Kuoni set to dominate headlines

Affolter is feeling the heat Keystone

Two annual general meetings (AGM) - at Switzerland's biggest travel group, Kuoni, and the Zurich Financial Services group - are set to make the headlines in the coming week in Switzerland.

The Kuoni AGM on Tuesday at Zurich’s Kongresshaus is expected to be heated, with reports saying supporters of the suspended chairman, Daniel Affolter, are likely to be vociferous in their protest at moves to oust him.

A power struggle within Kuoni started just over a week ago after five of the seven members of the board of directors and the entire management demanded Affolter’s immediate resignation.

The board is filing criminal charges for “disloyal conduct of business” against Affolter and the board of trustees of the Kuoni and Hugentobler foundation, which is the company’s largest shareholder.

The accusations against Affolter include the illegal payout of roughly SFr12 million to the board of trustees in 2000, with Affolter receiving two thirds of the funds.

Management at Zurich Financial Services can also expect to face some shareholders’ wrath at the group’s AGM on Thursday, following a 35 per cent drop in share value this year.

Investors want to know why top management members have received several million francs in remunerations over past year. The company has revealed weak earnings for the same period, with profit declining five per cent in 2000.

The annual report showed that seven members of the board received aggregate remuneration of more than SFr1 million in 2000, with one member of the board receiving SFr5.7 million pay.

Speculation that the bumper pay-out was made to the group chairman and chief executive, Rolf Hüppi, could prompt a number of difficult questions from shareholders.

Market analysts will also be looking for more news on what Zurich is going to do with its United States-based asset management business, Zurich Scudder.

In the banking sector, key first quarter figures are due from Switzerland’s biggest financial group, UBS on Tuesday. The group has already been downgraded by analysts at the US broker, JP Morgan.

Analysts Romain Burnand and Stuart Graham said they expected the publication of the first quarter numbers might lead to a further downward revision of earnings.

Dealers will also be looking for increased clarification of denials by the bank that it lost SFr500 million in its e-banking venture.

Switzerland’s largest telecommunications group, Swisscom, will also publish its first quarter results on Thursday. The group has suffered a number of recent downgradings, with analysts predicting a less rosy future than initially believed.

Bank Sarasin analyst, Reto Portmann, said in a note to clients that due to the rather unpromising profit outlook, limited growth perspectives and a stretched valuation, he was downgrading the stock.

The group warned in April that fierce competition in the sector would cause another significant decline in operating earnings in 2001. Net earnings, however, will be continue to be buoyed by extraordinary earnings through disposals.

by Tom O’Brien