DAF shares suspended on cash injection reports

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The Independent Online
DAF, the Anglo-Dutch truck manufacturer, will today announce details of a wide-ranging financial reconstruction, likely to involve a cash injection of several hundred million guilders and further job losses.

Shares in DAF were suspended on the Amsterdam bourse yesterday after Dutch press reports that the loss-making group would receive an injection of up to 500m guilders ( pounds 185m) from state-controlled banks in Belgium and the Netherlands.

The Dutch government, which has already pledged that it will not allow DAF to go bankrupt, provided the company with a 67m guilder loan just before Christmas as part of a 100m guilder refinancing supported by Belgian commercial banks backed by the Belgian government.

The restructuring follows two separate reports on DAF by the management consultants Arthur D Little and Coopers & Lybrand.

DAF, in which British Aerospace is the largest shareholder, with a 16 per cent stake, has suffered losses of 800m guilders in the past three years, largely as a result of the sharp downturn in the UK truck market, where it is market leader.

The company warned in December of further significant job cuts after disclosing that 1992 losses would be higher than the 100m guilders forecast earlier in the year.

DAF's workforce has fallen by 4,000 in the past three years to 13,000. It employs 5,500 in the UK on truck and van production in Leyland, Lancashire, and the West Midlands. Last year the group shed 1,600 jobs as Western European truck sales fell by nearly 10 per cent.

After many years of continued growth, BMW 'will be adjusting to a lower level of deliveries in 1993', the company said yesterday in a letter to shareholders. BMW said group sales rose 5 per cent to DM31bn ( pounds 13bn) last year. Car production, benefiting from the new 3 series, rose 8 per cent.

Noting that orders in the German car industry had already declined significantly, the letter warned a 'decline in business can be expected at least in the first half of 1993'.

The statement provided no earnings figures but industry analysts expect BMW's profits in 1992 to be flat or slightly down on 1991's result of DM783m.

The German car market is expected to contract by about 15 per cent in 1993, following a decline of 8 per cent last year.