned 
dealerships in the UK and continental 
Europe have ceased trading in the post- 
1990 recessions, most of these big groups 
have remained profitable, maintained a 
high level of investment and continued to 
take over less competent smaller rivals. 

Their credentials for playing an ever-ex- 
panding role in an industiy in need of 
their expertise and efficiencies appear 


impeccable. Yet their very effectiveness 
has made manufacturers wary of their 
potential power. As a result, dealers his- 
torically have been junior partners in the 
manufacturer-dealer relationship. 

Much as many groups wanted to they 
were forbidden, for example, to set up mul- 
ti-franchise sites where customers com- 
pare one make against another. Ford, for 
years the unchallenged UK market leader, 
had a rule whereby no single group could 
bold more than five Ford outlets or oper- 
ate any other franchise within 20 miles of 
that outlet. 

This was all very well for Ford when it 
controlled more than 30 per cent of the 
market - at the time around twice the 
share of anyone else. Now its share is just 
over 20 per cent, Vauxhall is treading on 
its heels and Rover is not far behind. 
Toyota. Nissan and Honda are Increasing 
their UK manufacturing output and new 
players from the Far East such as Kia and 
Daewoo are joing Hyundai on the scene. 

Europe is becoming more competitive as 
manufacturers crowd into the market The 
big dealers’ dependence on any one manu- 
facturer. even ford, is dwindling and with 
it their submissiveness to manufacturer 
diktat. 

Cracks are appearing: Vauxhall and 
Rover are allowing multi-franchising. The 
big dealer groups may now have a maxi- 
mum of eight Ford dealerships. 

Thus the balance of power is starting to 
tilt in the UK. 

It may be only a question of time before 
Lex. In chape and their cohorts start to 
turn their attention to taking their exper- 
tise to continental Europe and starting the 
transformation process there. 



Commercial pressures: a north London car 
Showroom Picture hwor Humanrui 



Kevin Done reports on moves in Brussels to liberalise the car market 

Carmakers locked into lobbying battle 


E urope's carmakers have been locked 
for several months in an intensive 
lobbying battle in Brussels against 
the plans of the European Commission's 
competition directorate for liberalising the 
European car market. 

At issue is the reform of the so-called 
block exemption granted to the motor 
industry for 10 years in 1985. which allows 
carmakers to operate selective and exclu- 
sive car distribution and retailing systems 
in contravention of European competition 
rules. The present regulation expires at 
the Kid of June 1995. 

After much delay the Commission is set 
to publish shortly its proposed terms and 
conditions for a new block exemption. Fol- 
lowing consultation with governments and 
the opposed ranks of the car producers 
and European consumer organisations, it 
is hoped that details of a new regulation 
can be finalised by the end of the year. 

The timetable is tight, but Karel van 
Miert, competition commissioner, is anx- 
ious to have the new rules agreed before 
the four-year term of the present Commis- 
sion runs out at the end of December. 

At stake are sharply contrasting visions 
of bow new cars should be sold and ser- 
viced. an issue that affects millions of car 
owners across Europe and which arouses 
intense emotions among Europe’s car- 
makers. Is toe consumer best served by 
the dedicated exclusive dealerships 
allowed under the present system? 


Or should the dealer networks be 
exposed to another order of competition, 
with mnltffranrbising - the sate of com- 
peting brands - allowed on toe same site. 

During coming weeks the debate will 
focus on several issues: 

• Should dealers be allowed to take on 
other competing franchises within their 
existing exclusive territories, 

• Sh oul d toe carmakers have to provide 
ter-fmiral information to independent ser- 
vice garages, and 

• Should they have to agree sales objec- 
tives with dealers with independent arbi- 
tration in the case of disagreement 

• For how long should a new block 
exemption be granted, seven or 10 years, 
»nrt qhnnlH there be an interim review of 
performance? 

The battle over the terms of a new block 
exemption began in earnest in May. when 
the wmtwitii of toe competition director- 
ate’s first draft were published in France. 

In an “explanatory note” the competi- 
tion mandarins stated that "toe experience 
acquired over the past 10 years shows that 
this regulation has not contributed in any 


significant way to either the opening up of 
national markets or to toe development of 
flexible and efficient structures in the dis- 
tribution of cars and spares”. The block 
exemption had to be revised to "remedy 
these defects and stimulate competition". 

The carmakers are incensed tor toe pro- 
posals. They argue that the present regula- 
tion works well, that far from stifling com- 
petition, it actually guarantees it and that 
what the motor industry needs above all is 
stability, as it fights to restructure and 
regain world competitiveness against both 
Japanese and newly resurgent American 
rivals. 

"There are those who wish, in particular 
within the European Commission, to sub- 
ject this industry to an unprecedented and 
arbitrary experiment . . . who seek to 
undermine the whole foundation of auto- 
mobile distribution in Europe." says Gior- 
gio Garuzzo, chief operating officer of the 
Fiat group and president of Acea, the 
European Automobile Manufacturers 
Association. 

The assault on the carmakers in Brus- 
sels has been led by the consumer organi- 


sations, chiefly through Beuc, toe Bureau 
Europ6en des Unions de Consommateurs. 

Jim Murray, director of Beuc. says that 
the block exemption been “an unmiti- 
gated disaster for consumers". Beuc 
accepts the need for competent, trained 
personnel to carry out garage servicing 
- the notion of "selectivity” allowed in the 
regulation. 

B ut it claims that there is "no basis 
whatsoever” for allowing toe pres- 
ent twin notions of exclusivity, that 
allow manufacturers firstly to limit toe 
number of outlets on a geographic basis, 
and secondly to restrict them from stock- 
ing more than one brand. 

“Why shouldn't new car buyers have the 
chance to compare different brands at a 
single outlet?" asks Mr Murray. “This is 
the sort of consumer-friendly distribution 
we would like to see in place after 1995." 

Beuc also maintains that the ori ginal 
block exemption of 1965 was granted on 
toe condition that new car prices across 
the then European Community should not 
diverge beyond certain limits, namely 12 


per cent in toe long term and 18 per cent 
for periods of less than one year. It was 
also agreed on condition that individual 
consumers were at all times free to buy 
cars across borders from another member 
state. On both counts, the block exemption 
has failed, it says. 

The most recent car price study by the 
commission published this summer 
showed that 22.5 per cent of the models 
produced by European manufacturers had 
price differentials of more than 20 per 
cent And as far as cross-border car-buying 
is concerned, Beuc is scornful. It claims 
that consumers that try to buy cars 
abroad are met with enormous difficulties, 
both from dealers and carmakers and from 
insfitnti nnai barriers In national import, 
registration and tax regulations. 

Acea has led the call for the extension of 
the existing vehicle distribution system 
for another 10 years, essentially without 
modification. 

Rudolf Beger, Acea executive secretary, 
claims that cars are different and cannot 
be distributed like other products such as 
toasters or washing maohinas. Cars are 


the most complex consumer goods on the 
market, and the way in which they are 
serviced has big implications for both 
safety and the environment. 

The carmakers claim that the competi- 
tion directorate has provided “no factual 
evidence whatsoever" to support the case 
for radical reforms. Competition has 
increased greatly during the past 10 years, 
says Acea. 

Between 19S6 and 1993 the number of car 
brands sold on the German market has 
jumped by 50 per cent from 44 to 66. The 
□umber of models and versions sold in 
France has risen by 47 per cent from 515 in 
1986 to 758 in 1993. 

Surveys in toe US show that customer 
satisfaction with conventional one-make 
dealers is consistently higher than with 
dealerships selling various brands, says 
Mr Beger. 

The carmakers argue that exchange rate 
fluctuations are the biggest cause of 
diverging car prices, not selective distri- 
bution. "Total price harmonisation will 
remain a fantasy as long as there is no 
truly unif orm market with harmonised 
taxes combined with a single currency or 
a prolonged period of guaranteed currency 
stability,” argues Mr Beger. 

As for cross-border car purchases, Acea 
says that it is already happening. “In 
recent years more and more customers 
and dealers have purchased cats in other 
member states,” says Mr Beger. 





The company 
that makes the 
fastest moving car 
in British history 
isiit American, 
European 
or Japanese. 


PROTON, Malaysia’s national car International Motor Shows. 


manufacturer, has been driving the British 


It’s a testimony of the British confidence 


automobile manufacturer. 


market, and since 1989 PROTON cars have in PROTON quality and value that has 
been the fastest selling new import in the established PROTON as a world-class 
United Kingdom, ever. 

PROTON cars have won numerous 
awards. in Britain, including an unprecedented 
6 gold medals at three consecutive British 


jDnot:cji\ 

Perusohoon Otomobti Kosiooal ficrhod 


Manufacturer of the Malaysian National Car. 

HICOM Industrial Estate, Batu 3, P.O. Box 7100, 40918 Shah Atom. Selangor Darul Ehsan. Malaysia. Tek603-51 1 10S5. 
TdexJROTON MA 38545. Telefex.-603-51 1 1252. 


BftuacnaPB 




v 


mg data lor tJio monitoring or targets, ana me iur me uhimiuiu wosie i™ »»»'*•• 




IV 


FINANCIAL TIMES TUESDAY OCTOBER 4 1994 


★ 

WORLD CAR INDUSTRY 4 


German luxury carmakers: Kevin Pone finds BMW and Mercedes-Benz undertaking radical strategy changes 

Striking departures for market leaders 


S watch watch boutiques 
have run a special offer 
at some European air- 
ports this year. "Buy three 
Swatches, get a fourth free.” 

It is an approach to market- 
ing that might help to sell mil- 
lions of cheap watches a year, 
but until recently It could 
hardly have been further 
removed from the refined 
world oE Mercedes-Benz. 

But the joint venture 
announced earlier this year 
between the prestigious Ger- 
man luxury carmaker and 
SMH, the Swiss pioneer of 
cheap and cheerful watches, to 
develop a micro compact car is 
one of the most dramatic signs 
yet of the radical change of 
strategy embarked upon by 
Mercedes-Benz. 

In a striking departure from 
corporate tradition the German 
group has mapped out a future 
for itself as a maker of a full 
range of cars from flagship lim- 
ousines to two-seater micro 
city cars. 

BMW. its arch domestic 
rival, is demonstrating a simi- 
lar ability to rethink its posi- 
tion in the world car Industry. 
The Munich-based producer 
has previously built its reputa- 
tion on a fierce independence 
and a profound reluctance to 
enter alliances with any other 
carmaker. Yet this year it has 
moved to broaden substan- 
tially its industrial base with 
the takeover of Rover group 
from British Aerospace. 

Through the acquisition of 
the leading UK vehicle maker. 
BMW has doubled its produc- 
tion capacity and has become 


the foremost European maker 
of four-wheel drive sport/uttlity 
vehicles with Land Rover. It 
has acquired several new 
brand-names - most impor- 
tantly Rover and MG as well as 
Land Rover - along with a 
position in the European mar- 
ket for small and medium-sized 
Erontwheel drive cars. 

Both Mercedes-Benz and 
BMW have accepted that their 
car operations can no longer be 
dependent solely on a German 
manufacturing base. They are 


Last month the first 
BMW roiled off the line 
at the group’s $400m 
plant at Spartanburg, 
South Carolina 


moving fast to establish for- 
eign assembly plants, most 
importantly in North America, 
but also in developing markets. 

Last month the first BMW 
rolled off the assembly line at 
the group's $400m plant at 
Spartanburg. South Carolina, 
making it the only European 
carmaker with an assembly 
plant in the US. Mercedes-Benz 
is not Ear behind, however, and 
is developing its first North 
American passenger vehicle 
plant in Alabama, where pro- 


duction should begin at the 
end of 1996. 

The shake-up at Mercedes- 
Benz is one of the most sur- 
prising in the world auto 
Industry. The group has 
embarked on a Ear-reaching re- 
alignment of its new product 
strategy after admitting pub- 
licly the unpalatable truth that 
the company's luxury cars 
were “over-engineered ”, and 
that if it persisted with such a 
policy for developing new mod- 
els, It would end up being 
“priced-out’* of world markets. 
Mercedes-Benz's new strategy 
means that by the late 1990s it 
will have launched a whole 
series of vehicles into new seg- 
ments of the world market 
including : 

• a multi-purpose vehicle 
called Viano, to rival models 
such as the Renault Espace 
and to be built in Spain, 

• a modem four-wheel drive 
sport/utility vehicle that will 
be assembled in the new plant 
in the US, 

• a small family car sized 
between a Volkswagen Golf 
and a Ford Fiesta, to be pro- 
duced In Germany, and most 
surprisingly 

• the micro compact car. a 
two-seater for urban commut- 
ing. that is under development 
with SMH. 


Helmut Wemer, Mercedes- 
Benz chief executive, claims 
that the group's traditional 
customers are on the move 
into new markets, and the 
executive and luxury carmaker 
must be there to meet than. 

Referring to the plan to cre- 
ate the so-called “Swatchmo- 
bile” he says boldly: “We 
intend to create a market seg- 
ment which has hitherto not 
existed in this form yet pro- 
vides substantial growth poten- 
tial . . . The micro compart car 
is ideally suitable to re-de.fi ne 
urban mobility. “ 

Mr Wemer expects to decide 
by the end of the year on the 
location of the first assembly 
plant for the mini car in 
Europe, which Is likely to have 
a capacity to produce about 
130,000 cars a year with a 
workforce of only 1,000 to L2Q0. 
Output is scheduled to begin in 
1997. 

The engineering and manu- 
facturing strategies for the 
mlnfcar will break new ground 
for Mercedes-Benz with the 
extensive use of outside auto- 
motive engineering consultan- 
cies and 70 to 80 per cent of the 
components purchased from 
outside components. 

The Mercedes-Benz transfor- 
mation is not being achieved 
without pain, although the car 


operations have broken back 
into profit this year after last 
year's heavy losses. 

The recovery this year has 
been helped by severe mea- 
sures to cut costs and jobs, to 
boost productivity and to 
rationalise operations, but it 
has also been supported by an 


improvement in Mercedes- 
Benz’s car sales and the suc- 
cessful launch a year ago of 
the new C-Class executive car 
range. 

Car production in the first 
half of the year jumped by 44.3 
per cent to 302J176, while car 
sales volumes increased by 40.3 


per cent to 296.770 and turn- 
over rose by 22.8 per cent to 
DMSUbn. 

The new projects under 
development are expected to 
increase Mercedes-Benz car 
production to around lm units 
a year by the end of the decade 
according to Edzard Reuter. 


chairman of the Daimler-Benz 
group management board. 

Mercedes-Benz is planning to 
increase the share of Its car 
production outside Germany to 
10 per cent in the medium-term 
from only 2 per cent at present 
with production growing in 
countries such as the US. 
Mexico, South Korea and India. 

With the marketplace frag- 
menting BMW, too, has 
accepted that it must move 
into new segments to add to its 
niche of high-performance 
executive and luxury cars. 

It could have continued to go 
it alone and develop the neces- 
sary products itself, but that 
would have taken time and 
would have been much more 
expensive. Instead, it has cho- 
sen the riskier fast track of 
acquisition. 

It believes that with Rover it 
has also found a viable way of 
entering the small car market 
without diluting its own pre- 
cious brand image. Rover is to 
be its centre for small car 
development “You must not 
over-stretch the core brand val- 
ues of BMW. A small BMW 
would not comply with the 
hard core BMW image, that we 
have worked for 20 years to 
achieve,” says Bemd Pischets- 
rieder, BMW management 
board chairman. 

Mercedes-Benz and BMW are 
both striking out in bold new 
directions, but they have cho- 
sen very different routes to 
enter the small car market. “1 
told Werner he was wrong,” Mr 
Pischetsrieder said earlier this 
year. “Clearly he does not 
think so.” 



Sign of change: Mercedes-Benz Men Compact Car, a joint venture with SMH, the maker of Swatch watches 


T he scene of the industrial 
espionage battle between 
Volkswagen and General 
Motors has moved from the 
high ground and the newspa- 
per headlines into the legal 
quicksands. 

Investigations of the circum- 
stances surrounding the defec- 
tion to VW of Jos6 Ignacio 
L6pez de Arriorttia, the US 
group's global purchasing 
supremo, in March last year 
have become bogged down in 
mountains of paper in Ger- 
many and enmeshed in an 
ever-more complex transatlan- 
tic tussle involving lawyers 
and politicians. 

But GM remains convinced 
that the probe into what a 
German judge described as 
“potentially the biggest-ever 
case of industrial espionage” 
will eventually show that at 
the time VW recruited Mr 
Lop£z along with seven of his 
closest associates from Detroit 


Christopher Parkes reports on the industrial espionage battle between Volkswagen and General Motors 

Ever-more-complex transatlantic tussle 


and the group's German sub- 
sidiary, Adam Opel, it also 
gained access to vast volumes 
of General Motors’ confiden- 
tial data. 

Staff poaching and charges 
of dirty dealing are common 
enough in the world of inter- 
national business, but the 
intensity of GM’s attack on 
Europe’s biggest volume car- 
maker and the scale of the 
allegations it has made have 
yet to be matched in the motor 
trade. 

The basic charges are that at 
the same time as Mr L6pez 
was negotiating bis terms at 
VW (and consistently denying 


that be was about to leave 
GM). he and his associates 
were systematically looting 
Adam Opel’s industrial 
secrets. 

These included details of 
Op el's entire European compo- 
nent supplier network and key 
contract data, especially 
prices; plans for a new-style 
low-cost, high speed car fac- 
tory, and information on new 
models. 

Mr Ldpez has consistently 
denied any wrong-doing, and 
has got on with his new Job. 
Formerly r en own ed within GM 
for squeezing price conces- 
sions out of component suppli- 


ers, he was charged by his new 
boss. VW chairman. Ferdinand 
Pigch, with a leading role in 
helping the German group 
daw back a 30 per cent pro- 
duction cost disadvantage in 
relation to French and Japa- 
nese competitors. 

Now, while VW races to 
reach the promised break-even 
point this year after last time’s 
DM2.3bn loss, a German crimi- 
nal inve s tigation, launched in 
May, 1993 after GM aired its 
initial suspicions at the public 
prosecutor’s office in Darms- 
tadt. is gnawing snail-fashion 
at a mountain of paper and 
electronic data. 



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Dorothea Holland, until four 
months ago the only prosecut- 
ing lawyer on the German 
case, assembled this mountain 
- officially estimated as equiv- 
alent to about 2m computer 
print-out sheets - daring one of 
the more spectacular phases of 
the probe, in a raid on VWs 
headquarters in August last 
year. 

Now, reinforced by at least 
one other prosecutor, she and 
her team have disappeared 
into the pile of paper. 

Following a steady flow of 
leaks and statements on 
apparently incriminating dis- 
coveries, her office has been 
gagged by senior legal authori- 
ties. 

No farther announcements 
will be made until a decision 
has been reached on whether 
there is evidence enough to 
indict Mr Ldpez and/or his 
associates. Until the gag was 
imposed, Ms Holland had 
appeared to be making sub- 
stantial progress. 

According to her office, 
boxes which were discovered 
early to the investigation to 


the former home of two of Mr 
Ltipez’s colleagues were found 
to contain some of the alleg- 
edly confidential documents 
which GM claimed h ad disap- 
peared at the time of Mr 
Ldpez’s leaving. 

These included plans for the 
0-Car. a mini-style vehicle 
designed for the hard-fought 
European market, and detailed 
price information. 

According to eye-witness 
reports which to date have not 
been challenged by VW, tiie 
apartment's former occupants, 
now employed by the German 
group, had earlier been 
observed shredding large 
quantities of documents with 
two machines. 

By VW’s own admission, 
shredders were also used in its 
corporate guest house in 
Wolfsburg to destroy papers 
and other materials which 
arrived there almost immedi- 
ately after Mr Ldpez’s appoint- 
ment to the VW board. 

According to VWs state- 
ments, the “possibly sensitive” 
material was shredded to pre- 
vent its circulating within the 


VW group. 

In late April this year, just 
before the flow of progress 
reports dried up, Ms Holland’s 
office reported that the haul 
from her VW raid had been 
found to include plans for a 
revolutionary car factory, 
known as “Plant B” within 
VW, which showed striking 

A US probe, started 
at the instigation of the 
Commerce Department 
in Washington, is stuck 
at the German border 

similarities to Opel’s “Plant 
X”. It also emerged that far- 
ther GM data was discovered 
on a computer diskette that 
had been compiled by one of 
Mr Ldpez’s daughters. 

Meanwhile, a US probe, 
started at the instigation of 
the Commerce Department in 
Washington, is stuck at the 
German border in a hither- 
and-t hither exchange involv- 
ing local and federal govern- 
ments, the Darmstadt diggers 


and VW's and GM*s legal 
advisers. 

This investigation, which 
was launched after US Presi- 
dent Bill Clinton apparently 
decided that industrial espio- 
nage in general was a threat 
to his nation’s well-being, is in 
principle a for more simple or 
at least more single-minded 
pursuit than that of Ms Hol- 
land. 

The Federal Bureau of Inves- 
tigation is probing possible 
mail and wire fraud. In effect, 
if GM data is found to have 
been posted or transmitted 
across state or federal bound- 
aries without the knowledge 
or permission of its owner, 
then those responsible, the 
recipient or its agents may be 
liable to criminal prosecution 
and huge fines. 

After months of toing and 
froing. the Bonn justice minis- 
try recently agreed in princi- 
ple that the FBI could have 
access to the evidence gath- 
ered to the German investiga- 
tion. 

However, since under Ger- 
man law VW has a right to 
know details of any proposed 
information exchange, and the 
right to challenge any planned 
moves in court, the scene 
appears to be set for an 
extended interlude that will 
spell yet more frustration for 
GM and relief for the VW man- 
agement 


Christopher Parkes examines restructuring tactics in Germany 

Markets approach saturation 


The recent downgrading of 
Daimler-Benz's long-term debt 
by the Standard & Poor’s rat- 
ings agency came as an unnec- 
essary but timely reminder for 
the German automotive indus- 
try that this year's expected 
recovery in profits, however 
welcome, has yet to be under- 
pinned by an enduring 
improvement in competitive- 
ness. 

As S&P said, despite a 6.8 per 
cent Increase in European car 
registrations in the first halt 
long-term demand growth was 
likely to slow as markets 
approached saturation. At the 
same time, increasing eco- 
nomic integration within the 
region, the erosion of world 
trade barriers and intensifying 
price competition would proba- 
bly heighten the impact of 
future ups and downs in the 
economic cycle. 

Profits are set to increase 
across the board this year after 
last year's slump into losses by 
all but BMW, and most ana- 
lysts expect further improve- 
ments as the end of the decade 
approaches and the savings 
wrought by rationalisation in 
the past two years show up. 

The most striking change in 
German factories has been on 
the shop floor, where automo- 
tive company's workforces 
have been slashed and reorgan- 
ised. From a peak of 78SL000 
employees in July 1991, the 
industry had reduced its head- 
count by 150,000 to July this 
year, and a further 50,000 jobs 
are scheduled to go. Team 
working and continuous 
improvement processes have 
become commonplace methods 
of increasing productivity. 

BMW, earliest into restruct- 
uring and the most advanced 
down the road to modem pro- 
duction methods, has managed 
a jobcutting programme which 
started in 1969 through natural 
wastage and limited early 
retirement 

Flexible working times, 
short-term contracts For pro- 
duction workers and weekend 
shifts have been introduced to 


cope with fluctuations in 
demand. 

This policy reflects BMW's 
determination to establish a 
new order in its domestic man- 
ufacturing processes. In short, 
long-term investments In 
domestic fixed plant will be 
based on long-term prospects 
and plans, while short-term 
demand shifts will be count- 
ered by the flexible use of man- 
power. 

But even the most bright- 
eyed optimists recognise that 
the savings to be gained from 
cutting and shuffling staff «nq 
reordering working methods 
are not enough to compensate 

for Germany's 

ingrained 
labour cost dis- 
advantages. In 
the most 
extreme 
instances, each 
DM1 in basic 
pay is supple- 
merited by a farther 80 pfen- 
nigs in tax, health, and statu- 
tory and voluntary welfare and 
social benefit contributions. 

One common response has 
been an increase in foreign 
components sourcing - a possi- 
bility enhanced by the develop- 
ment of market economies in 
relatively low-wage countries 
such as Poland and the Czech 
Republic - which has increased 
the estimated average propor- 
tion of non-German parts built 
into German-made vehicles 
from 25 per cent in 1992 to 
about 35 per cent this year. 

There is also an accelerating 
trend towards outsourcing of 
components formerly made 
within car manufacturers’ 
works to specialist suppliers 
which can increase their econ- 
omies of scale and reduce unit 
costs. Hence, for example, Mer- 
cedes-Benz’s recent decision to 
hand over seat construction at 
its Bremen works to Leister 
Recaro. 

Even more significant is the 
emergence of new partnerships 
between vehicle makers 
their suppliers which Is creat- 


The upshot has been 
an acceleration in the 
flow of capital 
investment into the 
developing regions 


ture among components mak- 
ers. Accordingly, Mercedes has 
to the past two months set up 
two trend-setting joint ven- 
tures dedicated to supplying 
Mercedes and outside custom- 
ers with key component mod- 
ules. 

Accordingly, its future sup- 
plies of complete power 
steering units will be supplied 
from an operation set up with 
and to be operated by ZF. 
Volkswagen has said it may 
join in later. Mercedes has also 
bundled its engine valve 
systems manufacture, cur- 
rently focused in a factory in 
Bad Homburg, into a separate 
arrangement 


with two parts 
suppliers in a 
three-sided 
operation to be 
know n as 
MWP. 

But the most 
telling change 
in German management think- 
ing has been wrought by the 
realisation that its traditional 
sales ground, western Europe, 
is virtually saturated. 

Average annual growth for 
the next few years may reach 
per cent, according to some 
estimates, but average expan- 
sion for the 1990s as a whole is 
expected to be only 1 to 2 per 
cent 

According to Achim Diek- 
mann, chief executive of the 
VDA industry association, the 
situation In the 1980s when 90 
per cent of world market 
growth sprang from Europe, 
the US and Japan, has been 
virtually reversed in the 1990s 
with 70 per cent coming from 
the Asean region, newly-ludus- 
trlalised countries and Latin 
America. 

While motor vehicle sales in 
Latin America alone are expec- 
ted to double to 5m units a 
year by 2000. the VDA esti- 
mates that vehicle output in 
Asia - a mere 2m units in 1990 - 
will have increased four fold by 
the end of the decade. 

As has been recognised in 


tog a new hierarehical struc other ciSTSSS 


in 


other industries, the chances of 
carving out a subs tantial share 
of such markets via exports 
out of high-cost Germany axe 
slim. The upshot has been an 
acceleration in the flow of capi- 
tal investment into the devel- 
oping regions. 

Announcements of joint ven- 
tures in assembly and to a 
lesser extant full-scale manu- 
facturing are becoming regular 
occurrences. Although over- 
shadowed in terms of scale by 
such investments as BMW’s 
and Mercedes' first US manu- 
facturing plants, due to open 
shortly, the trend is now 
dearly set 

Mercedes, targeting the Chi- . 
nese bus market, has three 
joint manufacturing ventures 
under development or study, to 
India it has a majority stake in 
a new concern to manufacture 
B-Class executive saloons. - 
Volkswagen was early Into the 
Chinese car market and is now 
enjoying rapid sales growth. 
But it has had less luck else-, 
where as continuing shake- 
outs at its ventures in Spain’s 
Seat and Skoda demonstrate. 
Autolatina, a collaborative 
venture between VW and Ford 
to Brazil is also on the verge of 
restructuring. 

Meanwhile, its arch rival to 
the German market, Adam* 
Opel is stretching its wings 
into every accessible comer of 
the emerging global market for 
passenger cars. A network cf 
Opel assembly plants stretch* 
tog from Poland to Indonesia is 
being established around a cen- 
tral hub at the company's' 
Russelsheim technical develop- - 
ment centre near Frankfurt 

While other German maud- r 
facturers’ plans appear less 
clearly defined, they share the 
same logical basis as Opd‘£ _ 
while their high domestic costs, 
and the expensive D-Mark mili- 
tate fiercely against exports, 
Germany’s high reputation for , 
technical excellence is the; 
passport which will give than 
a fi ghting chance in the new 
markets needed to secure their 
long-term future. 



i 


i 






FINANCIAL TIMES TUESDAY 4 1994 






WORLD CAR INDUSTRY 5 













T E* “l™ Honda between 
aca T t for one-third of 
“®^ s aanual ^ production by 
me year 2QOO. or G50.000 units. Koich^ 
Yoshiz awa, Honda's fanner chairman, pre- 
dicted during a recent visit to London. Bv 
then, he maintained, they wffl have scent 
a total of £2.2bn on their UK ferihtiteand 
be employing 10,000 people 
There is reason to think that Mr Yoshi- 
zawa was being conservative. Nissan is 
already committed to 300.000 capacity but 
has hinted that 400.000 could be the goal 

by the end of the decade. 

Honda has committed to 150.000 by the 
late 1990s but is keeping long-term options 
open on a move to 200.000. Toyota has 
already reached its phase one production 
rate of 100,000 cars a year with just one 
car, the Carina; is expected to add the 
smaller Corolla, and will almost certainly 
be producing 200,000 care or more from Hs 
Bumaston plant in Derbyshire by the end 
of the decade. 

That is by no means the end of the 
Japanese manufacturing presence in 
Europe. 


Next spring, NedCar a joint venture 
between Mitsubishi Motors, the Dutch gov- 
ernment and Volvo of Sweden, is to start 
producing up to 200,000 lower-medium 
sized cars at the radically mnrtw-mqod for- 
mer Volvo BV plant at Bom in southern 
Holland. One half of the output will be 
badged as Mitsubishi, the other Volvos. 

Both Nissan and Suzuki have production 
operations in Spain, capable of contribut- 
ing nearly 150,0 00 vehicles a year to Japa- 
nese production in Europe, although both 
have run into difficulties. 

Meanwhile Suzuki has done a d ea l with 
Subaru, part of Fuji Heavy industries, 
under which Suzuki will build up to 12,000 
four-wheeWrive cars a year at the Hun- 
garian plant at which Suzuki already 
makes its Swift front- wheel-drive car. The 
4wd vehicles wffl be badged as Subarus. 
with deliveries starting nest year. Swifts 
have been rolling off the Magyar Suzuki 
assembly line for about a year now at 
Esztergom, 40km north of Budapest 

Even allowing for the Spanish problems, 
then, it is likely that at the end of the 
decade at least lm Japanese cars a year 
will be in production in Europe. Addition- 
ally. Japanese cars are finding their way 
into Europe's markets from the US or from 
Japan itself. 

However, the long-standing fear of the 
European motor industry - and the expec- 
tation of many industry analysts - that 
Japanese carmakers, with their standard- 
setting quality, would inexorably drive the 



Toyota's Bumaston plant in Derbyshire: the Japanese presence in Europe goes wed beyond that of the UK 


At least 1 m Japanese cars will be built in Europe by 2000, says John Griffiths 


Transplants step up exports 


Europeans into endless retreat now look 
much exaggerated. One reason is the soar- 
ing yen, which has made Japanese produo 
ere lose competitiveness. But more impor- 
tant in terms of the Japanese transplants, 
there has been a strong product fight-back 
by indigenous European producers. 

Whatever the pros and cons of this 
debate, while total new car sales in Europe 
rose by 6.8 per cent in this year's first half 
compared with the same period a year ago. 
sales by Japanese carmakers Ml by 5.8 per 
cent Their market share stands at about 
11 per cent compared with 12.4 per cent a 
year ago. 

The setback provides no grounds for 
complacency. The European industry 


expects Japan to regroup and Nissan, for 
one, is already revising its approach to the 
European market, with more frequent 
facelifts now planned for its Twryfeis thaw 
is the norm in Japan. 

Nissan. Japan's second-largest vehicle 
maker, began production at Sunderiand in 
1986 and had built up production to 175.000 
units a year by 1992. Last year’s output 
had been scheduled to reach 270,000 as the 
Micra small car joined Primera produc- 
tion. However, with the UK market 
weaker than expected and a steep down- 
turn then under way in continental 
Europe, Nissan was obliged to trim its 
sails and output levelled off at 246,000. 

Nissan Motor Manufacturing (UK) man- 


aging director Ian Gibson says that cur- 
rent output rates are about 220,000 units a 
year. He refuses to predict what this year’s 
total production might be. 

Despite the problems. Nissan - which 
has won the Queen's Award for Exports 
for three years in succession - emerged as 
tbe iwwdiwg uk car exporter last year, out- 
stripping Rover group. Ford and VauxhalL 
Indeed, the Japanese transplants last year 
accounted for three of the top six places as 
UK car exporters. Seventy-four per cent of 
Sunderland's output was exported. 

A few weeks ago Honda, Japan's third 
largest car maker, announced plans to 
increase by 50 per cent the capacity of its 
Swindon plant in south-west England to 


150,000 a year by the late 1990s. This will 
raise direct employment by 500 to 2,500 
and lift Honda's total investment in the 
Swindon facilities to £700m. according to 
Kazue Ito, president of Honda Motor 
Europe. 

Production of a second model, the Civic, 
is just getting under way at Swindon 
alongside the laiger Accord range with 
which the plant went on stream at the 
beginning of last year. The car will go on 
sale in some parts of southern Europe in 
December, in Germany in January and in 
the UK in March. 

The Civic, which replaces the Concerto 
model which Rover had been building for 
ffnwria on its Longbridge Tinas , is intended 


to lift Swindon's annual output to 100,000 
next year. If all goes to Honda’s plan. 
Swindon will thus provide about half the 
300,000 care a year Honda is hoping to be 
selling by the end of the decade. 

Honda plans to sell about 80,000 of tbe 
Civics in Europe next year, and describes 
the car as the most important it has ever 
launched in Europe. The sales target 
appears modest beside the 200,000 a year 
that Rover intends to build of its version 
of the Civic, the Rover 400. 

Rover is producing the 400 - which will 
look markedly different from the Civic 
- under licence from Honda, continuing 
collaboration put in place before Rover’s 
sale to BMW by British Aerospace and the 
subsequent dism anting of cross sharehold- 
ings between Honda and Rover. 

Honda, initially dismayed and angered 
by the sale of its UK partner to BMW, is 
taking a pragmatic stance about its Euro- 
pean future. 

Fears that the Japanese would simply 
build "screwdriver” plants in Europe with 
minimal local content have long since dis- 
appeared. Nissan, admittedly tbe longest- 
established in tbe UK, already has S3 per 
cent European content, makes its own 
engines and even has its own foundry to 
produce castings. Tbe latest, £30m invest- 
ment is in a facility at Sunderiand to pro- 
duce axles. The only major component 
still to come from Japan is the gearbox. 

Indeed, exports of components produced 
in the UK for the transplants is also on the 
increase. Toyota's £140m engine plant at 
Deeside. Clwyd, is begiiming to supply a 
new car assembly plant in Turkey os well 
as tbe UK production lines. Several UK 
and continental -owned suppliers to Bur- 
naston are also seeing their components 
being exported to Japan itself. 

Japan and the EU ap-eed three years 
ago to set annual EU-wide import quotas, 
to be reassessed every six months, to pave 
the way for a completely open European 
car market by the end or the decade. As 
part of this agreement, restrictions which 
had previously been imposed by individual 
member states became null and void. 

In view of the resumption of sales 
growth in Europe. Japan was planning to 
seek a bigger quota for car exports to tbe 
EU at the latest of the six-monthly talks 
between officials of the European Commis- 
sion and the Japanese Ministry of Interna- 
tional Trade and Industry, in Brussels on 
September 29 and 30. 

Inevitably, there were likely to be robust 
discussions while forecasts were com- 
pared. But so far, the monitoring system 
seems to be functioning fairly welL 






.-O 


: Ir 




France: government incentives have helped the industry but celebrations are muted, writes John Ridding 

Doubts persist on resilience of recovery 



Tbe Feugot 80ft the company h kn proving the comp etitiveness of its range 


T he French car industry 
has turned the corner 
after the black year of 
1993. boosted by special gov- 
ernment incentives for car 
buyers and a revival in the 
French and European econo- 
mies. Monthly sales figures so 
far this year have generally 
recorded double-digit rises, 
providing a stimulus for 
broader economic growth. 

The two giants of the indus- 
try, PSA Peugeot CttroSn and 
Renault, are both on course 
for healthy increases in results 
for 1994 and are benefiting 
from revamped product 
ranges. At Renault, the out- 
look has been helped by last 
month's announcement that 
the government wffl partially 
privatise the state-owned com- 
pany, an operation which will 
be accompanied by a FFr2bn 
capital increase. 

Despite such uplifting fac- 
tors, however, there Is only 
muted celebration at the head- 
quarters of the French car 
manufacturers. Doubts persist 
about the resilience of the 
recovery, while the structural 
problems in the European 
industry have been masked, 
rather than resolved, by eco- 
nomic revival. In France, gov- 
ernment measures to boost 
sales, including a premium of 
FFr5,000 to car buyers who 
trade in a vehicle more than 
10 years old to boy a new one, 
have had a temporary, if sig- 


nificant, effect For Renault, 
there are additional question- 
marks about its longer-term 
strategy after the collapse at 
the end of last year of its plans 
to merge with Volvo. 

Jacques Calvet, Renault’s 
chairman, expressed the gen- 
eral caution at the recent 
launch of a new version of the 
company's Xantia mid-range 
car. Predicting an increase of 
about 4 pa- cent in Europe’s 
car market this year, he said 
that was stifi “bad when you 
realise that 1993 brought a 
drop of about 15 per emit on 
1992". 


At Renault, already one 
of Europe’s most 
profitable car 
manufacturers, the 
current year wiH see a 
strong rise in earnings 


As for France, he said: “I am 
not so pessimistic as at the 
end of July, but I do not hold 
with the forecasts of a French 
market of 2m care in 1994." 

For the Peugeot boss, and 
for most industry observers. 


the French market should nev- 
ertheless see a healthy rise 
thin year. “I think we will see 
a rise of about 12 or 13 per 
cent to just over L9m units,” 
says one analyst' ata French 
merchant bank. 

That kind of improvement 
should lead to earnings 
gro wth at the French manufac- 
turers. Peugeot Citrofen is cm 
course to bounce back to prof- 
its after a net loss of 
FFrl.41bn in 1993. In addition 
to improved market condi- 
tions, the company has been 
implementing productivity 
measures and reducing its 
debt bnrden. Net debts are 
forecast to fall to about 
FFrlObn at the aid of the year, 
compared with FFrl6.7bn at 
the aid of 1993. 

Tbe improved competitive- 
ness of its range - which has 
seen the introduction of the 
106 and 306 models and, more 
recently, its passenger van 
rivals to the Renault Espace - 
is also shown in market share 
figures. In the first eight 
months of 1994, the Peugeot 
group captured 12.7 per cent 
of tiie European market, com- 
pared with 12 per cent in the 


same period last year. 

At Renault, already one of 
Europe's most profitable car 
manufacturers, the current 
year wffl also see a strong rise 
in earnings. First-half results 


announced last month 
revealed net profits of 
FFrl.7bn, more than double 
the figures in the comparable 
1993 period. 

The results were flattered by 


the impact of exceptional 
gains from the sale of shares 
in Volvo, Renault's erstwhile 
merger partner. They also 
masked a decline in operating 
profit, partly reflecting the 


lower margins of entry level 
models favoured by the gov- 
ernment’s incentives. For the 
full year, however, both Ren- 
ault and industry analysts 
expect a strong improvement 
in the bottom line. 

Part of this will come from 
improved international sales. 
Like Pengeot, Renault has 
been extending its tentacles 
into emerging markets in east- 
ern and central Europe and 
Latin America. 

like its domestic rival, Ren- 
ault has benefited from a 
revamped model range. The 
Twingo, the popular mini-car, 
has helped restore its reputa- 
tion for innovation. The Saf- 
rane has strengthened the 
company's position at the 
opposite end of the market 
The question marks over the 
state-owned group relate more 
to its longer-term strategy in 
the wake of its failed alliance 
with Volvo. The spectacular 
collapse of merger plans at the 
end of last year deprived Ren- 
ault of significant cost savings 
from economies of scale and 
the sharing of design costs and 
components. This was a partic- 
ularly important factor witb 


respect to RVL its trades and 
buses subsidiary. 

Since the departure of 
Volvo, the centre-right govern- 
ment of Edouard Balladur has 
indicated that industrial part- 
ners need to be found before 
Renault can be privatised. The 
state will retain a stake of at 
least 51 per cent following 
Renault’s forthcoming flota- 
tion, due to be held by the end 
of the year. Tbe implication is 
that Renault’s future must be 
guaranteed in the increasingly 
competitive car industry 
before it can be released to the 
threats of private sector preda- 
tors. 

For the time being. Renault 
is pursuing a strategy of spe- 
cific targeted alliances, rather 
than a grand partnership & la 
Volvo. Thus, it has recently 
concluded an agreement with 
Iveco, Fiat’s track subsidiary 
to co-operate on the design 
and development of cabins, 
while rejecting the merger of 
its foundry facilities witb 
those of the Italian group. It 
already has extensive 
co-operation agreements with 
Peugeot for the development 
of components. 

Speculation is bound to con- 
tinue, however, about tbe for- 
mation of bigger alliances. 
That is unlikely to deter 
potential investors in Renault, 
particularly given tbe 
restricted supply of shares in 
its forthcoming flotation. 







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FINANCIAL TIMES TUESDAY OCTOBER 4 1994 


WORLD CAR INDUSTRY 6 


T he UK motor trade and 
Industry has entered 
this year's Dual quarter 
in a state of unease and uncer- 
tainty. 

In the first seven months of 
the year confidence was riding 
high. The UK new car market 
was leading Europe out of 
recession faster than anyone 
had predicted. 

After their precipitate fall 
from the record 2L3m market 
that was achieved in 1989 to 
1.59m by 1992. registrations 
had recovered to i.78m last 
year and were up a further 14 
per cent In this year's first 
half. 

With the approach of 
August, the “boom" sales 
month unique to the UK 
because of its annual introduc- 
tion of a new registration letter 
prefix, the Society of Motor 
Manufacturers and Traders 
predicted August registrations 
could reach 0.5m, matching a 
level that has no been seen 
since 1989. 

To the industry’s dismay, the 
boom did not materialise. 
August finished only 2.8 per 
cent ahead of last year at a 
mere 445.000 units. 

It also became apparent that 
the Increase had been fuelled 
entirely by the company car 
sector making long-overdue 
replacements of its fleets. The 
SMUT’S own statistics showed 
that there were substantially 
fewer private buyers in the 
market than in the previous 
year. 

Manufacturers and importers 
have therefore found them- 
selves approaching the final 
quarter with unexpectedly 
high stocks, a renewed ques- 
tion mark over the underlying 
strength of the UK economic 
recovery and a rude shock to 
the already fragile consumer 
confidence that came in the 
form of the first rise in UK 
interest rates for five years. 

Kenneth Clarke, the chancel- 
lor, has warned that more rises 
are in store if Inflation contin- 
ues to edge upwards. To add to 
the last-quarter uncertainty, 
there are no indications that 
this year's Budget, due in late 
November, might contribute to 
the “feelgood" factor so neces- 
sary for private motorists to 
commit themselves to a new 
car purchase. 

Against this background, the 
trade and industry has been 
retreating from earlier fore- 
casts that this year could see 
the UK return to a 2m-plus 
market for the first time since 
1990. Vauxhall, describing the 
recent interest rate rise as 
"unhelpful", has scaled back 


The UK: after August’s boom failed to materialise, the confidence seen earlier this year has disappeared 

Rude shock dealt to the forecasters 









Land Rover production Ones expansion of four-wheel drive activftss is proceeding ; 


its own forecast to l.92m. 

Richard Ide. chief executive 
of Volkswagen/ Audi's wholly- 
owned UK importer, main- 
tains, however, that his com- 
pany “never subscribed to the 
notion of a hatf-a-million 
August”. 

It expects a l.9m market this 
year, rising only slightly to 
l.95m in 1995 and points out 

Many are settling for 
simpler cars with fewer 
expensive options in 
order to reduce their 
personal taxation burden 

that the 60,000 cars built for 
buyers who did not materialise 
in August are going to leave 
market conditions extremely 
competitive for the foreseeable 
future. 

The German company, along 
with some other “traditional'' 
continental importers such as 
Peugeot Citroen and Flat, has 
substantially outperformed the 
market this year, achieving 
unit sales gains of 23 per cent 


for Audi and 27 per cent - in 
large part a reflection of the 
greater freedom of choice being 
given to company car drivers. 
"The executive/luxury sector is 
holding up well but it's almost 
all company money," says Mr 
Ide. 

There appears to be little 
sign of company car drivers 
handing back their keys in a 
favour of a cash alternative - 
something which was widely 
predicted in some quarters fol- 
lowing several years of com- 
pany car benefit tax increases 
well above the rate of inflation 
and the adoption of a new tax 
regime this year based on a 
simple percentage of new cars' 
list prices. 

But where the new tax 
regime is having an effect is on 
the type of cars for which com- 
pany car drivers are opting. 
Many are settling for simpler 
cars with fewer expensive 
options in order to reduce their 
personal taxation burden. Man- 
ufacturers insist, however, that 
there are few examples of driv- 
ers who have been entitled to 
an executive-level car opting 


for a much smaller and 
cheaper one, plus top-up cash. 

Meanwhile, most of the UK 
motor trade and industry Is 
uniting to seek the abolition of 
the August registration letter 
prefix system. Conceived in the 
early 1960s, its declared aim 
was to help make the yearly 
.sales pattern more even, by 
reducing what was then an 
unwieldy sales peak at the 
start of each calendar year. A 
useful proportion of buyers, 
the industry felt, would prefer 
the perceived one-upmanship 
of having the latest number 
plate letter in August. 

The undeclared hope was 
that the "keeping up with the 
Joneses” element of the yearly 
letter would also sell more 
cars. 

For many years, the system 
appeared to achieve both goals. 
Yet by the mid-1980s the 
August sales bulge was already 
getting out of hand; far eclip- 
sing the January sales peak 
and coming to account lor 
almost one quarter of a frill 
year's sales. 

It meant that by as early as 


May of each year, the "let's 
wait Cor the new letter” syn- 
drome was affecting sales. 
July, typically, now accounts 
for little more than 2 per cent 
of the yearly totaL Thus deal- 
ers' cash flow has been dwind- 
ling at the very time that they 
need to acquire large stocks for 
the August "boom”, drawing 
manufacturers as well into 
ever more complex and costly 
stocking finance schemes. 

Not least, dealer workshops 
have tended to be crammed 
with new cars being prepared 
for delivery at the peak of the 
season - a factor hardly likely 
to he in the interest of custom- 
ers, either. 

Finally, when August is 
over, the dealers face the prob- 
lem of what to do with the 
mountain of trade-ins. 

In a recent poll conunis- 
sioned by Automotive Manage- 
ment, more than 200 dealers 
voted six-to-one for the system 
to be scrapped. Most now 
appear to believe that what- 
ever extra sales may have been 
generated in the past, they are 
no longer worth the market 
distortions caused. 

According to Sewells Inter- 
national, the marketing moni- 
toring group, replacing the 
existing system with one 
spreading sales more evenly 
through the year could save 
the industry almost £1.5bn in 
stocking and related costs. 

The Society of Motor Manu- 
facturers and Traders has set 
up a working party to investi- 
gate alternative systems and to 
try and reach agreement 

Most of the production 
expansion is being 

accounted for by the 

Japanese “transplant” 
factories 

within the trade and industry 
on which one should finally be 
put forward to the government. 

It hopes to reach conclusions 
before die end of the year. 
More frequent letter changes, 
the issue of a "personal” regis- 
tration plate to the driver, and 
resurrecting a regional system 
are all coming under consider- 
ation. 

The outcome of the debate 
will be watched with particular 


UK new car registrations 



Volume 

Volume 

Share (%) 

Share {%) 


IM"*# 

Changed) 

Jan-Aug 94 

Jan-Aug 93 

TOTAL MARKET 

1,443,318 

+9JB 

100.0 

1004) 

UK produced 

612.320 

+4.7 

42.4 

44.5 

Imports 

830.993 

+iaa 

57.6 

■ 505 

Japanese mates 

171,570 

+3.6 

IIS 

12.6 

MANUFACTURERS: 

Ford group 

321,975 

+8.7 

99 $ 

22.4 

- Foid 

317,328 

+9.9 

224) 

22.0 

- Jaguar 

4,647 

-3.7 

0.3 

0.4 

General Motors 

242JJ28 

+7-5 

16.8 

17.1 

- Vauxhall 

234^470 

+7.4 

10.3 

18.6 

- Saab* 

7,558 

+8-9 

0.5 

05 

BMW group 

210,810 

+4J 

14.6 

15.3 

- Rover* 

176,370 

+2.9 

12-2 

13.0 

- BMW 

34.440 

+iae 

2.4 

2.3 

Peugeot group 

182^98 

+8-5 

1245 

12A 

- Peugeot 

114.147 

+6.1 

7.9 

8.0 

- Citroen 

66.249 

+9.3 

4.7 

4.8 

Volkswagen group 

96,602 

+27-8 

8.7 

SB 

- Volkswagen 

58,653 

+213 

4.1 

3.7 

- Audi 

18,541 

+27.5 

1.3 

1.1 

- SEAT 

10,492 

+54.3 

0.7 

05 

- Skodatt 

8,916 

+50-5 

0.6 

0.5 

Renault 

86.128 

+21-8 

6.0 

5.4 

Nissan 

66.471 

+6.5 

4.7 

4.9 

Flat groupt 

40314 

+324} 

02 

243 

- Flat 

43.950 

+36.7 

3.1 

25 

- Alfa Romeo 

1,193 

-21.6 

0.1 

0.1 

Toyota 

38^94 

-4.8 

2.7 

3.1 

Volvo 

30214 

-5.4 

2.1 

2.4 

Honda 

28,658 

+35.0 

2.0 

1.6 

Mercedes-Benz 

21,801 

+52-9 

1.5 

1.1 

Mazda 

12,943 

-4.5 

0.9 

1.0 


*BM hakh MU at Swb AuUmobBt and hat ma nagement conMt 
-tKttdon Hanoa AMr *k/ Otxcvory. 

(tn* ho fan J1% of Skoda a id tas nwn n onwnt control. 
fwouata MM Laid* ni&tmOavt. 

Sauroa Socloty of Uotor UnAcuos and Trodan 


interest by overseas car mak- 
ers/ 

The August prefix system is 
unique to the UK. Without it, 
continental Europeans In sum- 
mer are interested in vaca- 
tions, not buying new cars and 
demand in continental Europe 
slumps accordingly. For Fiat, 
Peugeot Volkswagen and oth- 
ers, therefore, producing right- 
hand-drive cars for Britain's 
August “boom” is a valued 
way of keeping assembly lines 
flowing. 

The UK car industry, how- 
ever, is no longer an easy tar- 
get for ambitious importers. 
On the contrary, car produc- 
tion this year might well reach 
a 21-year high as the result of 
prolonged, steady improve- 
ment since the early 1980s - 
when annual output dipped 
briefly below 900,000. 

Last year the UK industry 
produced 137dm cars, a 6.4 per 
cent rise over a year earlier. 
The rise in the first half of this 
year is much smaller, only 


slightly more than 1 per cent 
(to 751.717). 

However, this was largely a 
reflection of production for 
export being affected by reces- 
sion in the opening months of 
the year In continental 
Europe's markets. With most 
of these markets now growing 
again, the upward trend should 
shortly resume. 

Most industry analysts sug- 
gest that production will break 
through the 2m mark well 
before the end of the decade. 

However, this performance 
would have been achieved by 
the motor industry in Britain, 
not a British-owned industry. 
With the sale by British Aero- 
space of Rover Group to BMW 
of Germany this year, only a 
handful of small specialist 
companies such as Rolls-Royce 
and the Blackpool-based sports 
car manufacturer, TVR, are 
UK-owned. 

And most of the production 
expansion is being accounted 
for not by old-established com- 


panies such as Ford (still UK 
market leader) and General 
Motors* Vauxhall subsidiary, 
but the much more recent Jap- 
anese "transplant" factories. 

Toyota started production of 
the Carine E (for Europe) 
upper-medium car range at the 
beginning of last year. By year- 
end it had built 37,000. Output 
jumped to 43,000 in this year's 
first half and industry analysts 
DRI McGraw-Hill project 
nearly 91,000 this year, rising 
to 200,000 by 1997 - by when, 
DRI predicts. Toyota will have 
introduced a second model, the 
smaller Corolla, to the Burnas- 
ton lines. 

Toyota has yet to confirm 
this; nor has it publicly given 
DRI any reason to predict that 
Toyota's output will reach 
nearly 300,000 before the end of 
the decade - well above the 

200,000 capacity Toyota has so 
far indicated for the plant 

However Honda, whose 
Swindon plant began produc- 
ing the Accord upper-medium 
saloon at the end of 1992, and 
which is also about to start 
producing the smaller Civic, 
has already announced a 
£330m programme to expand 
Swindon’s output to 150,000 
cars a year by the end of the 
decade, from the 100,000 expec- 
ted in 1995. 

Nissan, which made Its deci- 
sion to man ufac ture in the UK 
almost exactly 10 years ago. 
has also hinted that its current 

200.000 capacity may be dou- 
bled by the aid of the decade. 

It is unlikely that a similar 
announcement from Toyota 
will be very long delayed. 

Total Japanese output in the 
UK last year was 316,000 cars, 
23 per cent of the total. Of 
these 237,000 were exported - 
some 45 per cent of the UK 
total. 

However, while the output of 
Ford and Vauxhall has fallen 
back. Rover’s drive upmarket 
is continuing to pay it divi- 
dends. Expansion of its Land 
Rover four-wheel-drive activi- 
ties is proceeding apace, 
thanks to soaring world-wide 
demand for Its Discovery 
model, while a rash of new 
products in the next 18 months 
will include Rover's version of 
the new Honda Civic, the 400; a 
new 200 hatchback, an MG 
sports car and a Metro replace- 
ment. 

DRI, for one, believes that 
the various product pro- 
grammes will see Rover produ- 
cing more than 500,000 cars a 
year by 1997, compared with 

407.000 last year. 

John Griffiths 


The Bosch 

National 

Curriculum 




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F or evidence of bow bad 
the past couple of yeans 
have been for the Italian 
car market, you need only 
look at Fiat Auto, with its 44 
per cent share. 

In 1993. the company - 
which manufactures under six 
different brand-names, includ- 
ing Flat. Lancia, and Alfa 
Romeo - lost Ll,745bu, after 
only breaking even in 1992. 
The Fiat industrial group 
reported a record loss of 
Ll,783bn after tax and minor- 
ity interests, reflecting its 
dependence on the automotive 
business. 

Not only was the state of the 
European car market grave, It 
was nnexpected. Gianni 
Agnelli, chairman of Fiat 
group, said In July that it was 
“only matched by the collapse 
in demand after the first oil 
shock 20 years ago”. 

Signs of recovery in the Ital- 
ian market are slower to 
appear tban in the rest of 
Europe. While deliveries in 
Europe rose an average or 6.6 
per cent in the first half of 
1994, the number of units 
delivered to clients by Italian 
distributors slipped 2.6 per 
cent to 1.058m, from 1,086m in 
the same period, according to 
Anfia and Unrae, the Italian 
trade bodies for automobile 
manufacturers and importers. 

Italian car buyers are 
already punished by the high 
cost of petrol, and the high 
level of taxes on new cars but 


O ptimists about the 
Spanish car industry 
will point to this year's 
surging sales figures, while 
pessimists will underline the 
traumas undergone by Seat, 
the VW subsidiary and Spain's 
biggest producer, and by San- 
tana. the now all-but-bankrupt 
small company owned by 
Suzuki. But few in the domes- 
tic industry doubt that the 
optimists hare the day. 

In the first eight months of 
this year car registrations in 
Sp3in rose 20.5 per cent on the 
January -August 1993 market 
total, well ahead of the Euro- 
pean Union average, to 555,000 
units. The forecast is that the 
final 1994 registration figure 
will be about 900,000, comfort- 
ably up on last year though 
short of the historic high of 
l.lm cars registered in 1989 at 
the height of Spam's growth 
period. 

A key element in this rush 
for registrations has been a 
government programme that, 
imitating a French initiative, 
pays owners of a 10-year-old 
car PtalOO.OOO (S7S1) for trading 
in the vehicle for scrap to buy 
a new one. Few government 
subsidy initiatives have met 
with such a ready response 
from the public- 


Italy: Fiat is still shaking off effects of recent losses, says Andrew Hill 

Labouring in the slow lane 


in the first quarter of 2994 the 
market was also hit by politi- 
cal uncertainty, ahead of the 
March general election. 

Optimism after the victory 
of Silvio Berlusconi’s right- 
wing alliance was undermined 
by the new government's fail- 
ure to clarify whether it would 
introduce incentives for first- 
time car-buyers and existing 
owners wanting to replace 
their vehicles. 

'At the moment, prices 
are much lower than in 
the rest of Europe, 
possibly by as much as 
15 or 16 per cent 1 

Elat claimed potential cus- 
tomers were holding back 
from buying because they 
thought incentives could be 
round the comer. As Mr 
Agnelli observed tartly at the 
group's annual meeting in 
July, car sales in France and 
Spain - both had enacted mea- 
sures to improve demand - 
increased substantially in the 
first five mouths of the year. 

In the past couple of 
months, however, better news 


bas began to filter through 
from the market Official sta- 
tistics in Italy are notoriously 
sluggish to emerge, bat projec- 
tions from the ministry of 
transport indicated that regis- 
trations in August increased, 
compared with the equivalent 
period last year, sustaining a 
year-on-year monthly increase. 

Promotor, an independent 
car Industry research group 
based in Bologna, observed in 
September that the faint signs 
of a general Italian economic 
recovery were beginning to 
stimulate the car market 

Some 58 per cent of Italian 
dealers polled by Promotor at 
the end of August said the 
level of orders was normal or 
high, compared with only 20 
per cent in June, and 29 per 
cent In July. Only 16 per cent 
of dealers thought demand 
would drop over the next three 
or four months. Consumers, 
cajoled by aggressive autumn 
promotions, may now go 
ahead with purchases which 
were postponed for the first 
two-thirds of the year. Fiat in 
particular, has put much pro- 
motional weight behind its 
new Pun to small car, Italy’s 
bestseller. 


However, there are plenty of 
reasons to be cautious about 
the statistical evidence. The 
main one being that the fig- 
ures may be distorted by the 
high proportion of "parallel 
exports" from Italy to other 
countries where prices are 
generally higher. 

Until two years ago, it was 
Italians who slipped across the 
border to buy up to 50,000 or 
60,000 cars a year from dealers 
in neighbouring countries. 
After the September 1992 
devaluation of the lira, how- 
ever, it is Italy which is bene- 
fiting Cram the bargain-hunt- 
ing traffic, officially 
discouraged by the car distrib- 
utors. 

"At the moment, prices are 
much lower than in the rest of 
Europe, possibly by as much 
as 15 or 16 per cent.” says 
Gian Primo QuagUano, direc- 
tor of Promotor. “But with dis- 
counts offered by dealers and 
intermediaries, that can rise to 
more than 20 per cent " 

He estimates that out of 
some 1.9m sales likely to be 
recorded this year by Italian 
dealers, as many as 250,000 
could be accounted for by par- 
allel exports, compared with 




••*■**. 


AgneHfc incentives are needed to 
woo potential customers 

150,000 in 1993. "Sales are 
roughly at the same level as 
last year, but this total is 
made up of Internal demand, 
which is still cautious, com- 
pensated by [parallel] 
exports,” says Mr Quagiiano. 

Fiat Auto, which is pressing 
the transport ministry for 
more efficient statistical Infor- 
mation about the Italian mar- 
ket, warns that some parallel 
exports may be counted twice. 


Spain: a subsidy scheme has helped push up sales 

Optimists have upper hand 


The so-called Renove pro- 
gramme was brought in for a 
six-month period which expires 
this mouth and manufacturers, 
who say that tt has accounted 
for some 70 per cent of the 
sales that have been made 
while it has been in operation, 
are seeking to have the pro- 
gramme renewed for another 
six months. 

The Renove incentive showed 
that attractive pricing can 
work wonders In what is poten- 
tially a very large domestic 
market. Unsurprisingly, manu- 
facturers are lobbying the gov- 
ernment to strike out a 13 per 
cent car tax on new purchases 
which, when combined with 
the Value Added Tax that is 
levied on vehicle acquisitions, 
places a 28 per cent tax burden 
on buyers. 

Vehicle exports have also 
done well and stood at 73 per 
cent of total production in the 
first half of this year, a ratio 
which is at least five points up 
on what in recent years has 


been considered normal for 
Spain's largest export-driven 
industrial sector. 

Two factors have spurred 
sales outside Spain: the com- 
petitive peseta after three 
devaluations of the national 
currency in 1992-93; and the 


likely to be reexported. 

The likelihood is that the 
emerging markets will sustain 
the momentum of Spanish car 
exports when the EU recovery 
dampens the demand for small 
cars. 

Nevertheless, most headlines 


As EU recovery dampens demand for 
small cars, emerging markets will grow in 
importance for Spanish exports 


increased attraction, during 
times of recession, of the small 
and cheap cars in which Spain 
specialises. 

New markets outside the EU 
for Spanish care -In eastern 
Europe, North Africa and Latin 
America - are estimated to 
represent not much more than 
5 per cent of the export total, 
though statistics may mislead 
since Spanish-built Renault-Ss, 
for example, which are nomi- 
nally exported to France, are 


about the domestic car indus- 
try have concentrated on Seat 
and Suzuki. 

Both firms are In trouble but 
neither is representative of the 
sector as a whole, says Carlos 
Espinosa de los Monteros, pres- 
ident of Anlac. the Spanish car 
m a nu fa c turers' federation. 

Seat went through a trau- 
matic period at the end of last 
year when its VW parent 
announced the closure of its 
30-yearold plant by the port of 


Barcelona. However, this 
development had long been 
awaited, particularly as VW 
had invested strongly in a new 
Seat facility outside Barcelona 
which will probably be the last 
big car plant to be built in 
western Europe. 

The new Seat plant at Marto- 
reU, north-west of Barcelona, 
says a great deal more about 
VWs commitment to car pro- 
duction in Spain than does the 
messy and emotionally-fraught 
closure of the historic, but 
obsolete, plant in Barcelona's 
Zona Franca port area. 

Suzuki was dragged into 
labour disputes early this year 
when it announced that it 
would withdraw from the 
small Santana production cen- 
tre that builds Vitara 
four-wheel drive vehicles. 

After a series of under-sub- 
scribed capital increases the 
Japanese giant, which had 
entered Santana as a junior 
partner to provide technical 
support, unwittingly found 


as registrations for Italy and 
the final country of destina- 
tion. 

Parallel exports are stUI 
sales, however, and the cur- 
rency devaluation bas 
undoubtedly benefited Italian 
manufacturers, even on the 
home market. For example, 
the strong yen has discour- 
aged Japanese imports, fur- 
ther shielding Flat and its 
mean European and US com- 
petitors on the Italian market, 
from the Ukely effects of full 
liberalisation of the European 
Union car sector in 1999. 

In the first half of the year, 
Italian car-makers (that is 
mainly Fiat, plus some special- 
ist manufacturers) accounted 
for 4&89 per cent of the total 
number of cars delivered, 
according to the Anfia/Unrae 
statistics - an increase of 
more than 1 percentage point 
on their market share In the 
first half of 1993. 

Fiat group is forecasting a 
return to overall profit in 
1994. But Flat Auto is still rel- 
atively pessimistic about its 
home territory. "For us the 
Italian market isn’t showing 
any signs of recovery. 
Although we have had one or 
two months where sales have 
increased the trend generally 
this year is static," says Fiat 

For Fiat Auto's Italian 
operations - and, by exten- 
sion, for the Italian car market 
as a whole - the real recovery 
will not be Pelt until 1995. 


itself to be the virtual sole 
shareholder of a company that 
tt had no intention of owning. 

The chief problems at San- 
tana, which formerly manufac- 
tured Land Rovers and was 
controlled by the UK's Rover 
group, are that it lacks a 
strong product and is strapped 
for cash. 

This Is not a situation that 
on either count bears resem- 
blance to any other vehicle 
producer in Spain. 

At present the small San- 
tana plant, based in the other- 
wise agricultural town of Lin- 
ares in the south and far fro 01 
Spain's main industrial cen- 
tres, is fitfully building Vitaras 
and hoping that a Korean 
group will step in to take up 
SuzuM's burden. The Japanese 
producer has already served 
notice that it intends to pun 
out of Spain at the end of tin® 
year. 

The other domestic car build- 
ers - Ford, General Motors 
Renault CitroSn and Nissan ' 
are talking about the start of 6 
new growth cycle. Anfac says 
that barring Suzuki, no l0 £ 
eign automobile group in Sppn 
is even discussing relocaU 0 * 1 
elsewhere. 

Tom Bums 




I 


I 





FINANCIAL TIMES TUESDAY OCTOBER 4 


WORLD CAR INDUSTRY 7 


T here are few more stri- 
king examples of US 
industry's renewed inter- 
national competitiveness than 
its motor companies, which 
just five years ago were being 
written off as sclerotic indus- 
trial dinosaurs, doomed to 
cede an ever larger share of 
the US market to Japanese 
rivals. 

Today, Detroit’s Big Three 
manufacturers - General 
Motors, Ford Motor and Chrys- 
ler - have bounced back, or 
are in the process of doing so 
although fierce competition 
from Asian and European 
rivals means they cannot 
afford any complacency. 

Recent market statistics 
underline both this recovery 
and the see-saw struggle for 
US market share: 

In 1993, for the second year 
in a row, Japan’s share of the 
US car and light truck market 
fell, to 23.1 per cent from 2&3 
per cent In 1992 and 25.7 per 
cent in 1991. Detroit’s share 
rose from 72.2 per cent to 73.9 
per cent 

This year, however, both 
Japanese and European manu- 
facturers have presented a 
stronger challenge - notably 
in the car market, where they 
have clawed back significant 
market share, although 
Detroit argnes that this is 
partly because of a shortage of 
products from the Big Three 
because of model change- 
overs. 

In the first eight months of 


Martin Dickson finds recent market statistics underline renewed international competitiveness in the US 

New lease of life for the industrial dinosaurs 


1994, Japanese name-plates 
accounted for 29.8 per cent of 
the car market, compared to 
28.8 per cent in the same 
period of 1993, and Europe 
was up from 3J» per cent to 4.3 
per cent, led by a reviving 
Volkswagen/Audi. Detroit's 
share slipped, from 66.4 per 
cent to 64.4 per cent 
For the car and light truck 
market as a whole, Detroit 

Detroit's financial 
fortunes have been 
helped by the turn in the 
US economic cycle 

held a 73 per cent share, down 
from 74.1, whfle Japan was on 
23.4 per cent, up from 223, 
and Europe at 2.7, against 2L2 
Detroit's financial fortunes 
have also been helped by the 
turn in the US economic cycle 
over the past two years, which 
has boosted demand for sales 
and allowed manufacturers to 
cut back on costly rebates. 

Vehicle sales dropped 
sharply in the 1991-92 reces- 
sion and the car companies fell 
Into heavy losses, with ineffi- 
cient GM alone losing $l2bn in 


its North American operations 
in just two years. 

But over the past year prof- 
its at the Big Three have been 
rising sharply and the indus- 
try is forecasting US car and 
truck sales in 1994 of 15.3m to 
15.5m units, up from 14.2m 
last year and 12.5m in 1991. 

But Detroit cannot afford to 
relax. First, international com- 
petition remains Intense, and 
on some measures Detroit still 
lags behind its Japanese 
rivals. 

Second, it remains uncertain 
just bow far the upswing in 
the US market has to go. 
Third, the US Industry has yet 
to prove that it wifi not repeat 
its past mistake of excessive 
complacency when the econ- 
omy is buoyant, leaving it ill- 
prepared it for the subsequent, 
inevitable downturn. 

The Japanese, in particular, 
are still formidable competi- 
tors and their loss of US mar- 
ket share is doe in no small 
measure to the sharp rise in 
the value of the yen relative to 
the dollar - a factor which 
could some day reverse itself. 
For now, however, a substan- 
tial price gap has developed in 
the US market between Japa- 


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nese vehicles and similarly 
equipped US ones. 

The Japanese are shifting 
more and more of their pro- 
duction to the US and buying 
more parts in the country, 
both to protect themselves 
against yen exposure and to 
ameliorate US protectionist 
sentiments. 

The trend was underscored 
in early September when 
Toyota, the largest Japanese 
manufacturer and the com- 
pany feared most by Detroit, 
said it planned to raise its 


North American vehicle pro- 
duction by nearly 50 per cent 
In July, Honda said it planned 
to spend 3310m to expand its 
North American operations. 

European luxury car manu- 
facturers are also setting up 
production plants In the US: 
BMW has built a plant in 
South Carolina In order to 
make a sporty new vehicle, 
both for the US and export 
markets, while Mercedes is 
constructing a factory in Ala- 
bama to make its entrance 
into tbe fast-growing sports 


utility vehicle sector. 

Both have been drawn to the 
US by the size of Its market, 
skills of its labour force and 
its competitive manufacturing 
cost structure. 

Exchange rate movements 
apart, several factors have 
helped Detroit claw back mar- 
ket share from foreign rivals. 
First, it has sharply improved 
its manufacturing productiv- 
ity, though here it still lags 
somewhat behind the North 
America plants of Japanese 
companies. 

There are also substantial 
efficiency differences between 
the Big Three. According to a 
recent report by Harbour & 
Associates, a Detroit consul- 
tancy, Ford's plants are the 
most productive of the trio, 
measured by workers per 
vehicle produced, followed by 
Chrysler, with General Motors 
lagging well behind. However, 
Chrysler more than makes up 
for the disadvantage with a 
more efficient vehicle develop- 
ment process. 

Chrysler completely changed 
the way it developed vehicles 
at the start of this decade, set- 
ting up “platform teams’* to 
develop cars. These bring 


together disciplines such as 
engineering aud design to 
work simultaneously on a 
problem, rather than “throw- 
ing it over the wall” from one 
department to another. 

Chrysler has also set up 
close links with suppliers, 
which are brought early into 
discussions about new models. 

Ford and GM's relationships 
with suppliers are also in a 

Both Ford and GM are 
combining their US and 
European purchasing 
operations to cut costs 

state of Dux. GM stirred up 
intense hostility when JosO 
Ignacio LOpez de Arriortua 
was appointed worldwide head 
of purchasing in 1992 and 
began demanding large price 
cuts from the group's parts 
suppliers. 

He left GM in controversial 
circumstances to join Volks- 
wagen last year, but the 
group’s relations with suppli- 
ers remains fragile. 

Both Ford and GM are com- 
bining their US and European 
purchasing operations in an 


attempt to cut costs, a course 
not open to Chrysler which 
has virtually no overseas 
operations. 

Each of the Big Three Is also 
retreating from the industry's 
traditional vertical integra- 
tion, selling off parts 
operations and redistributing 
contracts to outside companies 
with better expertise, fewer 
distractions and lower labour 
costs. 

Tbe US recovery has also 
been helped by improvements 
in the past five years in the 
quality of vehicles emerging 
from Detroit's plants. On the 
whole, the quality still lags 
that of Japanese rivals, but the 
gap has narrowed to the point 
where customers are prepared 
to place more weight on areas 
where the Big Three do have 
an edge - in pricing and 
vehicle design. 

Detroit, for example, has 
been ahead of the competition 
in exploiting a fashion for 
mini-vans (multi-purpose 
vehicles or people carriers) 
and four-wheel drive sports 
utility vehicles. 

How long will the current 
US expansion continue? Over 
the summer a slow-down in 
sales had some pessimists 
wondering whether it might 
already be faltering. 

But August saw a healthy 10 
per cent year on year rise in 
vehicle sales and most ana- 
lysts think the npswing could 
have two to three more years 
to run. 


G eneral Motors, the 
world's largest vehicle 
manufacturer, is in the 
throes of a painful transforma- 
tion aimed at restoring its 
troubled North American 
operations to health. 

The group is battling to over- 
come decades of complacency, 
bureaucratic encrustation and 
manufacturing inefficiency 
which culminated in combined 
North American losses of over 
?i2bn in the recession years of 
1991 and 1992. 

It was those losses, and the 
gradualist pace of change 
being pursued by Robert Stem- 
pel, GM’s then chairman and 
chief executive, which 
prompted a boardroom coup in 
October 1992 and the installa- 
tion of a new chief executive, 
Jack Smith. 

The 56-year-old Mr Smith 
who. in tbe 1980s, played a key 
role in turning GM's European 
operations into the most profit- 
able in that region, has moved 
with equal vigour in the US 
over the past two years. 


Profile: General Motors 


New man Smith administers a tonic 


Jobs have been sharply cut 
in GM's plant and white collar 
bureaucracy. The headcount of 
hourly paid workers had fallen 
from 329,000 at the end of 1990 
to around 250,000, and analysts 
think It may be down to 
around 200,000 by the end of 
1996. 

The biggest challenge 
facing the group is to 
start producing exciting 
new vehicles 

He has been selling off non- 
core businesses and shifting 
the supply of parts for GM 
vehicles from its huge, 
in-house components operation 
to outside suppliers, many of 


whom pay much lower wages 
and benefits to their workers. 

He has also cracked down on 
outside parts suppliers, 
demanding from them cuts of 
up to 20 per cent in the prices 
written into their contracts. 

He has also swept away 
much of GM's in-bred “old 
guard" top management, bring- 
ing in a younger generation of 
leaders, such as Rick Wagoner, 
41, the recently appointed head 
of North American automotive 
operations. 

All this, coupled with a cycli- 
cal recovery in the US vehicle 
market, has had a strong 
impact on GM's eamfng s. In 
the second quarter, the group 
reported best quarterly profits 
ever, of $l-92bn, more than 
double the $889m of a year ear- 


lier. Nor th America contrib- 
uted 3723m to the bottom line, 
compared with a $33m loss in 
the second quarter of 1993. 

International operations, 
which for years have helped 
offset disaster in North Amer- 
ica, reported a 3543m profit in 
the second quarter, up from a 
3306m profit a year ago. 

However, GM’s North Ameri- 
can vehicle profit margin, at 
2.7 per cent of revenues, still 
badly lagged behind its inter- 
national automobile 
operations, which posted a 75 
per cent margin. GM’s internal 
goal is 5 per cent 

GM earned an average of 
$557 for each vehicle it sold 
worldwide, up from just 3130 a 
vehicle a year ago, but well 
behind Ford, which earned 


£653 a vehicle, and Chrysler, 
which made more than £1500. 

Mr Smith says: "We recog- 
nise that we can't get compla- 
cent. We still have a lot of 
work ahead to improve our 
earnings power and achieve 
target earnings margins.” 

It could face several stumb- 
ling blocks along the way. 
First, GM’s crack-down on sup- 
pliers prices, lead initially by 
the abrasive Jos6 Ignacio 
LOpez de Arriortua. who then 
left GM for Volkswagen, has 
left relations between the com- 
pany and parts manufacturers 
extremely sore. 

GM says tbe LOpez campaign 
saved it |4bn in cumulative 
purchasing costs by the end of 
1993, and that it has softened 
its abrasive edge. But some 


suppliers complain it is still 
pressing them too hard, and 
showing their engineering 
drawings to competitors, in the 
hope of getting lower contract 
bids. GM, in short, has the 
worst relations with suppliers 
in Detroit and over the long 
term that could hurt the com- 
pany. 

It also faces an extremely 
delicate relationship with the 
United Auto Workers’ union, 
which is anxious to retain 
industry jobs. The company 
has suffered a rash of strikes at 
local plants, including a stop- 
page of 3,000 workers at an 
Indiana parts plant last sum- 
mer. 

However, behind the scenes, 
the UAW has been relatively 
co-operative with GM’s ration- 



Smitir cracking the whip on 
suppliers 

alisation, for example by not 
forcing the company to honour 
an agreement that it will hire 
one new worker for every two 
who retire. 

The biggest challenge facing 


the group is to start producing 
exciting new vehicles that cus- 
tomers want to buy. rather 
than the tired, look-alike mod- 
els it churned out for much of 
tbe 1980s, and which cut its US 
market share from around 46 
per cent at the start of the 
decade to one third today. 

There are some encouraging 
signs. For example, the new 
Aurora, a sporty luxury sedan, 
should restore some shine to 
the badly tarnished Oldsmobile 
badge. So too should the fact 
that the Aurora is being sold 
by dealers with the same “no 
haggle" techniques which 
helped make GM's compact, 
experimental Saturn car a hit 
with buyers. 

However, many of GM's 
other new vehicles have 
received a mildly appreciative, 
rather than enthusiastic, criti- 
cal reception. To win back 
market share the group needs 
cutting edge appeal, and it 
does not seem there yet 

Martin Dickson 


F ord Motor, in many 
respects the most suc- 
cessful US car company 
over the past decade. Is In the 
early stages of an ambitions 
plan to create a global car 
company, which it hopes will 
cat its costs, quicken its 
reflexes and give it a sharp 
competitive edge. 

The second largest US 
vehicle manufacturer, in its 
most sweeping reorganisation 
for 25 years, plans at the end 
of this year to merge two huge 
units - North American 
Operations and Ford of Europe 
- into a single operating unit. 
Ford Automotive Operations. 

Until now, Ford has had a 
tradition of independent 
regional fiefdoms. with Ameri- 
can mid European operations 
developing cars of essentially 
the same size, bat with differ- 
ent characteristics aimed at 
tbeir local markets. 

The shift is no small gamble 
by Alex Trotman, the British- 
born executive who took over 
as chairman of Ford at the 
start of this year. He says the 
upheaval is designed to “com- 
bine the resources of a large 


C hrysler, the smallest of 
the big three US car- 
makers. has been reju- 
venated since the end of the 
1980s by a far-reaching 
restructuring and a series of 
highly successful new product 
launches. 

Virtually written off as a 
serious competitor In the world 
industry at the start of the 
1990s, Chrysler is achieving 
record profits, and is being 
regarded by rivals, including 
some Japanese carmakers, as a 
new benchmark for global 
competitiveness in the world 
auto Industry despite continu- 
ing concerns about the quality 
of some of its cars. 

Last year the group achieved 
a record pre-tax profit of 
$3.8bn, a quadrupling from the 
3934m earned in 19S2 and a big 
recovery from the pre-tax loss 
of $9 l0 m suffered in 199L Pre- 
tax profits in the first half of 
1994 jumped again by 57 per 
cent to a record $3.14bn. 

Chrysler's reforms were 
driven by dire necessity, but 
Robert Eaton, group chairman 
and chief executive, insists 
Chrysler was “the first auto- 
maker to recognise that basic 
changes were taking place m 
our industry, and we were the 
first to prepare for them. 

“We began by cutting costs 
and eliminating waste while 
preserving future product 
spending. We sold non-automo- 
tive assets. And we began to 
get lean. But as we trimmed 
our workforce, wo also reor- 
ganised into [chassis] platform 
teams that design cars faster 
and more efficiently." 


Profile: Ford 


Sharpening reflexes 


and very successful company 
with the speed and respond ve- 
ness.of a small company.” 

The shake-up involves Ford 
reorganising into five vehicle 
programme centres (VPCs), 
four in North America and one 
in Europe. The European VPC, 
with research and engineering 
centres split between the UK 
and Germany, wifi be respon- 
sible for developing small and 
medium front-wheel drive cars 
for sale in Europe, America 
and Asia. 

The other four VPCs, based 
in Detroit, win develop large, 
front-wheel drive cars, such as 
the Ford Taurus; rear-wheel 
drive cars, such as the Ford 
Crown Victoria; personal 
trucks, such as the Explorer 
sports utility vehicle, and com- 
mercial trucks. 

While elements of the Ford, 
plan have same parallels with 


initiatives at its US rivals. GM 
and Chrysler, no car company 
anywhere has such an ambi- 
tious global integration 
scheme under way. 

Bnt Ford, which in many 
respects has set the pace for 
the US motor industry over 
the past decade, needs a sus- 
tained burst of innovation to 
maintain its competitiveness 
against rivals such as Chrys- 
ler, which has emerged over 
the past two years as particu- 
larly lean and aggressive. 

Forced by financial crisis to 
cut costs in the early 1980s. 
Ford improved productivity in 
its plants long before GM and 
Chrysler and still boasts the 
most productive North Ameri- 
can factories among the Big 
Three. 

It has also scored some huge 
hits with consumers, notably 
with the Ford Taurus in the 


mid-1980s, which revolution- 
ised US family car design and 
is currently the top-selling US 
car (though Honda’s Accord is 
again challenging for that 
title). Other successes include 
the Explorer sports utility 
vehicle and the revamped 
sporty Mustang car. 

These models helped Ford 
increase Us share of the US car 
and light truck market from 
about 23 per cent in 1987 to 
some 25.4 per cent last year, 
though in the first six months 
of 1994 there was slippage to 
245 per cent 

However, this success has 
yet to translate into adequate 
profits. In the first half of this 
year the group’s net profits 
were $2.62bn, compared to 
$L35bn in the same period of 
1993, while its worldwide 
automotive profits quadrupled 
from $5 71m to $2.14bn. 



Trotman; 'Our Investment Is In 
much more than hardware’ 

David McCammon, the 
group's treasurer, has says 
“our return on sales isn’t to 
the Level we believe it needs to 
be”. He adds that Ford made 
only 69 per cent of Chrysler’s 
profits on each vehicle ft sold 
in the second quarter and 
needed to lower development 
and purchasing costs, and con- 


Profile: Chrysler 


Radical steps pay off 




W 'A 


Eaton: cutting costa and 
eliminating waste 

Chrysler learned much from 
the production systems of the 
Japanese carmakers, and the 
lessons it has put into practice 
are commanding close atten- 
tion in Tokyo, where the Japa- 
nese car industry itself is 
under pressure to cut costs. 

Toyota has recently com- 
pleted one of the most rigorous 
examinations it has ever car- 
ried out of a competitor's car 
with a socalled “tear-down" or 
dicmantling of Chrysler’s Neon 
email family car to analyse its 


low-cost construction. The 
leading Japanese carmaker 
was not complimentary about 
the Neon quality levels, but it 
praised the way the engineer- 
ing had been simplified to cut 
cost 

According to Earl Hester- 
berg, vice-president of Nissan 
Motor in the US, the Neon is 
forcing Japanese carmakers to 
wonder if some of their strin- 
gent and costly quality mea- 
sures are too high. “It looks 
like they [Chrysler] did some 
really smart things. We are all 
re-examining our product spec- 
ifications now." 

Faced by a renewed financial 
crisis at the end of the 1980s 
Chrysler was forced to take 
radical steps to reform its 
organisation, and one of the 
keys to its recovery has been 
the way it incorporates its sup- 
pliers into the design, develop- 
ment and engineering process 
for new vehicles. 

“We view our suppliers as an 
integral part of a value-added 

chain we call it the 

extended enterprise” says Rob- 
ert Lutz. Chrysler president 
"We treat suppliers as fully- 
fledged members of our plat- 
form [individual car range] 
teams. We have totally 
scrapped the old system of auc- 
tioning off contracts to the 
lowest bidder. Instead we set 


an overall ‘target cost* for a 
given vehicle. And then we 
work with pre-selected ‘suppli- 
er-partners' to arrive at mutu- 
ally agreed costs for that 
vehicle's parts and compo- 
nents." 

A study released earlier this 
year by Harbour & Associates, 
the US automotive analysts, 
claimed that Chrysler was the 
most profitable vehicle maker 
in North America last year out- 
earning its nearest competitor 
by more than $500 per vehicle. 

Chrysler had the lowest total 
production costs of the five 
carmakers in North America 
examined In the survey, which 
attributed Chrysler's lead to 
dramatic Improvements in 
product development costs, 
which had helped to offset 
Ford's advantage in assembly 
costs. 

The study showed that 
Chrysler's product develop- 
ment costs were $357 less per 
car than Ford's and 3290 less 
than GM’s, giving Chrysler a 
big advantage when it 
launches new vehicles. Chrys- 
ler had also achieved signifi- 
cant cost savings in particular 
in its assembly operations and 
purchasing activities. 

Despite the scale of the 
transformation there are still 
concern that Chrysler quality 
levels have yet to match its 


financial performance. The 
group has introduced a series 
of new products in the past 
three years, but it still lags 
behind the competition when it 
comes to defects per car and 
customer satisfaction. 

It failed to gain a single 
place in this year’s list of top 
10 cars for initial vehicle qual- 
ity compiled by JJ). Power, the 
leading US automotive con- 
sumer research group. None of 
Chrysler's cars exceeded the 
industry average. 

In this year's new car cus- 


Despite quality problems 
Chrysler has continued 
to perform strongly in 
the US market 


tomer satisfaction index all of 
the group's four brand names 
Chrysler, Dodge, Plymouth and 
Eagle were below the industry 
average, a position that con- 
trasts sharply with its strong 
performance in the light truck 
market, where it matches 
Toyota at the head of the 
league table. 

Its car operations have been 
troubled during the year by a 
series of product recalls involv- 
ing some of Its newest vehicles. 
During the summer the com- 


ttnue to shift production from 
cars to more profitable light 
track lines. 

External critics have also 
long complained that Ford is 
particularly slow in the time it 
takes to develop models. 

Tbe global reorganisation is 
designed to address some of 
these problems. Mr Trotman 
reckons it should save the 
company $2 bn to $3bn by the 
end of the decade. 

Ford has some experience 
with global integration, 
thanks to its development over 
the past six years of the Mon- 
deo, the first “world car" 
designed to be sold around the 
world. It has been a big hit in 
Europe and is being intro- 
duced to the US this year. 

Analysts sceptical about the 
global integration drive point 
to the long gestation and high 
costs ($6bn) of the Mondeo pro- 
gramme. Bnt Mr Trotman 
says: “Our investment is in 
much more than hardware. 
We’ve been buying a new way 
of doing business for the long 
tram.” 

Martin Dickson 


pany formed a special group 
comprising its top 25 execu- 
tives to seek solutions and to 
focus on improving quality. 

Despite the quality problems 
Chrysler has continued to per- 
form strongly in the US mar- 
ket It increased its US car and 
light truck sales by 19.9 per 
cent last year to 2.047m in a 
market that rose by 8 per cent 
It raised its market share to 
14.7 per cent the highest level 
for 23 years. 

Chrysler is still overwhelm- 
ingly dependent on the North 
American market having been 
forced by an earlier financial 
crisis to sell most of its foreign 
operations at the end of the 
1970s. It is now aiming to dou- 
ble its retail sales outside 
North America, however, to 

200.000 by the end of the 
decade. It increased sales out- 
side North America by 45 per 
cent last year to 109,100 
(Including fleet and govern- 
ment sales) and exceeded 

100.000 retail sales for the first 
time since it re-entered inter- 
national markets in 1987. 

It is still a small player in 
foreign markets, but according 
to Tom Gale, Chrysler 
vice-president of design and 
international operations, the 
company is launching more 
new products in international 
markets in the next three 
years than at any time in its 
history with the introduction 
of at least six new left-hand 
drive and four new right-hand 
drive models by the beginning 
of 1997. 


Hie Bosch 

National 

Curriculum 


SCIENCE 


WMuruV ABS 



Lee's start with a simple hypothesis. It is now over 
15 years since Bosch introduced the world's first 
electronically controlled Anti-lock Braking System. 

Since that time over f6 million Bosch ABS 
systems have been supplied to vehide 
manufacturers worldwide - to become standard 
equipment on over 1 54 current models. 

To the driver such systems ensure vital additional 
safety exactly when and where it’s needed - by 
preventing wheels locking in an emergency, Bosch 
ABS allows steering control to be maintained. 

To the fleet buyer, specifying Bosch ABS means 
greater safety with consequent savings in all the bills 
and lost time associated with accidents. 

To find out more about how the latest advances 
in Bosch ABS systems can help your company 
balance sheet contact 

Corporate Affairs Department - Robert Bosch Limited 
PO Box 98 - Broadwater Park * North Orbital Road 
Denham - Uxbridge - Middlesex UB9 5HJ 
Telephone: 0895 834466 


Systems engineering by Bosch 


BOSCH 


Kevin Done 





VIII 


FINANCIAL TIMES TUESDAY OCTOBER 4 1994 


& 


WORLD CAR INDUSTRY 8 


Asia: Ian Robertson examines the market’s renewed expansion 

Pacific Rim output on the up 


Congestion, low incomes, 
government policy, pollution 
and underdeveloped roads will 
all hamper market progress in 
some Pacific Rim countries, 
but the average rate of growth 
will still be almost four times 
that of the west 
The new-vehicle markets of 
the region registered a 12 per 
cent increase, to 1.9m sales, in 
1993 - and this did not include 
the large growth markets of 
China and South Korea, which 
together accounted for more 
than 2.8m sales. 

Demand is likely to exceed 
2m this year, and rise to over 
3m (including 1.5m cars) by 
2000, according to the Econo- 
mist Intelligence Unit ( The 
Automotive Sector of the Pacific 
Rim and China Report R320 ). 

Last year's greatest volume 
growth occurred in Thailand. 
India and Indonesia, while the 
more mature and congested 
market of Taiwan reported a 
slight fail in new vehicle sales. 

By the end of the decade, 
Thailand will overtake Taiwan 
to become the region's leading 
vehicle market, followed by 
India and Indonesia; while, 
with its gross domestic product 
now beginning to increase rap- 
idly. Vietnam takes its first 
painful steps towards motorisa- 
tion. 

After slipping in the previ- 
ous year, vehicle production in 
the Pacific Rim rose by 10 per 
cent, to over 1.6m units in 1993; 
and forecasts indicate that, by 
the end of the decade, the 
industry will be producing 
322m vehicles a year. 

The risks to investors in the 
region include potential politi- 
cal uncertainty. Thailand and 
the Philippines have had 
recent difficulties and, 
although stability appears to 
have returned, it is by no 
means assured. India has a 
host of potential problems, 
from its borders with Pakistan 
to states wanting to break 
away from the federation. 

Only the Philippines, Indon- 
esia and India have experi- 
enced any real economic down- 
turn in the last few years, 
although demand has slowed 
in most countries. 

All are expected to see con- 
siderable development of thelr 
infrastructures and economic 
wealth over the next few years. 


Population growth could pres- 
ent difficulties in the long 
term, particularly for India and 
Indonesia. Conversely, the 
prospects for Malaysia may be 
limited by a labour shortage. 

Income levels are still low. 
The passenger car market usu- 
ally begins to grow quickly 
when GDP per head reaches 
the current equivalent of about 
$5,000 a year. Only Taiwan has 
reached this leveL In India 
GDP per head Is only $250. By 
this measure, for most of the 
region any real volume oppor- 
tunity, particularly for passen- 
ger car sales, remains some 
way off. 

Some of the largest markets 
- notably Taiwan - re main 
effectively closed to incoming 
car manufacturers, while Japa- 
nese vehicle producers and 
technology already have a for- 
midable hold in the car and 
light commercial vehicle mar , 
kets of the region. 


Some of the largest 
markets - notably 
Taiwan - remain closed 
to incoming car makers 


In Indonesia, the Philippines 
and Thailand, Toyota will 
retain its dominance. In Malay- 
sia. Mitsubishi and Daihatsu 
will control the market 
through their Local producers. 
In Taiwan, there is a more 
fragmented Japanese control, 
although Mitsubishi monopo- 
lises the commercial vehicle 
sector. 

In India, in spite of news of 
Volkswagen's latest partner- 
ship with Eicher Good earth, 
the market is dominated by 
Suzuki's technology; while, in 
Vietnam. Mitsubishi appears to 
have gained the strongest role. 

Although quality levels still 
foil short, Japan is aware of 
the potential of the region’s 
low labour costs as a refuge 
from the high yen. and its poli- 
cies have sought to satisfy co- 
operative ambitions across the 
region, including the develop- 
ment of specific models for 
Pacific Rim markets. 

Bangkok now has the 
world's worst traffic conges- 
tion. Kuala Lumpur is little 
better. And Taiwan is trying to 


Pacific Mm: sales and forecast sales of new motor vehicles (OOOs) 



Taiwan 

Thailand 

IncBa 

Indonesia 

PNEppfcnes 

Malaysia 

Vietnam 

Total 

1090 

9.484.0 ^ 

9,302.7 

9,357.7 

9,274.5 

9,132.7 

9.1669 

91.8 

91,719.3 

1091 

9,487.0 

9258.6 

• 9.344.9 

9.261.4 

9,118.6 

9.181.9 

90.6 

91,663-2 

1992 

9,547.1 

9.363.0 

9.330.3 

9.169.5 

9,146.1 

9,145.1 

96.0 

91.707.1 

1993 

9,540.1 

9.456.5 

9.382.0 

9.214.2 

9,163.6 

9,154.4 

97.5 

91,918-3 

1994 

9,574.0 

9.435.0 

9.405.2 

9,277.5 

9.172X) 

9,175.0 

967 

92.Q48.4 

1995 

9.596.0 

9/460,0 

9.430.0 

9.313.0 

9.183.0 

9,1860 

913A 

92.164.8 

1990 

9.60413 

9,490,0 

9,460.0 

9.353.0 

9.1 90.0 

9,209.0 

918.8 

92X124.8 

1w97 

9,618.0 

9,540.0 

9.490X) 

9.388-0 

9,199.5 

9,230.0 

920,2 

92,494.7 

1938 

9,632.0 

9.585.0 

9,530.0 

9,430.0 

9X10.0 

9,243.0 

936.2 

92.6662 

IE-39 

9,646.0 

9,625.0 

9,570.0 

9,482.0 

9,223.0 

9,255.0 

942.7 

96843.7 

2CQO 

9,660X1 

9.665.0 

9.610.0 

9,540.0 

9,238.0 

9,266.0 

951.5 

93,0265 


SouretcBU The Ataman* Sector of JSm entente 



f 


Japanese cars kn Hanoi: the Vietnamese government te already concerned about over-supply 


restrict sales of vehicles until 
its mass transit system Is com- 
plete. 

Already infrastructure is lag- 
ging behind market growth, 
and the Tiger economies are 
suffering the penalty of little 
or no pollution controls. 

Overcapacity and restricted 
growth prospects elsewhere in 
the mature markets of the 
industry have inflated interest 
in this emerging region. 

Moreover, the rush of new 
investment into the Pacific 
Rim threatens to result in 
gross capacity in excess of fore- 
seeable demand. In the latest 
market to emerge. Vietnam, 
the government is already con- 
cerned about over-supply as 
Suzuki, Toyota, Volkswagen 
and Peugeot SA join others in 
the latest attempt to break into 
the market 

With time running out, 
opportunities for new entrants 
in the region centre on the 
commercial vehicle sector - 
notably pickups and light vans. 

The other growth opportu- 
nity is in components. As the 
volume of vehicles produced in 
the region grows, the compo- 
nents industry will need to 
restructure and rationalise. 

New entrants also offer 
access to advanced technology 
- essential for markets such as 
Malaysia or Taiwan with ambi- 
tions to step up exports of their 
own national vehicles. 

In some markets, govern- 
ment-initiated programmes are 
stimulating development of the 
automotive sector. In India, the 
removal of stifling controls in 
1991 heralded a period of trans- 
formation for the industry. 
During the 1980s there were 
only three vehicle manufactur- 
ers in the country, producing 


around 120,000 vehicles per 
year, now there are 13, with 
installed capacity of almost 
600,000 units. 

Sales were lifted last year, 
when excise duties were 
reduced from 55 per cent to 40 
per cent, resulting in lower car 
prices and further reductions 
in the tax burden are expected. 

Competition for industry 
leader Maruti/Suzuki is grow- 
ing. Other local producers are 
keen to enter the smaller car 
segment: . Mahindra, Telco. 
Bajaj and Escorts. In addition. 
Premier, already the second 
largest supplier in the car mar- 
ket has spent much of the past 
few years exploring new oppor- 
tunities. 

Hindustan Motors, the third 
main supplier in the car sector, 
is working on a rival in collab- 
oration with Germany's Opel; 
while Eicher will start produc- 
tion with Volkswagen in 1997. 
A new entrant Sipani has also 
signed an agreement with 
Rover to produce the Montego. 
Other challenges come from 
Mercedes-Benz, Daewoo and, 
significantly, from the motor- 
cycle industry. 

Japan's grip on the Indone- 
sian market is overwhelming 
and getting tighter. Japanese 
producers control 99 per cent 
of the commercial vehicle mar- 
ket and over 80 per cent of the 
smaller car sector. They are 
investing in new facilities and 
introducing new models. They 
have increased their shares in 
local assemblers, and are sup- 
porting the Indonesian govern- 
ment’s plans to develop a 
regional Asean components 
industry. 

Their dominance of the mar - 
ket has forced many weaker 
competitors - both US and 


European - to withdraw in 
recent years. Outstanding 
growth prospects are still lur- 
ing newcomers in, however, 
not least Volkswagen's Seat 
and Skoda, Proton. Hyundai, 
Opel and Kia. 

In Malaysia, the government 
is keen to build on the success 
of Proton. A second national 
project has just started produc- 
tion, making the Kancil in 
partnership with Daihatsu. A 
third project is planned involv- 
ing pickups with Hyundai, and 
a fourth is on the drawing 
board. 

The Philip pines government 
is trying to stimulate the sec- 


tor with the development of a 
smaller, inexpensive people's 
car. 

This has brought Kia, 
Honda, Daihatsu, Fiat and Dae- 
woo into the market as assem- 
blers. The car development 
programme will regulate the 
industry until at least 1998. 
when local content require- 
ments may be scrapped, with a 
radical chang e in market struc- 
ture expected to follow. 

In Taiwan, industry atten- 
tion centres on the Gatt, which 
could mean that import tariffs 
on vehicles and parts will have 
to foil quickly, with devastat- 
ing implications for local pro- 


ducers. The challenges to the 
country's export drive are also 
mounting. 

To boost the local industry 
and to meet the conditions of 
the GATT, the government in 
Thailand is liberalising the sec- 
tor. 

In 1990, it lifted a ban on 
imports under 2.3 litres. 
Vehicle taxes were cut in the 
following year, and in Novem- 
ber the government signalled 
that it was to end the require- 
ment for assemblers to have 
local stakeholders. 

In Vietnam, still at a more 
embryonic stage, several 
vehicle manufacturers are 


already queueing up to join the 
Mekong Corporation (Ssan- 
gyong/Fiat Iveco) and Vietnam 
Motors Corporation (Colom- 
bian Motors of the Philippines) 
in a bid to share the expected 
growth in the region's newest 
vehicle market 
Mitsubishi, Mercedes-Benz, 
Renault, BMW and other South 
Korean suppliers have all 
sought to make substantial 
investments, and look likely to 
succeed. Others, including 
Suzuki, Toyota, Volkswagen 
and Peugeot SA. are also try- 
ing to break into the market, 
but finding entry more diffi- 
cult. 


Barbara Harrison on new BMW and Mercedes Benz plants in the US 

The Germans head west 


v ■ 


“Build the plant, and they wfl] 
come." So could have said 
BMW and Mercedes Benz 
about suppliers following in 
their paths to invest in the US 
states of South Carolina and 

Alabama, respectively. 

For these in v estment hungry 
south-east states, the collat- 
eral investment fry the suppli- 
ers to the two German luxury 
carmakers is a dream come 
true. With their new US 
plants, both BMW and Mer- 
cedes are positioning them- 
selves to compete more 
fiercely to the US, the world's 
largest car market, and to do 
so with for lower production 
costs than in pricey Germany. 

The hourly wage of German 
workers costs BMW, for exam- 
ple, about $25. whereas in 


South Carolina it will pay $12 
to start and $16 after two 
years. Mercedes reportedly 
estimates that building the 
new car in Alabama will cost 
30 per cent less than if built In 

Germany. Bath 

manufacturers 
Intend to 
export the 
cars. 

But it is not 
only labour 
that will come 
cheaper for the mmmemmmm 
two German companies. They 
have designed advanced state- 
of-the-art plants to pare down 
on their own relatively more 
expensive manufacture or 
assembly of numerous compo- 
nent parts. In this, they are 


Both firms will only 
supply critical systems. 
The rest wfil come from 
component producers 
bidding for contracts 


that is increasingly do-integ- 
rating. 

Both firms will only supply 
critical systems - such as 
engines, transmissions and 
suspension - and the rest will 
- come from 
component 
manufacturers, 
which bid for 
contracts. To 
assure quality 
and timeliness, 

the two Ger- 

■■■■■■■ man car mak- 
ers are requiring their suppli- 
ers - a majority of which are 
US companies - to work 
closely with them in the 
design of the components. 

Mercedes has gone slightly 
further than BMW in this 


will basically only bolt and 
weld together a series of mod- 
ular systems of parts that are 
already assembled. 

BMW is spending at least 
$300m on its plant in Greer, 
South Carolina, which is 
expected to produce its first 
car before the end of Septem- 
ber. The plant, which starts 
making 318i's and 325i's and 
next year adds a new small 
two-seater sports car, will 
employ 2,000 people and pro- 
duce 400 cars per day by 1998. 

Mercedes has construction of 
a $S00m plant under way to 
Vance, Alabama to the west- 
ern county of Tuscaloosa. It 
will start producing a sports 
utility vehicle (akin to a 
Range Rover) in early 1997. 

Continued on Page 11 


jpandi 


. v.- i • 

■ ■■ 












us 


FINANCIAL TIMES 


TUESDAY OCTOBER 4 1994 


WORLD CAR INDUSTRY 


F or the past few months 
employees at a Toyota 
car factory in 
Motomachi, Nagoya, have been 
putting in extra hours to keep 
up with strong demand. 

The Motomachi factory is the 
manufacturing base for a 
4-wheel-drive recreational 
vehicle called RAV4, which has 
been a spectacular success in 
the five months since it was 
launched. 

In the RAV4, Toyota hit on a 
formula for success that 
reflects the fundamental 
changes Japan's car market 
has seen In the past years. 

Its aff-roader filled a gap for 
Japanese consumers. It is a 

different kind of passenger car, 
available at a much lower price 
than they had come to expect 
However, the RAV4 has been 
a conspicuously bright spot in 
Japan's otherwise stubbornly 
sluggish auto market 
Following three years of 
falling demand, the Japanese 
car market suffered another 3 
per cent fail in domestic 
demand in the first half of this 
year to 3.3m units, while 
exports declined by 20 per cent 
to 2.2m. 

In 1993, domestic sales of 
new passenger cars fell to 4_2m 
units, down 5.7 per cent from 
the previous year, while 1992 
saw an &5 per cent decline. 

The reversal in the Japanese 
automakers' fortunes has been 
all the more p ainf ul, as it 
followed three years to 1990 of 
spectacular growth. During 
that period, new car sales 
jumped 150 per cent. Yutaka 
Kume, chairman of Nissan, the 
country's second largest 
carmaker, said 


Japan: Michiyo Nakamoto examines the painful reversal in the industry’s fortunes 


One bright spot in a sluggish market 


Japan: vehicle production Y: -V Y. 



1*8*' TUB -086.1*8? iMa! 1980 •ia90.‘ 19M:! 1802 1*3 
;Squg«' Jwm» ft/anwtato MMwfcfltoii « ft— n trtfcm 


JapwrhewVefiicIe registrations 


Mffitarr units- " 
■ 8 



. ... * •• - ,•* 




Three years of falling 
demand have, however, wiped 
out any hope Japanese car 
makers may have had for a 
return to the boom years when 
prestige, rather than price, was 
the main concern for the 
domestic market 

Instead, given the country’s 
shrinking population growth 
and a trend to greater 
economy, Japan's market is 
expected to stabilise at an 
annual growth rate of about 1*2 
per cent, compared with an 
average of 9 per cent in the 
three years to 1990. Mr Kume 
said 

Furthermore, competition 
will intensify as the greater 
price competitiveness of 
foreign-made cars in a 
high-yen environment has 
opened up Japan's domestic 
market to a high level of 


Amid these changes, 
Japanese carmakers 
have been conducting a 
fundamental review their 
entire operations 


imports. 

In the first six months of this 
year, registrations of Imported 
automobiles rose 40 per cent to 
nearly 138,000 units, according 
to the Japan Automobile 
Importers Association. As 


awareness and availability of 
foreign cars increases, their 
popularity is expected to 
continue growing. 

At the same time, exports 
have been in steady decline, 
for the eighth consecutive year 
in 1993. 

The trend is in part a result 
of the falling competitiveness 
of Japanese cars overseas due 
to the yen's appreciation, but 
more fundamentally as a result 
of increased production 
overseas. 

That trend is expected to 
accelerate further, as political 
pressures, the comparatively 
high costs of manufacturing in 
Japan and the growing 
necessity of developing models 
that are suited to particular 


regional needs are making it 
imperative that Japanese 
carmakers further globalise 
their operations. 

Amid these structural 
changes, Japanese carmakers 
have been conducting a 
fundamental review their 
entire operations. 

“In this market environment, 
we at the Japanese automobile 
industry who enjoyed a 
continued expansion in 
production up until recently, 
are now pressed to undertake a 
major restructuring," Mr 
Kume said. 

One pillar of restructuring 
will be increased globalisation 
of operations as carmakers 
come under pressure from the 
yen to reduce their dependence 


on Japan as a world 
manufacturing base, and to 
seek growth in overseas 
markets. 

“From now on, growth Cor 
Japanese auto makers will 
come mainly from outside 
Japan," said one industry 
analyst 

In response, Japanese 
carmakers have been building 
their operations in south-east 
Asia and China, and 
strengthening their 
manufacturing capabilities in 
western markets. 

Toyota recently made clear 
its intention to increase local 
vehicle production in North 
America by more than 50 per 
cent, to double engine 
production, and to increase 


exports from the region to 
other countries, including 
Japan, by 60 per cent 

Production of the popular 
pick-up truck sold in the US 
will be moved entirely to North 
America. 

Honda, meanwhile, aims to 
give more autonomy to its 
global manufacturing bases 
and lessen dependency on 
Japan. 

The company will increase 
spending in North American 
facilities by $3 10m in a bid to 
boost manufacturing and R&D 
capacity. Exports from North 
America are expected almost 
to double this year, and double 
again by the turn of the 
decade. 

In Europe, Honda plans to 


increase capacity at its UK 
manufacturing plant so that 
about half the cars sold In 
Europe could be produced 
there. 

At the other end of the spec- 
trum, Mazda has been left 
somewhat behind in the move 
to globalise. It is particularly 
vulnerable in Europe, where 
plans to share production facil- 
ities with Ford, the US auto 
maker which owns more than 
24 per cent in Mazda, collapsed 
early last year. 

The other pillar of restruct- 
uring in the Japanese auto 
industry is the adjustment of 
domestic production. 

One important aspect of 
Toyota's success with its RAV4 
has been the company’s ability 
to reduce costs by increasing 
commonality of parts with 
other cars, and keeping the car 


In the first six months of 
this year, registrations of 
imported automobiles 
rose 40 per cent to 
nearly 138,000 units 


very simple. 

“We decided to make the car 
as simple as possible and not 
to include anything unneces- 
sary,” explained Masakatsu 
Nonaka, chief engineer of the 
RAV4. 


By restricting the car to one 
engine, one body and one 
grade, a revolutionary step for 
Toyota, the car maker was able 
to substantially lower costs. 

Other Japanese carmakers 
have been pursuing the same 
goal, and some have enjoyed 
similar successes to Toyota. 

However, shifting production 
overseas and reducing costs 
will uot alone be remedy for 
their woes. 

Japanese carmakers have yet 
to face up to the overcapacity 
that remains in the domestic 
market. 

While overall sales of new 
cars have recovered slightly In 
the past months, helped by a 
long-awaited tax cut, domestic 
demand is unlikely to recover 
to the levels seen during the 
peak years, while exports will 
continue to decrease as produc- 
tion is shifted overseas. As a 
result domestic production, 
which fell from almost 13.5m 
units in 1990 to 1 1.2m last year, 
is not expected to recover sig- 
nificantly. 

Even while recognising the 
problem, Japanese auto mak- 
ers have been reluctant to 
implement full-scale capacity 
cuts. 

At the lower end of the man- 
ufacturing pyramid, smaller 
sub-contractors are showing 
the strains of reduced domestic 
production. Since the begin- 
ning of last year, 127 auto parts 
suppliers in Japan have col- 
lapsed, according to Teikoku 
Data Bank, a private research 
company. Sooner or later, the 
wider impact of the structural 
changes facing the industry is 
likely to be seen higher up the 
pyramid. 



: .».r 
'..'Hr: 


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a. 


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Korea: John Burton on the ambitions of the country’s Big Three 

Expanding, but it’s a gamble 


China plays a waiting game 

Steady growth 
is the goal 


South Korean car 
manufacturers are taking per- 
haps their biggest gamble since 
the industry was established in 
the 1980s by doubling their pro- 
duction capacity to at least 6m 
vehicles annually by 2000, with 
a third of this ammmt manu- 
factured abroad. 

The rapid expansion is risky 
when the global car industry is 
already struggling with sur- 
- plus production. But Korea’s 
leading industries have tradi- 
tionally been addicted to large- 
scale production to achieve 
economies of scale in spite of 
dire predictions about adverse 
market conditions. 

Korea’s three leading car- 
makers - Hyundai, Kia and 
Daewoo - are hoping to repeat 
the success of the country’s 
shipbuilding, electronics and 
petrochemical companies, 
which added massive produc- 
tion capacity during the last 
five years and are now reaping 
the benefits by quickly filling 
rising global demand. 

The expansion of car produc- 
tion has the support of the gov- 
ernment, which selected the 
motor industry as a vital sec- 
tor in 1990 and gave it easy 
access to state-subsidised bank 
loans and overseas borrowing 
privileges to raise capital for 
the capacity increase. 

If the expansion goes accord- 
ing to plan, Korea will become 
fourth biggest car manufac- 
turer in the world by end of 
the decade, with its three main 
companies being included 
among the top ten carmakers. 

Hyundai wants to increase 
its production from 1.16m 
vehicles this year to 2.Sm in 
the year 2000. Production win 
double to lJm at Kia by 1997 
and quandruple to 2L2m at Dae- 


woo by the end of the decade. 

Ssangyong, which produces 
commartcal trucks and sports 
vehicles, also plans to start car 
manufacturing in late 1996 in 
cooperation with Mercedes- 
Benz. Its initial production of 

50,000 cars is expected to rise 
to 150,000 by 2000. 

“The Koreans are contradict- 
ing the global trend toward 
downsizing," said Don Lee, 
motor industry analyst at BZW 
Securities in Seoul. “They are 
justifying the expansion, by 
going into new markets In the 
developing world.” 

Exports now account for 
only a quarter of Korean car 


production, but manufacturers 
want to raise the ratio to 40 or 
50 per cent within the next sev- 
eral years as growth in the 
domestic market slows down to 
an annual rate of 10 per cent 
from 40 per cent in the late 
1980s. The weakness of the 
Korean currency against the 
strong yen is likely to benefit 
Korea in its export plans. 

Overseas sales in developing 
countries accounted for 462 
per cent of exports during the 
first half of 1994, while ship- 
ments to North America 
accounted for 37.4 per cent of 
exports and western Europe 
16.4 per cent 

The car companies are con- 
centrating on increasing their 
market share in the developing 
world by building local assem- 
bly plants to avoid possible tar- 
iff harriers. Hyundai has 


signed joint-venture agree- 
ments in faHnnwiia l the Philip- 
pines. Egypt and Zimbabwe to 
produce a total of 300.000 cars 
abroad. Kia will also produce 

300,000 cars overseas through 
planned fawittiw in Tnrimn»gia l l 
Mexico, India and Morocco. 

Daewoo has set a more ambi- 
tious target of producing lm 
cars in the developing world to 
take advantage of the region’s 
low wages. Joint ventures have 
been established in Uzbekistan, 
Iran, India and Vietnam. Dae- 
woo is now negotiating to 
build a car parts factory in 
China as the first step toward 
gafoiwg approval from Beijing 


for the construction of a car 
factory In what is potentially 
its largest overseas market 

But the Korean carmakers 
are not neglecting toe US and 
Europe. While Hyundai 
already has a strong presence 
in these markets, its rivals are 
following suit. 

Kia began establishing distri- 
bution networks in the US and 
Europe last year and recently 
signed an agreement with Kar- 
mann of Germany to produce 
its Spoilage four-wheel drive 
vehicle for tba European mar- 
ket from next year. 

Daewoo has acquired a car 
plant In Romania to supply 
vehicles for its independent 
West European dealer network, 
which will begin operations in 
1996. It will also enter the US 
market in 1996. 

But while Korean carmakers 


are aggressively expanding 
abroad, they must worry about 
the opening of their strongly 
protected home market to 
imports. The US and the EU 
are demanding that Korea 
reduce duties and non-tariff 
barriers that limited the sale of 
foreign cars in Korea to 
slightly less than 2,000 last 
year, only 0 19 of the total mar- 
ket 

Seoul recently agreed to cut 
the car tariff to 8 per cent from 
10 per cent and ease restric- 
tions on TV advertising and 
distribution outlets, but the 
concessions have still not satis- 
fied Washington, which has led 
the rawwppign a gains t the car 
import restrictions. 

Even if further concessions 
are made, sales of US and 
European cars in Korea are not 
likely to represent much of a 
threat to domestic manufactur- 
ers since the foreign models 
will be concentrated in the 
executive car segment. 

A more serious worry would 
he abolition of the two decade- 
old ban on car imports from 
Japan. It remains undecided 
whether the Korea will lift the 
ban in 1997 as part of a pro- 
gramme to improve trade rela- 
tions with Japan. But Tokyo Is 
expected to demand this action 
if Korea wants to gain mem- 
bership in the Organisation for 
Economic Co-operation and 
Development in 1996. 

The irony is that the Korean 
motor industry has largely 
developed due to technical help 
provided by Japanese car man- 
ufacturers. Hyundai has a part- 
nership with Mitsubishi, Kia 
with Mazda and Ford, and Dae- 
woo recently linked up with 
Honda after dissolving its joint 
venture with General Motors. 


C hina could not be 
accused of lacking 
ambition in formulating 
a policy to meet rapidly 
increasing demand for cars 
and commercial vehicles into 
the next century. 

The long-awaited Policy for 
China Automotive Industry 
Enterprises, released in July, 
sets the goal of making a hith- 
erto fragmented, low-volume, 
poor-quality sector into one of 
the country’s “pillar” indus- 
tries. 

Policy-makers appear to 
have grasped the importance 
of a vibrant automotive sector 
to the economy as a whole. 
But in the interests of orderly 
development, they are delay- 
ing approvals of new foreign 
entrants until 1996, pending a 
consolidation of existing plant 
and facilities. 

Beijing also wants to 
strengthen the components 
sector, a weak link in its 
vehicle-bunding industry. For- 
eign car companies such as 
Ford, General Motors and 
Toyota have been told that to 
“qualify” for entry to China as 
fully-fledged participants in 
passenger car manufacturing 
they must first invest in the 
components industry. 

Since China opened its doors 
to foreign investors in the 
1980s, a few international car- 
makers, led by Volkswagen, 
have established a foothold. 
The German company is prod- 
ucing the Santana (a copy of 
its Passat produced in Brazil) 
in Shanghai and Audls and 
Jettas at a plant in 
Gumgchun, northern China. 

Other foreign participants 
include Chrysler, building the 
Jeep Cherokee in Beijing; Dai- 
hatsu, producing a mini bus in 
Tianjin; Toyota and General 
Motors which are building 
commercial vehicles in Shen- 
yang; Peugeot which has a 
venture assembling 504s in 
southern China and Citroen 
which is producing its ZX 
small car near Wuhan. 


Apart from Volkswagen, 
which built about 150,000 
vehicles in China last year, the 
others are still relatively 
small-scale operators. Citroen, 
for example, assembled just 

13.000 of Its ZZs in 1393. 
China’s output of passenger 

and other vehicles falls well 
short of demand. In 1993, 

234.000 passenger cars were 
produced of a total 1.3m 
vehicles manufactured locally. 
Some 310,461 vehicles were 
imported, according to official 


figures, but this did not take 
account of thousands more 
that were smuggled in. 

By 2000. domestic demand 
for passenger cars is expected 
to exceed 2m with local car- 
makers supplying 90 per cent 
of the market under the terms 
of the new plan. At present, 
car-sales to individuals as 
opposed to companies and 
work units account for about 1 
per cent of the total, but 
demand is building among an 
increasingly affluent bourgeoi- 
sie. 

In its efforts to promote the 
development of the automotive 
sector, the government has 
laid down guidelines envisag- 
ing the development by the 
end of this century of two or 
three "large-scale” vehicle- 
producing conglomerates and 
six or seven “backbone” auto- 


motive enterprises. 

This formula, aimed particu- 
larly at encouraging econo- 
mies of scale, leaves the door 
open for new entrants after 
the present freeze expires in 
1996. China is making little 
secret of the fact that it is anx- 
ious to involve the big Ameri- 
can and Japanese producers. 

Ford and GM are already 
establishing a strong presence 
in the components sector. 
Ford, for example, recently 
signed agreements with com- 


ponents makers in Shanghai 
to produce plastic automotive 
items such as instrument pan- 
els and to make safety glass. 
Ford plans to invest 850m In 
these ventures. 

GM’s Automotive Compo- 
nents Group (ACG) recently 
established a headquarters in 
Beijing and is seeking to 
enlarge its involvement in the 
components sector where it is 
engaged in joint ventures and 
licensing arrangements. 

While China's new automo- 
tive policy is aimed at encour- 
aging through tax and other 
incentives the growth of large- 
scale producers, it is also 
directed at rationalising a 
highly-fragmented local sec- 
tor. There are, for example^ 
120-130 vehicle-makers of one 
sort or another operating in 
China, but many are tiny, 


producing just a few vehicles 
each week. 

According to a recent study, 
quoted by the official China 
Daily newspaper, two-thirds of 
China’s vehicle manufacturers 
lost money in the first half of 
tins year, and a number were 
beading for bankruptcy. The 
highly-fragmented components 
sector is in a similarly parlous 
state, and many small produc- 
ers are expected to go ont of 
business under the new policy, 
with its emphasis on high vol- 
ume production and economies 
of scale. 

In spite of the freeze on new 
entrants to assembly and man- 
ufacturing until 1996. foreign 
car makers are extremely 
active in ongoing discussions 
about new projects. These dis- 
cussions are expected to lead 
to a number of agreements 
over the next six months or so. 

Chrysler, for one, is believed 
to be close to finalising deals 
to produce minivans in Guang- 
dong and Hainan provinces. A 
number of carmakers, includ- 
ing Toyota, Ford, GM and 
Mazda, are involved in discus- 
sions with the Shanghai Auto- 
mobile Industry Corp for a 
minivan and passenger car 
project in the Shanghai area. 

Toyota has also been in dis- 
cussions with the Tianjin 
Automobile Industry Corp on 
possible ventures. Tianjin 
Anto Is the partner of Dai- 
hatsu in the production of the 
Charade small car and mini- 
buses. Toyota has a 16 per cent 
stake in Daihatsu. According 
to Japanese press reports, 
Toyota hopes by the end of 
this year to start building a 
factory near Tianjin to pro- 
duce engines, transmissions 
and other key components for 
cars that would be sold domes- 
tically. Toyota is reportedly 
proposing that its Corolla 
small car would be the most 
suitable product for the China 
market 

Tony Walker 


If the expansion succeeds, Korea will be 
the fourth biggest car manufacturer in 
the world by end of the decade 


By 2000, demand for cars is expected to 
exceed 2m, with local car-makers supplying 
90 per cent of the market 


Brazil 

Rising imports 
cause anxiety 


T umbling car prices trig- 
gered by tax cats and 
Improved productivity 
are unleashing pent-up 
demand in Brazil, which was 
the fastest-growing big market 
for vehicles last year. 

Despite this good news, 
locally-based manufacturers 
are worried about the rise in 
imports, as well as a continu- 
ing productivity gap with for- 
eign competitors, some of 
which are considering whether 
to move production to Brazil. 

After averaging 800,000- 

900,000 vehicles a year in the 
1980s, Brazil’s manufacturers 

churned out nearly 1.4m 
vehicles last year, up 30 per 
cent on the year before. This 
made the industry Latin Amer- 
ica’s biggest producer and No 
10 globally. Production this 
year is likely to approach 1.6m 
vehicles. 

Exports within the Me rcosu r 
common market, which comes 
into force on January 1 and 
will include Brazil, Argentina, 
Uruguay and Paraguay, may 
also increase. Last year Brazil 
exported 218,000 vehicles to 


Argentina compared with 

83,000 in 1991. 

The Mercosur countries are 
negotiating a transitional 
agreement for the car indus- 
try, which will cover rules on 
regional content and a com- 


mon external tariff. Compa- 
nies are investing to standar- 
dise and integrate production 

between Brazilian and Argen- 
tine plants. 

However, some analysts 
believe that the overvaluation 


of Brazil's new currency, the 
Real, and Argentine worries 
about its trade deficit raise 
uncertainties about vehicle 
exports to Argentina in the 
future. 


believe the big growth poten- 
tial is In the local market 
where there are just five cars 
per 100 inhabitants compared 
with 11 in Argentina and 30 in 
Europe. 

Domestic demand has grown 
as local car makers have had 
to compete since the economy 
was opened up at the begin- 
ning of the decade. This cut 
tariffs and imported vehicles 
have grown from 15,000 In 
1991 to a likely 120,000 
vehicles this year, forcing 
local manufacturers to 
improve productivity and 
quality. 

Productivity at Flat, General 
Motors and Antolatina, the 
holding company for the joint 
operations of Ford and Volks- 
wagen, has Increased by an 
average 17 per cent a year this 


decade due to higher volumes 
combined with a reduced 
workforce and the contracting 
ont of services. Quality has 
also improved, with defects 
falling by 50 per cent over the 
period, according to a report 
by consultants Boaz-AHen ear- 
lier this year. 

More importantly, agree- 
ments between the govern- 
ment and the Industry since 
1992 have cut taxes and profit 
margins. Taxes have fallen by 
an average 22 per cent, leading 
to a dramatic fall in prices, 
particularly for l,000cc cars 
where the reductions were 
concentrated. 

The price of VWs l,000cc 
Gol car has fallen from $13,000 
to just over $7,000 in the past 
three years, says Pierre Alain 
de Smedt, Antolatina chair- 
man# ■ 

But there could be problems 
ahead for Brazil’s manufactur- 
ers. Despite the productivity 
gains, they are stDl 10 per coat 
less efficient than Europeans 
and further behind the Japa- 
nese, says Booz-ADen. Thanks 
to the growing local market, 
they face foe threat that com- 
petitors who are now import- 
ing cars could start to produce 
in Brazil. Nissan and Toyota 
are thought to he planning 
investments. 

The companies are also con- 
cerned about the rise in 
imports and are calling for 
quotas to be imposed, which 
the government has so far 
refused. They argue that, 
despite foe tax cute, Brazilian 
vehicles are still overburdened 
compared with foreign cars. 

Patrick McCurry 


1 -■ 


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Brazilian car executives 


Executives believe the big growth potential 
is in the local market, where there are just 
five cars per 100 inhabitants 


Mexico: recovery in the US has caused exports to rise 

Nafta makes its mark 


The North American Free 
Trade Agreement, imple- 
mented only nine months ago, 
has already had a powerful 
Impact on the car and truck 
industry in Mexico. Both 
imports and exports are 
sharply up, while companies 
not previously operating in the 
co unt r y have announced plans 
to set up manufacturing 
operations. 

In the seven months to July, 
Mexico exported 304,923 
vehicles, primarily to the US. 
an increase of 26.6 per cent on 
the same period last year. 
Meanwhile, imports were still 
relatively small at 25.277 
vehicles, yet this represents a 
454 per cent increase from the 
year before. The US Big Three 
carmakers - General Motors. 
Ford and Chrysler - almost 
completely monopolised the 
import boom. 

The increase in exports is 
primarily attributed to eco- 
nomic recovery, and therefore 
rising demand, in the US. But 
the growth in exports to the 
US, as well as Japan, is expec- 
ted to continue over the 
medium term as carmakers 
invest some |i.6bn in 1994 
alone to Increase capacity and 
modernise plants. Nissan 
recently announced that it 
would move its entire Sentra 
production line from Japan to 
its Aguascalientes, Mexico, 
plant This new factory will 


supply the US, Mexican, Japa- 
nese and other Asian and Latin 
American markets. 

The rise in imports is pri- 
marily due, as stipulated in 
Nafta, to a loosening of the 
complex formula which linked 
a company’s ability to import 
with its level of exports. GM 
has been highly successful 
with its new line of Chevy sub- 


low domestic content rules in 
order to encourage newcomers 
to set up shop and export to 
the US. With the agreements 
stiff S2J5 per cent domestic con- 
tent stipulation, Mexico has 
been pleasantly surprised that 
newcomers have announced 
$300m investments this year to 
initiate operations. This new 
production will be mostly for 


In the seven months to July, Mexico 
exported 304,923 vehicles, an increase of 
26.6 per cent on the same period of 1993 


compacts brought la from 
Spain. Based on its first few 
months on the market, the 
Chevy could be a formidable 
challenger to the Volkswagen 
Bug, the market leader. The 
US company now says It may 
set up a Mexican production 
line for the budget car. 

Ford and Chrysler are taking 
shots at Nissan's Tsuru, the 
leader In the compact class, 
but in different ways. Chrysler 
is importing its US-produced 
Neon, while Ford has begun to 
sell previously for-export-only 
Escorts from its Hennosillo 
plant This arrangement gives 
Ford the ability to use its 
import quota for high mark-up 
luxury cars. 

During the Nafta negotia- 
tions, Mexico fought hard for 


the domestic and Latin Ameri- 
can markets. 

BMW, the German carmaker, 
will account for $l76m of that 
sum as it sets up domestic pro- 
duction, scheduled to come on 
line in 1995. Production at this 
new plant will be southerly ori- 
ented, with small and mid-size 
models destined for the Mexi- 
can market and other Latin 
countries. There will be only 
limited integration with the 
new BMW plant to be built in 
the US. 

Honda is expanding its 
motorcycle plant in Guadala- 
jara to include facilities for 
assembling cars for the domes- 
tic market and Latin American 
exports. At first, cars wifi be 
made from part-kits supplied 
by Honda plants and contrac- 


tors in the US, but Mexico is 
expected to become an impor- 
tant parts centre as Honda 
works towards its goal of pro- 
duction of at least 75 per cent 
of its North American sales 
from plants in the continent. 

Mercedes-Benz is setting up 
a luxury car production line at 
its rapidly expanding truck 
plant and is building a new 
passenger bus factory in north- 
ern Mexico in an attempt to 
penetrate the US market Mer- 
cedes' main competitor in the 
truck and bus business, Dina, 
recently bought Motor Coach 
Industries, the US market 
giant, and has spoken to 
Toyota, Hyundai and Fiat 
about setting up a joint ven- 
ture to expand into car produc- 
tion in Mexico. 

Despite the optimism of the 
new players and plans to 
increase capacity among estab- 
lished competitors, domestic 
sales continue to fall amid gen- 
eral economic uncertainty and 
tight credit. Domestic sales 
dropped 3 per cent in the first 
seven months of the year, to 
343,207 vehicles. The launch of 
carmakers' own in-house retail 
credit divisions such as GMAC 
and Ford Credit, a by-product 
of the Nafta financial services 
regulations, should lead to 
some market recuperation 
towards the end of the year. 

Ted Bardacke 


f 




ing data lor Hie monitoring oi targets, ana me mr inti nauuiuiy ui pm.mb»hs. i«n.n UB ... h u^u...v 





WORLD CAR INDUSTRY 10 


V olvo and Saab Automo- 
bile, Sweden's two car 
manufacturers, are once 
again savouring the race taste 
of profits after several turbu- 
lent years of losses, heavy 
restructuring and, in Volvo’s 
case, the trauma in 1993 of its 
aborted plan to merge with 
France's Renault 
Volvo, still Sweden's biggest 
manufacturing company, is at 
group level enjoying a resur- 
gence of profitability to rival 
the pre-recession boom days of 
the mid- and late-i980s. In the 
first six months it posted a pre- 
tax profit of SKrtMQbn, com- 
pared with SKr380m in the 
same period last year. 
Although inflated by capital 
gains of SKrLOSbn, the operat- 
ing profit of SKr4.47bn was far 
ahead of the SKrl66m returned 
in the first half of 1993. 

A 20 per cent rise in unit car 
sales during the period, to 
189,000, was an important fac- 
tor in the group result. The car 
division, which has stacked up 
heavy losses throughout the 
1990s, finally returned to an 
operating profit of SKrl.47bn 
from a loss on SKffObn last 
time. Sales were particularly 
strong in the US, Volvo's big- 
gest market, where the com- 
pany outsells all other Euro- 


Sweden: Hugh Carnegy finds the two niche producers profitable but introspective 

Cash-rich Volvo wary of new alliances 


peas car makers. 

At Saab, the picture is less 
dramatic but do less signifi- 
cant, given the trouble it has 
been in since the US's General 
Motors bought a half share in 
the company in late 1989 and 


GM became joint owner with 
Sweden's Saab-Scania. This 
allowed Saab to show a first- 
half profit of SKrl04m - a mod- 
est figure, but a very welcome 
relief for GM after accumu- 
lated losses since 1989 of 
SKrllbn and capital injections 
of more than SErSbn. 

But if the two companies are 


now able to look to the future 
with more confidence than 
they have for some time, there 
remain big question-marks 
over what shape they will be in 
when the motor industry cycle 
takes its next downturn. 

Volvo, in particular, Is stfil 
in the process of a deep strate- 


t ranst bmr Volvo into a diversi- 
fied industrial group through 
moving the car, truck and bus 
operations into a merged Ren- 
ault-Volvo operation in which 
Volvo would have a 35 per cent 
share. The two companies, 
which had operated a strategic 
alliance since 1990, were to 
develop jointly their new car 


model ranges for the mid- and 
late-1990s, sharing as many 
systems and components as 
possible. Including common 
“platforms" or chassis. 

The rejection of the merger 
by shareholders and senior 
management - and the resig- 
nation of Mr GyDenhammar - 
threw previous assumptions 
about product development 
into the air. The new Volvo 
chairnym, Bert-Qlof Svanbolm, 
says it set back the product 
development process at least 
six months. 

Under Mr Svanholm and 
SOren Gyil. the chief executive. 
Volvo’s new overall strategy is 
to sell off up to SKr40bn worth 
of non-core assets and concen- 
trate on its core car and truck 
operations. This, along with 
resurgent profits flow not 
expected to peak until 1996, 
will provide the financial back- 
ing needed to fund the next 
generation of cars and trucks. 

“Volvo will be an extremely 


cash-rich company,” says Colin 
Whitbread, motor industry 
analyst with Swiss Bank Cor- 
poration in London. “It will 
probably be the strongest in 
balance-sheet terms in the 
industry in Europe. The ques- 
tion is: what will they do with 
the money to earn a better 
return than they get at present 
from their other assets?” 

Volvo says it will not com- 
plete until later this year a 
thorough reappraisal launched 
after it broke off the Renault 
marriage of how to develop its 
present narrow range of three 
basic car models, the medium- 
sized 400 series, the new 850 
and the largest 900 series. 

The underlying aim is to 
break out of Volvo’s traditional 
limited market appeal based on 
safe, reliable but rather doll 
cars. 

A significant start on produc- 
ing more dynamic models, giv- 
ing greater "driving pleasure", 
was made with the launch of 


the 850, the sportiest fu 11-sized 
saloon ever made by Volvo. A 
new medium-sized car. code- 
named the V40, Is due out 
within 18 months. 

But Volvo has some way to 
go to establish a sportier style 
while it is facing ever staffer 
competition in its traditional 


the big growth in the US and 
Europe of “people carrier" min- 
ivans (like the Renault Espace) 
and four- wheel-drive Land 
Rover-type vehicles. It also 
missed the surge in popularity 
in Europe of diesel-engined 
cars. 

The company faces a 
dilemma in addressing these 
issues. It does not have ambi- 


tions to go beyond being a 
niche car producer. With a 
total production capacity likely 
to hit 425,000 cars a year next 
year, against expected 1994 
sales of 350.000, it is approach- 
ing capacity limits, but does 
not intend big production 
increases that could lead to 
dangerous 
overcapacity it 
experienced in 
the early 1990s. 

But such rel- 
atively small 
output figures 
mean Volvo 
feces the prob- 
lem of how to produce strong 
profit margins while carrying 
high units costs - especially if 
it wants to launch wholly new 
models such as a Volvo people 
carrier. 

This raises the question of 
whether Volvo will look tor a 
new partner to succeed Ren- 
ault. Such a move would 
match conventional motor-in- 


took over the management 
In the second quarter, as the 

benefits fed 

through of the 
successful 
launch last 


The aim is to break out 
of the company’s 
year of the new traditional market appeal 
Saab 900 car, based on safe, reliable 
SnStS bu, rather dull cars 
terly profit for 


gtc rethink, fol- 
lowing the col- 
lapse last 
December of 
the plan to 
merge with 
Renault. Pehr 
Gylleohammar, 
the former 


five years, and the first since - chairman, wanted, in effect, to 


stronghold of 
safety-first, 
spacious estate 
cars from a 
range of rivals. 
Volvo has also 
missed out ou 
other opportu- 
nities - such as 


Volvo is facing ever 
stiff er competition in its 
traditional stronghold of 
safety-first, spacious 
estate cars 


das try wisdom that producers 
must share hig h development 
costs to get hill returns. But 
Volvo does not seem in the 
mood for another major alli- 
ance - even if a partner were 
readily available. 

It does already have a ven- 
ture In the Netherlands with 
Mitsubishi of Japan and the 
Dutch government, which pro- 
duces the 400 series. This ven- 
ture will make the V4D. But 
beyond that the signals from 
Volvo are that it will seek 
co-operation agreements with 
other manufactures on parts of 
cars, such as engines, gear 
boxes and other systems, 
rather than a new strategic 
alliance. 

Meanwhile at Saab, the pri- 
ority is to consolidate the 
return to profit, rather than to 
take any bold new leaps. Saab 
this year expects to sell 94,000 
cars, well up from last year's 
73,600 and comfortably over 
the new break-even level of 
83,000. 

The next step after the all- 
new 900 model is to revamp the 
bigger 9000. a development 
which is now under way. But 
Saab has yet to say whether it 
will go ahead with a third * 
model line GM once talked of 
adding to the range. 


Stuart Marshall assesses the new models on offer 

Design a high priority in 
the luxury market 



The new Audi A4, soon entering the European market, viffl raplaoe the Audi 80 Saloon 

Although its two beam axles 
cannot reasonably be expected 


W ill a radical change in 
construction materi- 
als and techniques 
put Audi up among the front 
runners In the luxury car 
stakes in 1995? Its new A8 
quattro saloon’s light alloy 
space frame and panels save 
weight and fuel; Tiptrontc 
transmission gives drivers the 
benefits of automatic or man- 
ual shifting; and four-wheel 
drive allows them to make foil 
use of its 4.0-Iftre, multi-valve 
VSs 300 horsepower on wet or 
dry surfaces. 

But by Itself, this technology 
may not be enough to ensure 
sales success. When it comes 
to styling and mechanical lay- 
out, status conscious luxury 
car drivers are remarkably 
conservative. Thus the new 
BMW 7-Series has classic rear- 
wheel drive and lines remark- 
ably like those of its predeces- 
sor, while the new Jaguar XJ 
saloon, roomier inside yet 
slimmer looking, has even 
reverted to the twin round 
headlamps of an earlier model. 

In business motoring’s mid- 
dle reaches, General Motors 
has stayed faithful to rear- 
wheel drive for its Opel (Vanx- 
hall in the UK) Omega, as has 
Ford with its heavily 
revamped Scorpio. 


Drivers of these classes of 
car know what they want • 
smoothness and silence, ample 
power and air conditioning, 
automatic transmission and a 
built-in telephone, airbags and 
anti-lock brakes. 

Next year the list will 
extend to satellite navigation. 


In the medium/large 
class most of the past 
year’s newcomers 
have conformed to 
a pattern 


to be offered in Mercedes- 
Benz’s most prestigious 
S-Class. BMW’s 7-Soles and, 
probably the successor to 
Japan's trend-setting luxury 
car, the Lexus LS400. 

In the medium/large class 
most of the past year’s new- 


comers - the Renault Laguna is 
typical - have conformed to a 
pattern: front-wheel drive 
(occasionally with an all-wheel 
drive option), space-saving 
transversely-mounted engines, 
standard airbags and anti-lock 
brakes and the easy availabil- 
ity of air-conditioning and 
automatic transmission. 

Choice of a diesel as au 
alternative to a petrol engine 
has become essential. Only 
two European business car 
providers of any consequence - 
Saab and Jaguar - do not have 
diesels In their product 
ranges. Both are likely to add 
diesels, with engines bought-tn 
rather than developed in- 
house, within the next two or 
three years. 

Great strides are being made 
in car d iesel technology. For 
now, BMW’s in-line turbo- 
charged and (ntercooled six- 


cylinder units have no peers 
for urgent and near silent 
power delivery. 

Mercedes-Benz, with the 
world’s first four valves-per- 
cy Under passenger car diesels, 
and PSA Group’s latest 2.5-li- 
tre diesels with twin balancer 
shafts, have brought diesel 
smoothness close to petrol 
engine standards while bene- 
fiting from higher torque at 
low revolutions and cleaner 
exhaust emissions. 

BMW's Just Introduced four- 
cylinder diesel is raising the 
stakes in the market for less 
expensive, fuel efficient busi- 
ness cars. For fuel economy 
combined with acceptable 
refinement, VW-Audi's direct- 
injection diesels, as fitted in 
Andi 80 and 100 and VW Golf 
and Passat models, lead the 
pack. Rover’s direct-injection 
engined 600 diesel saloon will 


soon rival their standards. 

Sales of on-off road 4x4s 
have maintained their Impe- 
tus. The vehicles have become 
cmlised, if rather thirsty, on- 
road car substitutes and rarely 
venture cm to the rough ter- 
rain which they were designed 


to tackle. 

Land Rover's latest Range 
Rover with height-adjustable 
air suspension is put forward 
as an alternative to conven- 
tional luxury cars in the 
BMW, Jaguar and Mercedes- 
Benz class. 


to equal the ride comfort of a 
sophisticated all-independent 
system, it Is a most urbane 
performer on the road and 
remains capable off it 
One of the attractions of on- 


off road vehicles such as 
Range Rover is their so-called 
command driving position. It 
gives users a feeling of superi- 
ority and allows them to see 
over the tops of normal cars 
ahead. 

Similar benefits are offered 
by multi-pnrpose vehicles 
(MPVs) which lack the high- 
stung 4x4s largely unused off- 
road capability. 

Their market penetration is 
forecast to grow substantially 
in Europe as new models such 
as the joint Portugese-pro- 
duced Ford-VW project come 
on stream. Whether this win 
be at the expense of on-off 
road 4x4s or conventional 
estate cars remains to be seen. 

In the past eight years, sales 
of MPVs such as the Renault 
Espace (still market leader in 
Europe) have risen by an aver 
age 80 per cent per annum. 

By the end of the century it 
is expected that 700.000 MPVs 
wifi be sold in Europe each 
year. 

This forecast makes the 
introduction of a range of 
MPVs built by PSA but which , 
will be sold badged as ' 
Citrodns, Peugeots, Fiats and 
Lancias among the most sig- 
nificant motoring events of 
1994. 


! 















\r. 


"1 


FINANCIAL TIMES TUESDAY OCTOBE R 4 1994 + 

WORLD CAR INDUSTRY 11 


Technology: European buyers are starting to demand more extras, writes Jeff Daniels 

Early sign of a change in attitudes 



E urope is a motoring par- 
adox for the systems 
engineer. European 
motorists, as any engineer (and 
especially any Japanese engi- 
neer) will tell you. drive faster, 
go round comers quicker and 
generally expect more in the 
way of performance from their 
cars than anyone else. 

Yet for the most part they 
have until now remained reso- 
lutely indifferent to develop- 
ments which make life at the 
wheel safer, more comfortable, 
and more efficient. 

The antithesis of the Euro- 
pean is to be seen in the 
clogged streets of Tokyo. Here 
the driver of a typical medium- 
sized car will edge his way 
along with the aid of automatic 
transmission. The temperature 
and the humidity may both be 
in the nineties but the Japa- 
nese driver will have air condi- 
tioning to take care of that 
Every so often, he will 
glance at a display which tells 
him if he is still heading in the 
right direction. And if the bore- 
dom of slow progress becomes 
too much, he may switch the 
display from navigation mode 
and sing his way along to the 
tones of his own in-car karaoke 
as the words of the song 
appear on the same screen. 

It may be that European 
drivers will forever place in-car 
karaoke lower on their list of 
priorities - but don't laugh: the 
addition of such frivolities 
gave a huge boost to the origi- 
nally slow-starting sales of in- 
car navigation systems in 


Japan. Many motor industry 
suppliers, anri in particular the 
larger component groups, are 
writing their plans around the 
assumption that European 
drivers will begin to embrace 
technically advanced systems 
for their own sake. 

An early sign of this chang- 
ing attitude was provided by 
the air-bag. Product planners 
wise in the ways of Europeans 
bad long predicted that the air- 
bag would remain a largely 
American phenomenon, its 
extra cost stoutly resisted on 
this side of the Atlantic by 
drivers who would continue to 
rely on the efficiency of their 
tried, trusted and sensible 


Through 1993, there was 
what amounted to a 
panic among car makers 
to secure air-bag 
suppliers 


safety belts. The planners were 
wrong. The majority of cars on 
sale in Europe are now 
equipped at least with a driver- 
side air-bag. and there is no 
question that the trend has 
been consumer driven. 
Through 1993, there was what 


amounted to a panic among 
car manufacturers to engineer 
in s tallations and secure com- 
ponent supplies to avoid being 
left behind in the rush. 

The question now is which 
item of equipment will be the 
next to rise to the top of the 
consumers' must-have list 

Some of the smart money 
has gone to back air condition- 
ing systems. In perhaps 10 
years, air conditioning has 
moved in European eyes from 
being an indulgence confined 
to the most luxurious of cars, 
to a remarkably efficient aid to 
comfort which is now begin- 
ning to appear in the upper 
reaches of mid-range family 
cars. 

Significantly, as used to be 
the case wtth central locking 
(which is now fitted to well 
over half of all the cars sold in 
Europe), those who have tried 
it tend to insist that they could 
never again do without it 

Encouraged by such senti- 
ments, the leading system sup- 
pliers such as Valeo are gear- 
ing up for a rapid rise in 
demand, with the possibility of 
SO per cent of new European 
cars being air conditioned by 
the 1997 model year. 

The debate meanwhile rages 


as to how eagerly European 
car buyers wU] embrace the 
visible aspects of electron- 
ics - not the karaoke, but cer- 
tainly the navigation display, 
for example. The electronics 
are already there in the car, of 
course; no modern low-emis- 
sion engine could function 
without its electronic manage- 
ment system, no anti-lock 
braking and traction control 
system could operate with high 
efficiency without the speed 
and precision of electronics. 

Most automatic transmis- 
sions have abandoned hydro- 


mechanical for electronic con- 
trol; the new generation of 
“active” chassis control 
systems, from adaptive damp- 
ing to Citroen 's remarkable 
new Activa roll-limitation sys- 
tem, depend on electronic sens- 
ing and control. The real argu- 
ments in this area now centre 
around two questions: visibil- 
ity and standardisation. 

Visibility in this context 
means whether or not the pres- 
ence of extensive electronic 
systems should be apparent to 
the driver. There is a powerful 
school of European engineer- 


ing philosophy which would 
prefer such technology to be 
“transparent”, functioning 
entirely behind the scenes, so 
that the actual driving task 
remains as simple and straight- 
forward as possible: more sim- 
ple and straightforward, 
indeed, than it has ever been 
before. 

Others, encouraged in some 
degree by marketing depart- 
ments who feel they have- a 
better chance of selling more 
expensive cars if the technol- 
ogy behind the expense is 
immediately apparent, want to 
see the power of electronics 
brought to the “driver inter- 
face". In other words, commu- 
nication between the driver 
and the vehicle will become 
electronic rather than manual. 

One reason for the current 
surge of interest in navigation 
systems is that their technol- 
ogy appears to fall between the 
two extremes. Which works 
best, a display screen or audi- 
ble instructions? How does the 
driver best tell the system 
where he wants to go - by key- 
ing into a computer-type key- 
board, or by issuing verbal 
instructions into a micro- 
phone? 

As yet, there are no clear 


answers to such questions. 

It is the need for standardisa- 
tion. however, which is most 
occupying the automotive elec- 
tronics industry. Even within a 
single car, the need clearly 
exists. We have already 
reached the stage where an 
engineer developing a new sys- 
tem, and needing a specific 
piece of information - bow last 
the car is going, how fast the 
engine is turning - will usually 
find that the information is 
already being supplied by a 
sensor to an existing system. 

It is far c