International Business News

Weakened by the crisis, the French capital again to make headlines in the business press but professionals are questioning the sustainability of a recovery that dare not speak its name.

The uncertainties in the sector are also the prospect of entry into force of new rules that regulators want to impose the financial sector, whether the standards of solvency of banks and insurance and new tax regimes on capital gains and bonuses of investment funds.

The Forum's capital organized by Reuters of 8 to 10 September in Paris will provide an update on the new standards and expectations of the profession after the excesses of the years 2004-2007 and the bursting of the credit bubble.

According to data compiled by Thomson Reuters over the period from January 1 to September 7, the activity of private equity in France, measured by value is more than six times lower than it was in 2006, a report close to that observed globally.

The nascent recovery is still tangible: the activity is about 60% higher than it was in 2009.

"There is still a little early to give a real trend for the end of the year, although there is still a 'stock' of deals that can be done," said Vincent Ponsonnaille, a lawyer specializing in capital at Linklaters.

"Especially on small and mid-cap activity there," says his side OSSMANN Remy, vice president of the consulting firm LEK in France.

Selling Frozen Picard, the largest operation in France since the bankruptcy of U.S. investment bank Lehman Brothers, however, showed that the billion euros was more impenetrable.

VIRTUOUS CIRCLE

But uncertainty over the economic environment and financial markets remain a brake, particularly in terms of IPOs (IPO).

"If the IPO market reopens for sizes and valuations fairly consistent, it is a bit of a virtuous circle for a variety of companies that are still in the portfolios," said Catherine Vincent, Chief Executive within the activity of investment bank Goldman Sachs in Paris.

Analysts said the IPO provided the chain of casinos Lucien Barriere will be a test.

But conversely, the withdrawal of the sale of fast food chain Quick or the retirement homes Medi-Partners also show that investors remain cautious.

"There is a fairly long list of transactions that have no takers, either for reasons of size or profile, for reasons of funding or pending award," notes Céline Méchain, director in charge of relationship with the investment fund at Goldman Sachs.

The continued funding of operations, moreover, remains uncertain because if the banks agreed to finance numerous records at the end of the first semester, they must organize now, that is to say, find investors interested in debt.

This process has also been launched on Monday by the banks in charge of LBO mounted for the redemption of Picard Frozen by Lion Capital.

"We can not consider access to the debt as an asset for the moment," he told Reuters late August Monique Cohen, managing partner of private equity group Apax.

NEW WAVE

The banks also require different ways to structure transactions so as to regain control faster business purchased by the funds in case of restructuring.

Because the crisis has shown the procedure to safeguard French was rather favorable to shareholders and creditors trying to turn faster debt capital.

The news of the capital since the outbreak of the crisis has been marked by restructuring banks that were very expensive to fund and precipitated the departure of certain officers.

In France, corporate restructuring or OMS Monier were characterized by such deadweight losses for the PAI, Sagard and Cognetas.

"We had a first wave of restructuring.By 2011, there could be a second for companies whose underlying economic activity is not to go and who only see their problem of excessive leverage, "says Catherine Vincent.

"2012 will be the first year where we will face a wall of refinancing," explained her side Céline Méchain.

"We'll see how some funds are recovering from their previous failures, particularly in the fundraising going and coming but for now there are many more records in 2009 rollover," said Olivier Tordjman, a lawyer with Ayache Salama.

"And if subjects remain restructuring, there is less risk of 'dead'," he says.

Positioning high-end of Germany and its strong presence in emerging markets, causing a record growth, should protect Europe's largest economy from the impact of an economic slowdown in the U.S. or its neighbors in the euro area.

During the last two decades, German companies are well established in the markets of emerging Asia and Latin America, particularly in infrastructure which these economies need to grow.Germany and last year signed a cooperation agreement with Brazil to develop the infrastructure needed to organize the World Cup soccer in 2014 and the Olympics in 2016.

Controlling the production of capital equipment up-end the German strategy was used. Indeed, the demand for these products is very strong, and machinery and commercial vehicles alone representing nearly 50% of German exports.

"We are well represented in many markets that are now very important, but which were not specifically before.We are better represented than others, "says Volker Treier, chief economist of the Chamber of Commerce and Industry (DIHK).

This good exposure to growth markets is reflected by good orders to German companies, even as mature economies like the United States, struggling to recover.

Orders in the German manufacturing sector have increased by 3.2% on month in June, after a strong second quarter showing a growth of 2.2% over the first three months of the year, the strongest growth since the reunification in 1990.

Businesses benefit directly from this favorable environment.Of the 30 groups listed on the DAX index, 23 of them have published results above market expectations in the second quarter, and 12 have raised their forecasts.

EXPORT DEPENDENCE

But the economic profile of Germany, focusing on exports, has its downside.Last year, at the height of the recession, German exports have dropped sharply, causing an economic contraction of 4.7%, higher than the average contraction across the euro area – 4.1%.

"The sensitivity to exports has struck the German economy in 2008 and 2009, and now she supports a remarkable growth," explains Niels Thygesen, professor of economics at the University of Copenhagen.

During the recession, foreign groups often had no access to funds for the purchase of German equipment, explains Volket Treier. "Often, the financial structure does not follow.(…) Now, repeat orders. "

These include small and medium businesses, often family, the famous Mittelstand, which form the backbone of the German economy.

SUPPORT HOUSEHOLD AND CONSTRUCTION

Another key factor in recovery: households.German consumers, known for their sense of savings, have supported the growth in the second quarter after starting the year marked by sluggish consumption.

The construction sector also contributed to the improved economic situation of the country, bouncing over the period April to June after a particularly harsh winter, which had greatly affected the industry.

Economists expect growth in the German economy at least 3% in 2010, prompting the country's trade unions to demand a high wage growth, after agreeing to tighten its belt during the greater part of the decade elapsed.

Such a decision would certainly erode the competitiveness of Germany, but without affecting the economy significantly.

The powerful IG Metall union calls for a wage increase of 6% to 85,000 steelworkers, a claim well above the inflation rate of 1% of Germany.

The U.S. stocks closed lower Tuesday, penalized by the publication of statistics of home resales already been added to fears surrounding the health of perennials the world's biggest economy.

The Dow Jones closed with a loss of 133.96 points, or 1.32%, to 10,040.45. The Standard & Poor's 500 broad, fell 15.49 points, or 1.45%, to 1051.87 while the Nasdaq Composite Index ended down 35.87 points (-1.66%) to 2123 76.All three indexes have ended at levels unprecedented in seven weeks.

Sales of existing homes in the United States in July suffered an unprecedented fall that brings them back to their lowest level in more than 15 years, a deteriorating just confirmed that the U.S. recovery loses much of its momentum.

Shortly before the publication of these statistics, Charles Evans, president of the Federal Reserve Bank of Chicago, said that the risk of a relapse into recession in the U.S. economy had increased in the last six months even if such an outcome is unlikely in his eyes, a recovery "modest" is being said.

Home resales fell 27.2% last month compared to June to 3.83 million units annualized, the lowest level since May 1995, announced the National Association of Realtors (NAR) The American Federation of Estate Agents. Economists polled by Reuters were expecting a much less pronounced decline from 12.0% to 4.7 million.

This statistic has led to a decline in property values.The PHLX Housing Index was down by 1.05%.

"The economic statistics of the day were added to a long list of evidence showing that there is a slowdown in the economy," said Michael Sheldon of RDM Financial.

"Investors were expecting a mediocre statistics, but today's figures have revealed the extent of the disaster."

These events have however not been taken on renewed vigor of the activity on the front of mergers and acquisitions.

Hewlett-Packard and Dell continued to struggle to capture the data storage specialist 3PAR.According to Bloomberg, Dell is preparing to improve its offer after Monday HP has $ 1.6 billion on the table.

3PAR has closed up 3.64% to 27.04 dollars while HP has lost 1.65% to 38.39 dollars and Dell fell 2.97% to 11.58 dollars.

The medical equipment maker Medtronic has also plunged 10.80% to 31.21 dollars after reporting a drop in sales and lowered its forecast.

The announcement weighed on the sector and the Health Sector Index S & P lost 2.03%.

BP confirmed the upcoming resignation of its CEO, Tony Hayward, widely criticized for his handling of the oil spill in the Gulf of Mexico and its replacement by the American Robert Dudley.

This announcement coincides with a special charge of $ 32.2 billion (24.8 billion euros) related to the oil spill, which plunges the accounts of the British group into the red to the tune of 16.97 billion only for the quarter April-June.

"The tragedy of the explosion and damage wells Macondo environments that ensued marked a turning point," said the group's president, Carl-Henric Svanberg after announcing the departure of Tony Hayward.

"BP is a strong company but will now be (…) a different company."

Robert Dudley, 54, currently in charge of the group's activities in the U.S., oversees efforts to contain the oil spill, considered the worst in the history of the United States, which pollutes the region since the collapse of the Deepwater Horizon platform April 20.

He will be based in London after taking office and will sell the direction of the American branch in Lamar McKey, the company said.

Tony Hayward to take its share towards the non-executive of TNK-BP, BP's joint venture in Russia.He will receive compensation equivalent to one year's salary, or 1,045,000 pounds (1,250,000 euros).

Hayward had angered the U.S. administration for having complained of being overstretched since the beginning of the disaster and for having, during his congressional testimony, tried to dodge responsibility for his group.

Excluding costs related to oil spills and other non-operating expenses, BP poster for the second quarter adjusted earnings of the replacement cost of 4.98 billion dollars, in accordance with Reuters based on estimates of 11 analysts.

Adjusted earnings replacement cost excludes gains or losses related to changes in valuation reserves of fuel and is comparable to net income.

In a separate announcement, BP said its asset sales could reach a total of 30 billion dollars over the next 18 months, which could allow it to reduce its debt by between 10 and 15 billion dollars.

The group said it will review its dividend policy once established results for the fourth quarter.

Schlumberger, a global oilfield services company, reported Friday in an increase in line with expectations, 33% of its quarterly earnings, strong growth of its land in North America offset the effects of the moratorium on drilling offshore in the Gulf of Mexico.

Net income from continuing operations of U.S. group stood at 818 million dollars (632 million euros) over the second quarter, or $ 0.68 per share, against 613 million ($ 0.51 per share) last year.

Turnover rose 7.4% to 5.94 billion dollars.

Analysts on average had forecast earnings per share of $ 0.68 and revenues of 5.915 billion.

In exchange for pre-market action Schlumberger, who finished at 61.30 Thursday, yielded more than 2%.

The moratorium on offshore drilling in the Gulf of Mexico was decided after the explosion and sinking of the platform Deepwater Horizon, operated by BP, which left 11 dead and is causing the worst oil spill from the history of the United States.

But Schlumberger is less affected than, for example, Halliburton, by stopping the activity in the Gulf of Mexico, this region represents only 5% of its turnover.

STMicroelectronics said they expect any slowdown in new orders, after a first half that exceeded expectations, but the difficulties of the ST-Ericsson joint venture have disappointed for the second consecutive quarter.

The European leader in the manufacture of semiconductors published Thursday adjusted earnings of 18 cents per share, which was entered in above expectations, and said providing a sequential increase of its turnover included between 2% and 7% in the third quarter.

"We see today a strong flow of new orders, there is no slowdown," said Group CEO Bozotti during a conference call.

Around 10:10, the title fell by 2.57%, to 6.56 euros, compared with a stability of the sector index of technology stocks.

Several analysts have cited the poor performance of ST-Ericsson, the joint venture between STMicro and Ericsson, to explain this decline.

"The continuing recovery is confirmed in this publication, except for the ST-Ericsson joint venture, where the situation continues to worsen," said one trader.

The subsidiary had already, at the publication of the first quarter, overshadowed the strong performance of STMicroelectronics, and many analysts continue to believe that the recovery of this subsidiary is the main weak point of the Franco-Italian.

"ST-Ericsson is in line with its restructuring plan. A major transition can not be achieved overnight (…).We remain committed to this JV, "said Carlo Bozotti.

The subsidiary has seen its sales drop sharply, while it tries to reposition its product offering, overshadowing the first positive effects of restructuring on the profitability of the JV.

STMicroelectronics has published a turnover up 8.9% sequentially to $ 2.53 billion, while the Reuters Editorial was counting on average quarterly sales of 2.513 billion dollars, on Based on estimates of 14 analysts, and earnings per share of 14 cents, according to 12 estimates.

The group, which had raised its forecast for the end of April the market for semiconductors, has confirmed an expected growth of 20% in 2010.

Major European stock markets finished higher Wednesday for the first time in over a week, boosted by banks and U.S. companies quarterly results.

The Paris Bourse closed up 0.75% to 3493.92 points.

While the results of their strength tests will be published Friday, banking stocks were among the most requested on Wednesday.The Stoxx index of European banking core values thus gained 1.01%.

German Chancellor Angela Merkel said that resistance tests conducted with European banks to help restore confidence in the financial sector.

The maker of Durex condoms and Scholl sandals SSL International has jumped from his side of 33.45% after the announcement of its takeover by the British household products and health Reckitt Benckiser for 2.5 billion pounds ( 2.97 billion euros).

The corporate failures have continued to decline in France in June to register down 7.9% on the entire second quarter compared to the same three months of 2009, according to data published on the news website score3.fr business.

The Observatory for the failures identified score3.fr 13,189 openings procedures from April to June against 14,326 a year earlier, a decrease of 7.9% followed a modest decline of 1.8% in first quarter .

On June alone, the failures are the number of 4677, a figure higher than in May (4310), but down 7.2% compared to 5039 cases in June 2009.

"The improvement is particularly noticeable in the areas most affected by the crisis, namely real estate (-30.4%), manufacturing (-21.2%) or construction (-10.9 %), "said Score3.fr, which belongs to the group of business services Pouey International.

Agriculture and fishing have also seen their bankruptcies decline sharply compared to June 2009 (-44%) but some areas remain, however, the sentence, like business services and administrative support (14.4% ), accommodation and food (+3.2%), or transport failures which rose 1.4% compared to June 2009.

After several positive months, financial and insurance for their part, experienced strong growth in their failures (6%) in June a year ago. Developments in this sector, however, positive throughout the quarter with an average decline of 3.2% of failures from April to June 2009.

The detailed figures are available on the website www.score3.fr.

The International Monetary Fund and the European Union have suspended Saturday program evaluation assistance granted to Hungary in 2008 to enable it to overcome the financial crisis, noting that tough measures must be taken to reduce deficits.

The suspension means that consultations, as the assessment has been completed, Hungary can not access funds that have not yet been used for the loan of 25.1 billion euros earmarked by EU and the IMF.

The negotiations were supposed to be completed by early next week.

According to analysts, the forint, the national currency could fall sharply at the reopening of markets on Monday.The loan from the EU and the IMF now serves as a safety net for Hungary, which is financed on the markets since the end of last year.

"In an environment of increased scrutiny by the markets of government deficits and debt levels, the budget deficit targets previously announced – 3.8% of GDP in 2010 and less than 3.0% of GDP in 2011 – remains a appropriate basis for the necessary process of consolidation and debt sustainability (…) but additional measures will be taken to achieve these goals, "said the IMF.

The new center-right government, based on the April elections, said he wanted to extend the current agreement with the EU and the IMF until the end of 2010 and obtain a new agreement, as precaution, for 2011 and 2012.

The Minister of Economy, Gyorgy Matolcsy said clearly that the government wanted to resume negotiations with its international creditors.

"The government will obviously continue discussions with international organizations, including the EU and the IMF," he said in a statement taken Saturday by the news agency MTI.

'DIFFICULT DECISIONS'

Christoph Rosenberg, who led the IMF delegation to Hungary, said that the international organization requested more details on the budget next year."When we come next time, unless we were coming next week, the government has consistently advanced the budget 2011 and budget will be very important," he told Reuters.

He also said that the IMF had not discussed with the Hungarian authorities for a new funding agreement for 2011 and 2012.

In a separate statement, the EU has indicated that the conclusion of the evaluation had to be postponed and that further consultations would be held.

"Hungary has returned on a path of positive economic growth and record today one of the lowest gaps in the EU.I welcome the commitment of the authorities towards the 2010 target of reducing the deficit, "said Olli Rehn, European Commissioner for Economic and Monetary Affairs.

"However, the correction of the excessive deficit from next year will require difficult decisions, including spending," he added.

Hungary needs to maintain the safety net that provides the loan of the EU and the IMF to maintain the confidence of the markets from which it borrows.The country remains vulnerable to high public debt, which represents 80% of GDP, and its dependence on foreign financing.

"If we do not have the safety net international creditor, it will penalize us where we are most vulnerable," he responded Zsolt Kondradt, analyst at MKB Bank, adding that a decline in the forint is expected Monday.

The Hungarian currency was trading at 282 forints per euro Fridays.

Romania has already had to make tough decisions last month to ensure the disbursement of IMF aid and reassure the markets.

Negotiations on the reform of financial supervision has failed Wednesday and European agreement on the text has been postponed until September, show several European sources.

"There will be no further talks before late August or early September and I think we can say that the talks failed," a parliamentary source said.

"The core issue is Article 6 which concerns the principle of direct supervision exercised at European level by the new supervisors," the source said adding that the objective was to find a consensus with the all states, including Great Britain.

A second source confirmed the report and discussions held that "one or two additional steps the council (of EU ministers) in the direction of the European Parliament would be required to obtain an agreement."