Bloody but unbowed after Cable & Wireless Plc’s ungentlemanly termination of its telecommunications alliance with the German conglomerate, Veba AG yesterday announced a 25% increase in group net profits for 1996 and proposed a higher dividend, but warned that earnings growth would slow in the current year. Group net profits were $1.6bn, and sales were 3% ahead at $44bn. The company plans to outrage most of its compatriots by listing its shares on the New York Stock Exchange on October 8, although it did not plan to raise any new money. That is the worst thing a fellow German can do in the eyes of many of its siblings, the issue being that the US demands far more transparency than Germany requires, and more rigorous treatment of special items, to the point where German companies that have racked up handsome profits for many years in the eyes of the benign German authorities, are chronic loss-makers when they redo their books under US accounting rules – and publish figures to US rules they must, if they want to list in New York. Veba said it would continue the expansion of fledgling – and now wounded – telecommunications business, which made start-up losses of $123m in 1996. In partcular, it looks to build on its operations with its partner RWE AG, through their O.TEL.O joint venture, which was founded in October and which plans to offer telephone service to private subscribers this year. Hermann Kraemer, head of the telecommunications unit, told Reuter that he expects the group’s cellular telephone business to be profitable by 1999, while the fixed network should follow by 2002. We have set the ambitious goal of becoming the premier private carrier in the German telecommunications market, Ulrich Hartmann, Veba’s management board chairman, declared in his statement.
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