German car sales continue to rise

Germans are being encourage to trade in their old cars for new models

German car sales climbed 19% in April compared with the same time a year ago, as a trade-in plan to scrap old cars continued to encourage purchases.

The VDA automobile federation said new vehicle registrations totalled 380,000 last month.

However, the rise was not as sharp as March, when sales leapt by 40%.

Germans have been taking advantage of a scheme that gives drivers 2,500 euros (£2,220; $3,170) for trading in a car more than nine years old.

The scheme will be phased out by the end of 2009. The UK is introducing a similar scheme this month.

Germany has been a rare bright spot for car sales.

Data released this week showed that new car sales fell by 7% in France and by 7.5% in Italy.

However, vehicle production in Germany has been hit hard by the downturn, falling 34% in April from a year earlier. Exports fell 48%.

Ferrero accused in hazelnut fraud

By Anthony Reuben Business reporter, BBC News

Ferrero uses large quantities of hazelnuts for its confectionery

The talk around the High Court's Chancery Division was about the legal battle over whether the ambassador had, actually, been spoiling his guests.

And for those in on it, the joke was, well, "excellente".

But sadly for fans of the much-quoted 1980s television advertisement, that was not the matter being heard.

The case at the court is indeed against Ferrero, the company behind Ferrero Rocher chocolates as well as Nutella spread and Tic-tacs.

But there is no challenge to the quality of the confectionery.

Seven years after the event, a fraud case involving two major banks, Ferrero, and the world's biggest supplier of hazelnuts, is finally nearing its conclusion.

Switched nuts

By February 2002, Bank of Tokyo Mitsubishi and Belgium's KBC Bank had lent 22.8m euros ($29.6m; £20.3m) to the Turkish hazelnut supplier Baskan Gida.

The banks thought that the money would be used to buy hazelnuts from growers and would then be repaid by companies such as Ferrero paying for them.

Instead of the money for the hazelnuts going to Baskan Gida it would go directly to the banks.

But by the time Ferrero came to buy the nuts, they were bought not from Baskan Gida, but from another company called Aksu Gida.

The banks allege that all of the assets, including the hazelnuts, had been transferred to Aksu Gida and another company called Baskan Yuksel.

This left Baskan Gida as "a worthless shell", the court heard, although it is hard to tell if the lawyers involved have spotted the pun.

As a result, the banks only got about 2m euros of their money back.

The banks allege that Ferrero was involved with the switch, and indeed that it authorised it, but the Italian company denies that.

Another defendant, Shabbir Abidali, is accused, along with two companies with which he worked, of being involved in the switching of the assets, and he also denies the allegations.

Seven other defendants are named, but they have either not turned up for the proceedings or are companies in liquidation.

The judge could still find against them, but it is unlikely that the banks would be able to get a significant amount of money from them.

'Hardly a masterpiece'

The case finally began before Mr Justice Briggs last October and a judgment is expected in May or early next month.

"It is obvious that the Ferrero defendants were very well aware of what Baskan Gida was doing... but were prepared to put their commercial interests first on the basis that they thought that the prospects of anyone ever discovering the truth were so small as to be discountable," the counsel for the banks submitted.

But the counsel for Ferrero reached a very different conclusion.

"The picture the banks seek to paint is of a Ferrero, which paid vast sums of money to assist a fraud by Baskan Gida, in return for a hazelnut mountain for which it had no use and five years of litigation for which it had no wish."

"Even painted impressionistically, as the banks have sought to do, it is hardly a masterpiece."

Mr Abidali's lawyers say that the hazelnuts that were transferred were not even the ones on which the bank loans were secured.

Lengthy case

In a nutshell, it is a complicated case by any standards.

Turkey grows 70% to 75% of the world's hazelnuts

The opening arguments submitted by the banks and the two defendants run to a total of more than 500 pages, including extensive discussions of the state of the Turkish hazelnut market and how hazelnuts are priced.

The case has called on the expertise of a Queen's Counsel (QC) and two other barristers for the claimants, a QC and two other barristers acting for Ferrero and another barrister acting for Mr Abidali, not to mention the solicitors involved and what the submission for the banks described as a "painstaking investigation".

The case was in court for a total of 84 days.

But the action in London is not the only one - there is also a case underway in Italy.

Price of litigation

A jurisdiction battle earlier in the process decided that the fraud case should be heard in London while the contractual dispute takes place in Italy.

London is relevant to the case because the loans made to the Turkish hazelnut supplier came from the London branches of the two banks and one of the defendant companies, Indo Mediterranean Commodities, which is in liquidation, was based in London.

Taken over the seven years of this case, with an extremely long hearing in London and a parallel trial in Italy, the cost of the legal action will be astronomical.

Indeed, well-informed sources have suggested that if the legal costs of the banks, Ferrero and Mr Abidali were added together, the total would not be far off the 22.8m euros at the centre of the case.

Proceedings in the Italian case included a recent estimate of Ferrero's costs alone of 11m euros.

Under such circumstances, when the verdict comes, the awarding of costs may become the most important part of the ruling.

Making news pay online

The last print edition of the Seattle Post-Intelligencer went on sale on 17 March

By Vincent Dowd Reporter, BBC World Service

In his fifties and still full of energy, Gene Stout may have hoped his job on the Seattle Post-Intelligencer would see him to the end of his career.

For 25 years, he was the pop music critic. But in March, faced with annual losses of $13m, media conglomerate Hearst closed the print publication in March.

Now, some 20 journalists keep the Post-Intelligencer alive online, compared with some 150 previously. The Rocky Mountain News, founded in 1859, also closed in Colorado recently.

And well-known titles such as the Chicago Tribune, San Francisco Chronicle and New York Times all have financial problems. At least 12,500 jobs have gone in US print journalism in two years.

'System collapsing'

Mr Stout said the problem became painfully obvious. "The traditional newspaper model for making money is under duress in America," he said. "It's the loss of readers to the internet plus a drift of classified advertising to the likes of Craigslist.

Income across the board will be far lower than traditionally we sold a page of print for Steve Swartz, Hearst

"In fact the paper's online readership was through the roof -- but what actually made us profitable was selling print ads. With fewer readers for the physical newspaper, the system was collapsing."

Mr Stout admits a 20-year-old sitting in a Seattle bedroom might prove a great music writer.

"Look at the online music bloggers," he said. "Some are very good and some are awful - but they've changed what we expect journalism to be. And financially those sites can do a lot with very little."

The big question is can online-only sites ever make enough cash to support the hugely expensive business of general journalism - reporting what happens in your local council or in a war half a world away? And if the money isn't there what's going to happen to the journalism we have long taken for granted?

New approach

Hearst is based in an extraordinary Norman Foster-designed tower in Manhattan. It was there that the new president of Hearst Newspapers, Steve Swartz, took the decision to axe the print edition of the Post-Intelligencer.

The Hearst Tower in New York City was designed by Norman Foster

"Many big US newspapers now have unsustainable cost structures -- especially if there's more than one newspaper in a given market," Mr Swartz said.

He admits that for now the Post-Intelligencer website has traffic lower than when it was linked to the newspaper -- but he's looking to the future. "The next important wave is the move toward digital subscription products on smart phones, the Amazon Kindle and other digital reading devices," Mr Swartz said.

Currently even the most popular website makes a tiny proportion of the money agencies used to pay for a page in a major paper. The 'eyeballs' just aren't there yet and no one's quite convinced how effective online advertising is.

"So we're constructing a multiple digital approach," Mr Swartz said. "Our sales people aren't just selling the ad inventory on seattlepi.com -- they'll also be selling Yahoo inventory and search engine marketing for Google and MSN. You need a multitude of digital products to make the equation work."

Challenging future

He is clear about the challenge ahead. "Income across the board will be far lower than traditionally we sold a page of print for," Mr Swartz said. "You're talking thousands of dollars, not hundreds of thousands."

In the UK the Guardian is often held to be the great example for how to extend a newspaper's presence online. Janine Gibson, editor of guardian.co.uk, says traffic varies between almost 2 million on a really big news day or "half that on a wet Saturday".

A third of all hits come from the US, with a third from the UK and the remaining from the rest of the world. She said one thing which helped guardian.co.uk internationally (and the likes of The Huffington Post in the US) was the decision by the New York Times in 2005 to put its comment behind a pay-wall.

The policy flopped totally and was abandoned two years later. Ms Gibson said perhaps the Wall Street Journal was the only one to make real money that way.

The New York Times, struggling under debt, sold its flagship building in March

Clicks to profits

So how do you turn a profit from online news?

"Well, until this year we were doing all right with advertising. This year everyone's finding it tough. It's important not to confuse the immediate position with the questions which have always baffled mainstream media around digital -- how can we sustain our organisation in a new world order where people expect content to be free?" Ms Gibson said.

And she suggests that many large media companies have not found any answers because they do not like what they hear.

"It's going to mean much smaller incremental revenues you're going to have to extract from a lot of people -- through advertising or through direct payments," Ms Gibson said. "With new iPhone applications you make a payment and you get a certain amount of stuff. It's part of how journalism will be paid for."

Mr Swartz in Manhattan and Ms Gibson in London share a vision of micro-payments one day sustaining good journalism as readership continues to migrate online.

The cost to the reader would increasingly derive from ease of delivery and less from advertising. It's as if a newspaper had no cover price -- but cost the customer much more to get delivered.

And all of this may one day work. But what if it does not?

Adidas sees profits drop by 97%

Sales of Adidas gear fell 6% this winter when compared with last winter.

Sportswear giant Adidas has reported a 97% fall in profits during the January to March quarter after sales were hit in the economic downturn.

Adidas made 5m euros ($6.7m; £4.4m) in pre-tax profits during the first quarter, down from 169m euros in 2008.

Sales were down 6% on a year ago, and the company said it was facing higher raw material and wage costs. Shares in Adidas fell 10% in Frankfurt.

The firm also said it will close some offices and might shut some stores.

Adidas is to close some regional offices in Europe and Asia as it aims to save more than 100m euros per year.

It will also carry out a review of under-performing retail stores.

'Urgent restructuring'

"We are now in a position to make a game-changing structural refinement to our business," said Herbert Hainer, group chief executive and chairman.

"The current economic climate adds urgency to accelerate our plans.

"Our results have been materially affected by higher input prices, currency devaluation effects and restructuring costs.

"Although some of these items will recur again as we go through the balance of the year, I am convinced we will put most of these effects behind us in the current year."

Adidas is the world's second-biggest sporting goods maker after Nike.

The German firm bought Reebok in 2006 to help it compete against Nike, but Reebok still struggles, particularly in North America where Adidas saw its sales fall by 14% in 2008.

In January Adidas announced it would close its Reebok office in Bolton, ending a 116-year association with the town.

Rival Nike has also been hit by falling consumer demand. In March it said it planned to halt production at three shoe factories in China and one in Vietnam.

Swine flu fears hit travel shares

The flu outbreak is causing global alarm

Shares in airlines and travel firms have fallen sharply around the world on concerns about the economic impact of the swine flu outbreak.

With the outbreak in Mexico spreading to the US, Canada, Spain and the UK, shares in British Airways fell 7.7%, while cruise firm Carnival lost 6.8%.

Investors fear the flu outbreak may lead to people cancelling overseas trips, or even to travel restrictions.

But some shares did rise, such as Roche, maker of a key anti-flu drug.

'Real concern'

Analysts said investors were more cautious than panicked, but still concerned that if the outbreak worsened, especially in the US, it could potentially derail economic recovery efforts.

Swine flu is ripping through the markets, creating uncertainty in its wake Manoj Ladwa, ETX Capital Economy braced for swine flu impact

"In essence, this is an already dangerous time for financial markets, so to have this spectre developing right now is just cause for some very real concern," said analyst James Hughes of CMC Markets.

In other developments:

• Shares in most UK-listed travel firms were lower, with hotel business Intercontinental down 4.2%, and tour operator Thomas Cook falling 4.4%

• ABTA, the UK's main travel association, said there were "no suggestions" there had been any outbreaks of the flu in Mexico's main tourist regions, and that normal booking conditions still applied - though tourists have been warned against travel to areas with swine flu by the European Union's Health Commissioner

SWINE FLU Swine flu is a respiratory disease thought to spread through coughing and sneezing Symptoms mimic those of normal flu - but in Mexico more than 100 people have died Good hygiene like using a tissue and washing hands thoroughly can help reduce transmission 'I couldn't get out of bed' Q&A: Swine flu In pictures: Swine flu

• Airlines around the world have seen their shares fall, with Hong Kong's Cathay Pacific ending down 8%, Australia's Qantas losing 4%, Germany's Lufthansa losing 9%, and Air France finishing down almost 7%

• German tour operator TUI says tours it was running in Mexico would miss out the capital as a precaution

• Shares in Swiss firm Roche - the manufacturer of anti-flu drug Tamiflu - rose 3.5% after it said it was increasing production. Shares in UK rival GlaxoSmithKline, which makes anti-flu drug Relenza, also gained, adding 5.7%

• Russia, China, Ukraine and Thailand ban imports of pork from North and Latin America, despite the swine flu in question not infecting pigs

• US soy and corn prices fall on fears that the flu outbreak will cause a slump in demand for pork products, which would hit sales of animal feed

• Oil prices fall on concerns that the flu outbreak will knock the world economy. US light crude was down $1.87 a barrel to $49.68

• The Mexican peso falls 5% against the US dollar, dropping as low as 13.97 per dollar.

'Health emergency'

The declines in airline and travel stocks initially dragged down most stock markets. However, European markets recovered later on, boosted by drugmakers, whose shares were up on hopes of demand for more vaccines.

Shares in airlines have fallen around the world

"The threat of the pandemic will add further weakness to global trade," said Justin Urquhart Stewart, investment director at Seven Investment Management.

"We saw with Sars, tangible percentage points knocked off the index, and that was in a buoyant time. Put that in a weaker time and it is likely to be more unpleasant."

The UK's main FTSE 100 index closed up 0.27% to 4,167, while Germany's Dax gained 0.4% to close at 4,694.

Wall Street's main Dow Jones index was up 32.4 points, or 0.4%, to 8,108.7 in morning trading.

Hong Kong's Hang Seng share index had earlier ended down 2.7%. Japan's Nikkei index managed to end up 0.2% after takeover news in the semiconductor sector.

"Swine flu is ripping through the markets, creating uncertainty in its wake," said trader Manoj Ladwa of ETX Capital in London.

The World Health Organization has declared the flu a "public health emergency of international concern", warning that it could spark a pandemic, or global outbreak.