Kajo Neukirchen, Metallgesellschaft's chief executive, said yesterday the disastrous oil futures portfolio of its US subsidiary, MG Corp, had been rapidly reorganised so that it no longer posed a threat to the existence of the conglomerate.
But a DM1.5bn ( pounds 590m) loss from an oil deal, which Metallgesellschaft had previously described as 'potential' for the 1993/4 business year, has been booked as a real loss during the first quarter, ending 31 December 1993. This obliterated a DM64m profit made from the rest of the conglomerate's activities in the first quarter.
In addition to the DM3.4bn financial rescue package agreed in January with Metallgesellschaft's creditor banks, the company is proceeding with an urgent programme of rationalisation and divestment, Mr Neukirchen said. It will shed 7,500 jobs this business year, bringing savings of DM550m. A further DM500m in savings is to come from cutting other costs.
Metallgesellschaft also expects to raise DM1bn through disposals, including the sale of its 50.1 per cent stake in Metall Mining Corp, its 46.6 per cent holding in the car components maker Kolbenschmidt, a 5.4 per cent stake in Methanex Corp, a 49 per cent stake in Jewometaal Stainless Processing and a 98.7 per cent stake in its Korf unit in Brazil.
Mr Neukirchen said these measures would 'lead to a clear improvement in operating performance', but he warned that 'Metallgesellschaft has a road full of obstacles ahead of it'.
The group plunged to a DM1.9bn pre-tax loss in 1992/3, DM800m of which resulted from what Mr Neukirchen called speculative dealings on the US oil futures markets.
The volume of the US subsidiary's oil contracts increased eightfold last year to 160 million barrels. 'To make clear just what this means: 160 million barrels is 80 times the daily production of Kuwait,' Mr Neukirchen said. He did not rule out the possibility of criminal proceedings against his predecessor at Metallgesellschaft, Heinz Schimmelbusch, who was sacked in December once the scale of the calamity became known.
Mr Neukirchen said the group's operating losses, excluding MG Corp in the US, had fallen in the first quarter of 1993/4 to DM31.9m from DM41.9m a year before. At an extraordinary shareholders' meeting in Frankfurt tomorrow, called to approve the rescue package, the group's supervisory board is expected to come under fire for not knowing enough about the disaster.Reuse content