Metallgesellschaft heading for another oil-led loss of DM2bn

METALLGESELLSCHAFT, the German engineering and trading group pushed to the brink of bankruptcy by disastrous US oil futures speculation, expects to record another loss this year similar to the near DM2bn posted in 1992/93. In addition, the company will have to make provisions of DM1bn against continuing heavy losses in oil refining in the US.

Kajo Neukirchen, Metallgesellschaft's chief executive, said the group was pushing ahead with disinvestments, which had already raised DM800m, to cover the provisions.

Metallgesellschaft made group pre-tax losses of DM1.5bn in the first half of the year to end-March, most of which were concentrated in oil futures speculation that was costing the company DM20m a day during the worst period in the first quarter.

With the oil hedging mostly restructured, the company had suffered no further losses in this area in the past few months, Mr Neukirchen said. The main problem was Metallgesellschaft's oil refining contracts with Castle Corp in the US, which were so uncompetitive as to guarantee losses over a long period.

Outside of its US operations, Metallgesellschaft is making a small profit. Mr Neukirchen said he aimed to reduce the group's financial debt from DM9.4bn at the end of 1993 to DM5bn this year.