Results from Alcatel Alsthom SA yesterday were so much better than expected that the shares had to be suspended limit-up for 15 minutes to allow the enthusiasm to cool a little after they rose almost 10%. Despite the profit being small, the company was at least back in the black after a swingeing loss last year, and its in net attributable profit was equivalent to $473.3m for 1996, slightly ahead of its own January forecast. That compares with a loss of $787m; sales rose 1% to $28.41bn. The company plans to create a major defense group with allies if it wins the bidding battle war for state-controlled Thomson-CSF SA against Lagardere Groupe, but anyway, it is talking to GEC Plc about extending co- operation beyond their GEC Alsthom transport and power generation joint venture, chairman Serge Tchuruk said. He said that while in the US, a big wave of restructuring was going on, in Europe the defense industry was shattered due to national interest and had led to a number of joint venture deals in which nobody is the boss, and he hoped to be able to find middle ground between the US and European models. The group also said it had cut its debt by $1.21bn and reduced its gearing to 32% at the end of 1996 from 61% at the end of 1995. Tchuruk said there would be further job cuts at the company in 1997 and early 1998, after 10,000 job losses in 1997, but declined to speculate on the number. He said the actual job cut decisions were made on a local level and discussed with European-wide staff representation bodies. The group was also looking at buying in some of its components, and could close a number of factories in Europe but would try to look for a buyer for the sites. In 1996, Alcatel used $894m in restructuring provisions, leaving it with $1.84bn for further restructuring in telecommuncations and cables. In 1995, Alcatel it 4,500 jobs and used $280m in restructuring provisions. It is still losing money on its Alcatel NV telecommunications side, but the number was down to $140m from $578m. Alcatel Alsthom aims to increase its operating margin by two percentage points a year to see satisfactory margins by 1998.
