960404

Germany's MG on target for profits

FRANKFURT: Metallgesellschaft AG METG.F, the German metals and trading group rescued from the brink of bankruptcy in 1994, reported on Thursday its profits rose 27 percent in the first four months of the business year.

The company said it was sticking to its goal of increasing pre-tax profit to 300 million marks ($203 million) in the year to September 30, 1996, compared with 171 million last year, despite a worsening economic slowdown in Germany.

Group pre-tax profit rose to 33 million marks in the four months to January 31 from 26 million in the year-earlier period, the company said.

"We're back, we've made it," MG chief executive Kajo Neukirchen told the company's annual shareholders meeting. "We are no longer talking about losses running into billions, but profits of many millions."

MG said the first four months went according to plan but added that income from the plant engineering and contracting sector was usually billed later in the fiscal year.

Group sales fell to 4.5 billion marks from 5.5 billion marks, reflecting divestments last year as part of a heavy restructuring which has seen the group's workforce dwindle to just a third of its 1992 level of 62,500 people.

The company said it employed 22,064 people at the end of January 1996, 1,365 fewer than on January 31 last year.

MG swung to a pre-tax profit of 171 million marks in 1994/95 from a loss of 2.538 billion in the year before after losing billions of marks on oil deals in the United States.

Neukirchen said MG's trading division would continue to expand its international business further and strengthen its activities in South-East Asia.

MG Corp, the U.S. unit which conducted the loss-making oil deals, would probably complete the winding-down of its oil and gas business by the end of the current fiscal year, he said.

MG Corp would continue as a holding company and MG aimed to make "appropriate acquisitions" using tax benefits relating to high losses carried forward in the U.S.

The new MG has slimmed down dramatically from the sprawling conglomerate of 700 companies and partial holdings that Neukirchen inherited from Heinz Schimmelbusch, the company's disgraced former chairman.

Separately, MG said Schmimmelbusch's lawyer had rejected the company's terms for an out-of-court settlement of a lawsuit filed against him last year for alleged breach of duty.

MG had offered to reach a similar arrangement as it did last year with former finance chief Meinhard Forster, who like Schimmelbusch was dismissed in December 1993 after the extent of MG's losses was revealed.

MG filed a suit against its two top former officials in February 1995, charging flagrant breach of duty and calling for 25 million marks in damages from Schimmelbusch and two million from Forster.

MG said last year that Forster had offered to clear up the facts in the case and that he might help pay damages related to the troubles.

In return, MG had provisionally suspended its legal action aginst Forster.

MG said in a statement on Thursday that Schimmelbusch's lawyer had said he would present documents which would support the former chairman, but that the documents presented did not yield any relevant new facts.

Schimmelbusch's Frankfurt lawyer Wolfgang Apitzsch could not be reached for comment.-Reuter