International Business News

Eiffage yesterday confirmed its forecast of sales for 2010 thanks to the growth of its backlog and achieved a 40% jump in net profit group share biannually.

The eighth group of European construction and concessions generally expected that sales suffer in 2010, and 2009, the reluctance of public procurement, while the branch motorway concessions observes it, a gradual recovery its activity.

"For now, we have been heavily affected by margins than they were at the top of the previous cycle in 2007, but we do not know when they ascend," said CEO Jean-Francois Roverato at a meeting analysts.

He noted that the shift of the French market over the last ten years, to concessions and public-private partnerships (PPP) would generate a "return to better fortune" in some time."The question is when," he added.

Eiffage, best known for the Millau Viaduct and the future stadium of Lille, has achieved a net profit after minority interests of 70 million euros in the first half thanks to the reduced cost of debt.

The operating profit has however declined by 2.6% to 412 million, within the scope of the downturn in work due to a climate of increased competition.

Alongside Eiffage, Bouygues has raised its annual target of revenue, thanks to TF1 and real estate, while still waiting for a 5% decline in construction.

Vinci, the world leader in construction and concessions, has published its interim results next to expectations, particularly thanks to the improvement of traffic conditions.

NEXT ISSUE OF THE OFFER OF WITHDRAWAL ON APRR

Eiffage, owner of motorway networks APRR (Autoroutes Paris-Rhin-Rhone) and Area (Rhone Alps), has already published July 30 in sales for the second quarter, emerged up 2.2% to 3.547 billion euros.

The company said that the outcome of a bid withdrawal filed on APRR Eiffarie early July by the joint venture between the Australian Eiffage and Macquarie would be published on September 24.

The offering will enable Eiffarie hold 100% of APRR and will be accretive to net income of the group in 2010, says Eiffage.

PRPA reported Friday a net profit increase of 16.3% on back of recovery in traffic, especially trucks.

The group is held June 30 to 26.3% by its employees and 20% by the Strategic Investment Fund (ISF), the float is 35.7%

The action Eiffage closed down 1.34% to 35.99 euros on Tuesday, giving a market capitalization of 3.24 billion euros. It has lost 8.5% since the beginning of the year.

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.

The Bank of Korea raised its key interest rate Friday for the first time since the beginning of the financial crisis and reinforced expectations of a further tightening of monetary policy by predicting strong growth and rising inflation .

The Bank of Korea increased by 25 basis points rate previously set at record low of 2.0%, falling into step with its regional counterparts in Australia, India, Taiwan and Malaysia.

Investors were expecting such an initiative for several weeks in light of the growing confidence shown by the authorities regarding the ability of the fourth largest economy in Asia to consolidate its recovery, despite lingering uncertainties in Europe and the United States.

Most analysts polled by Reuters had forecast, however, on a rate hike in August or September.

The won has increased its earnings to grow by over 1.0% on the session against the dollar.The stock market is, they, remained virtually unchanged.

"Governments in Asia seem relatively confident about the economic outlook despite concerns about the potential impact of euro weakness and the short-term downturn in growth by the rapid pace set earlier this year "said Brian Jackson, a specialist emerging markets at Royal Bank of Canada.

"We expect the Bank of Korea will further increase interest rates by 50 basis points by the end of the year, the risks are increasingly tilted to the upside," he adds.

For a chart on the interest rate and inflation trends: here

PROGRESSIVE CURE

The Governor of the Bank of Korea Kim Choong-soo told reporters that the economy had probably increased more than 7% over the same period last year in the second quarter and throughout the first half.

He also said that inflation should reach 3.0% next year, in the middle of the range the central bank's target of between 2.0 and 4.0%, which analysts said could conduct Bank of Korea to bring its rate of 3.0% by the end of this year.

He also reported a sharp rise in housing loans in June after a period of sluggish growth.

"There is no doubt that the basic rate of 2.0% was very low in view of various factors such as economic growth and inflation outlook," the governor said.

Kim Choong-soo was upbeat on global growth while highlighting the budgetary problems in Europe that it deems the main risk, adding that further turmoil in financial markets were possible.

The tightening of monetary policy the central bank should be gradual as the institution has ensured that its policy would remain accommodative.

"As the policy rate is still very low and the pace of tightening is very gradual, it is still support for the economy and the market impact will not be negative," said Lee Sung Kwon, an economist at Shinhan Investment Corporation.

This is the first increase in interest rates in South Korea since August 2008 and their first change since the beginning of last year.