German utility Viag AG said net profit for 1999 fell 20% because of high restructuring costs and pressures on energy prices.
Viag said net profit came to DM 1.2 billion (US$ 591.9 million), or DM 1….
German utility Viag AG said net profit for 1999 fell 20% because of high restructuring costs and pressures on energy prices. Viag said net profit came to DM 1.2 billion (US$ 591.9 million), or DM 1.34 a share, compared with DM 1.5 billion, or DM 1.72 a share, the year before. Pretax profit fell 16%, to DM 2.6 billion while operating profit from ordinary business slid 15%, to DM 2.3 billion. Sales for the year fell 23%, to DM 38.1 billion. Viag said the profit slowdown was in line with its expectations, but analysts who saw preliminary data some weeks ago said the numbers were below their forecasts. The company has allocated DM 3.8 billion for a program aimed at reducing costs and raising profitability, thus offsetting price pressures. “Continuous cost-cutting measures, the sale of fringe areas, and the expansion of core activities through acquisitions and investments from a DM 3.8 billion budget should strengthen the competitiveness of our operating business,” the company said. Viag said it expects to conclude the sale of its trading subsidiary Kloeckner & Co. and its packaging subsidiary Gerresheimer Glas AG this year, chairman Wilhelm Simson said at the company“s annual earnings conference in Munich. However, Viag hasn“t started arranging the sale of another packaging subsidiary, Schmalbach-Lubeca AG, or its VAW Aluminum AG unit, Simson said. VAW is a “pearl” in the Viag portfolio, and Viag wants to place it “in the best of hands,” Simson said. Simson added that the structure and aims of the planned merger between chemicals subsidiary SKW Trostberg AG and Degussa-Huels AG, which is majority owned by Veba AG, will be made public by the end of April or beginning of May. SKW is preparing to merge its energy and chemicals businesses with those of Veba AG (VEB) later this year. “The merger will have no major synergies due to the structure of the companies“ activities. The issue will be to select the top segments from a broad spectrum and define a strategy for their further development,” Simson said.