If dealers were hoping for a quiet week in the run-up to the Ascension Day holiday, they were disappointed. Sulzer Medica took a knock over news that it was facing a huge bill over faulty hip implants, and shareholders led a revolt against merger plans at Feldschlösschen-Hürlimann Holding.
The medical technology group¸ Sulzer Medica, revealed on Monday that it was not fully insured to cover the costs of surgery to replace the faulty hip implants. The Winterthur-based company had previously said that its product liability insurance was adequate to cover costs associated with revision surgery.
Shares in the group were under pressure throughout the week as analysts added up the damage this could cost the company's annual earnings. So far, some 1,700 revision surgery operations have been carried out in the United States.
Also on Monday, Switzerland's second largest financial concern, the Credit Suisse Group announced that first quarter net profits had fallen by 25 per cent to SFr1.482 billion ($816.9 million), reflecting difficult market conditions over the first three months of the year.
However, the group said it was still looking forward to better earnings overall for 2001 despite the poor performance of its private and investment banking divisions.
Meanwhile, shareholders at Feldschlösschen-Hürlimann Holding voted overwhelmingly against a planned SFr1.5 billion merger with Swiss Prime Site, which would have created the largest property group in Switzerland.
The revolt was led by the controversial commodity trader, Marc Rich, who was earlier this year pardoned by former US president, Bill Clinton, for tax fraud in the US.
Britain's Financial Times newspaper reported that Rich had been attracted by Feldschlösschen's remaining property portfolio and was concerned that the deal seriously undervalued the company's property assets.
Feldschlösschen's shareholders voted against the merger with Swiss Prime Sites after Rich's lieutenant, Thomas Frutig, outlined Rich's reservations about the valuations. Frutig then proposed five new members to the board, including himself and another member of Marc Rich Finanz, which all won shareholder backing.
The Swissair Group was back in the news on Wednesday as it appointed a new chief financial officer to replace George Schorderet, who had been criticised in the wake of losses of SFr2.9 billion ($1.63 billion) which the group chalked up last year.
His replacement was 40-year-old Jacqualyn Fouse from the United States, who is currently group treasurer of the Nestlé food concern in Vevey, western Switzerland.
Fouse, who has been with Nestlé since 1986, will assume her new position on July 1, a Swissair Group statement said. She will be the first woman to serve on the Swissair Group's top management board.
The statement added that Schorderet is to assume new responsibilities for special assignments within the Swissair Group. One of his main duties will be to help with an upcoming special audit that was demanded at the annual meeting of shareholders.
He will continue to report directly to chairman and chief executive, Mario Corti, who himself moved to the Swissair Group from his post as chief financial officer of Nestlé.
On the economic front, the International Monetary Fund (IMF) said on Tuesday that it believed there was room for interest rate cuts by the Swiss National Bank (SNB) if the economy shows a more marked slowdown.
The IMF forecast said Switzerland's economy would grow by just two per cent in 2001, after logging a gain of 3.4 per cent in 2000.
However, the IMF said that even this reduced growth forecast could be tempered because it "viewed the growth projection as subject to downside risks from the weakening global economy".
by Tom O'Brien
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