German GDP increased significantly in the second quarter, climbing 1.5 per cent after a 0.5 per cent decline in the first quarter. A big increase of 0.9 per cent in consumer spending and a recovery in construction from its winter slump explained the higher-than-expected growth. However, the picture of steady economic recovery was obscured by a surprise increase in unemployment. There was a pan-German rise of 14,000 in the number without jobs last month, leaving the unemployment rate unchanged at 10.2 per cent.
Chrysalis, the music and film company, pulled the plug on its film production and distribution arm, citing difficulties in competing against US independents that are now part of giant, multinational companies. "If I thought it was going to work even in the medium term, I would have stuck with it," Michael Pilsworth, chief executive of Chrysalis Filmed Entertainment, said. He added that the company would keep its 49 per cent stake in Scala Productions, a leading UK distributor. The closure would have "no financial effect" on the company's current year results, he said.
Smiths Industries, the last FT-SE 100 company to be audited by a firm outside the accountancy profession's Big Six, plans to transfer the audit from Clark Whitehill to Price Waterhouse. Clark Whitehill, which will jointly audit the 1997 accounts with PW, stressed that it had prepared for the loss of Smiths and other large clients by focusing on smaller businesses.
Cookson, the specialist metals to ceramics group, unveiled a pounds 25m cost-cutting programme as it warned of a mixed outlook for the second half. The group said the streamlining plan would be implemented over the next few months, with the aim of generating a payback within two to three years. Profits were pounds 69.2m in the half year to June, down from pounds 81.2m before, hit by a pounds 16.1m loss on disposals. The interim dividend rises 11 per cent to 3.9p.
Frost Group, the UK's fourth-biggest forecourt operator, has seen average volumes slump by 40 per cent so far this year as it fights to retain margins in the face of the petrol price war. Pre-tax profits crashed by a third to pounds 3.8m in the six months to June. The group claimed it would be the only profitable company in the market this year if nothing changed in the second half. The latest price increase appeared to be holding, it added.
Claremont Garments, the Marks & Spencer clothing supplier, is considering closing its plant in Glasgow, threatening up to 700 jobs. The company said it might switch production to its other plants in North-east England.
Leeds Group's shares crashed 31 per cent to 137.5p after warning that full-year pre-tax profits would be significantly below the pounds 7.5m made in 1995, due to further deterioration in the fashion clothing sector. The problem has been exacerbated by increasing cheap imports and the depressed retail sector on the Continent.Reuse content