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Kvaerner set to wield the axe

KVaeRNER IS poised for 'ruthless restructuring', including job losses or the sale of a core business, following the dramatic departure last week of president and chief executive Erik Tonseth.

A successor for Tonseth could be named by the end of this week, according to a company spokesman, and market analysts believe the person is likely to have a track record of taking tough decisions.

'I'd assume a replacement would be ruthless,' said Merryl Lynch analyst Alan Coates.

Current favourite is Kjell Almskog, the present head of Norwegian firm ABB's oil, gas and petrochemicals division, but a Kvaerner spokesman said talks were being held with 'several senior figures' in the industry. Meanwhile, board of directors chairman Christian Bjelland is standing-in as group chief executive officer with Tore Sorensen as managing director.

Tonseth was dismissed by the Anglo-Norwegian firm's board of directors last week in the wake of poor company performance and low shareholder confidence. He led Kvaerner from north-European shipbuilder to international industrial combine, but was criticised for over-extending the company and failing to dispose of non-core assets, lumbering it with pounds1bn debt. First half profits for the group were down 68% this year (NCE 10 September) and share values plummeted 75% during his reign.

Recent strong performance in Kvaerner's engineering and construction business has secured it as a Kvaerner mainstay. However, further expansion is unlikely in the face of global recession, said Coates, who added that the slow pace of change in Kvaerner's construction business, formerly Trafalgar House, which it acquired in 1996, stemmed from Tonseth's preference for negotiation rather than confrontation.

To buoy up investor confidence, market analysts expect consolidation and divestment of non-core businesses. Kvaerner could sell one of its poorer performing core businesses, probably Pulp & Paper or Shipbuilding. Further streamlining, including job losses, could not be ruled out, said Coates. 'The person who takes the job has to understand big business, engineering and restructuring.'

Andrew Mylius

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