Business Briefs
June 27, 2003
Consumer spending up
Germany's consumer climate improved slightly in June after months of being in the doldrums. A study carried out by the Nuremberg market research institute GfK showed purchases were up and consumers were beginning to regain confidence in economic developments. The fear of recession seems to be abating, but sustained improvement can only be expected if unemployment decreases, the institute said. Some 4.45 million people were jobless in Germany in May. The European Commission commissions the GfK to carry out the consumer climate study monthly.
U.S. firm invests in ESCADA
The U.S. private equity firm HMD Partners will pump €45 million into cash-strapped fashion house ESCADA, the fashion group announced on Friday. HMD will acquire 29 percent of shares in Germany's largest producer of women's fashion shortly after the Munich-based company released poor results for the first half of 2003. The deal, for which HMD will pay €10 per share, will significantly increase the ESCADA group's equity base. ESCADA recorded a slump in sales from €410.5 million to €306.6 million this year -- a loss of €7.3 million, which it attributed to low consumer spending and the SARS epidemic in Asia.
Setback for DaimlerChrysler in U.S. court
In the legal battle over the fusion of the German-American car manufacturer DaimlerChrysler, a U.S. court in Delaware partially dismissed arguments put forth by the company. U.S. District Judge Joseph J. Farnan said there was no merit to the DaimlerChrysler claim that the media adequately informed shareholders over the merger of Daimler-Benz and Chrysler five years ago. The car maker said after the decision it remained "committed to a vigorous defense of these cases." Shareholders have taken legal measures against the car maker, saying they were duped into believing the fusion was a "merger of equals." U.S. millionaire Kirk Kerkorian, a former Chrysler shareholder, is suing DaimlerChrysler for $8 million.
Policies from insolvent insurer safe
Current policies issued by the insolvent German life insurance company Mannheimer Lebensversicherung will be honored, Germany's finance ministry and financial regulator BaFin said on Friday. The German Insurance Association (GDV), an organization of 110 insurers, confirmed that Protektor, the industry-backed safety net set up last year to protect policyholders' investments in the event of an insurer’s insolvency would soon be ready to step in, BaFin announced on Friday in Bonn. Neither the GDV nor Protektor will be bailing out Mannheimer Lebensversicherung, one of Germany's oldest insurance companies. The insurer has been struggling to stay afloat following significant losses on the capital markets last year.
BMW considers expanding U.S. production
Car manufacturer BMW is contemplating expanding its production facilities in the United States. BMW managing board member Michael Ganal told the Financial Times Deutschland the company is considering further increasing production at its Spartanburg plant in South Carolina. So far, the Spartanburg facilities only produce the Z4 roadster and the X5 sport utility vehicle. Ganal said BMW aimed to sell 300,000 cars in the United States each year. The company sold 232,000 vehicles there in 2002. In May, the United States overtook Germany as BMW's largest market.
Compiled with material from wire services.