SCHENKER REPORTS HIKES IN EARNINGS, REVENUE FOR 1989

SCHENKER REPORTS HIKES IN EARNINGS, REVENUE FOR 1989

Schenker & Co., the parent of the worldwide freight forwarder, said in a preliminary report that its income grew 6.3 percent in 1989 to 359 million deutsche marks. Revenue increased 7.8 percent, bringing the company's sales volume to DM2.6 billion (US$1.56 billion).

Revenue from the Frankfurt-based freight forwarder's international truck traffic grew 7.2 percent to DM77.6 million, led by strong increases in Spain and Portugal, followed by Scandinavia, Finland, Switzerland and Austria. Income from the company's West German domestic truck business rose 5.9 percent to DM118.3 million.Schenker's air freight income grew 3.6 percent to DM55.3 billion, while its maritime forwarding revenue rose only DM50 million, or 1 percent.

Barbara Rauch, company spokeswoman, said the company was heavily hit by a drastic slowdown in Middle East construction projects, caused in part by the Iran-Iraq war, but also due to difficulties Mideast countries have had in obtaining hard currency.

Schenker had billion-mark contracts to transport heavy materials needed for massive Mideast road and airport construction projects. But those projects were either canceled or shelved. With that income gone, the company has had to seek ways to fill the gap.

West Germany's export boom, which resulted in a record DM134.7 billion trade surplus last year, helped. The growing markets in Eastern Europe are expected to aid the company's income, but Schenker doesn't expect to see a repeat of the once-massive orders from the Middle East.

"We have to bake smaller potatoes now," Ms. Rauch said of the market. A company statement noted that the 1 percent increase in sea traffic represents ''the first noticeable recovery tendency."

Schenker has its eye on East Europe and soon will open representative offices in Poland and Czechoslovakia to add to its established representation in Hungary. The company is discussing expansion into East Germany, and its

plans will be announced by July 7, when Schenker holds its annual press conference.

Like many other businesses, Schenker is waiting for the legal framework to be in place for Western firms to do business in East Germany.

The more than 100-year-old company was active in what is now the German Democratic Republic before World War II, but has had no business there since. Schenker's property was confiscated after the war, although Ms. Rauch said the firm would not lay claim to its pre-war holdings in what is now East Germany.

The company plans to invest some DM130 million in West Germany this year. Some will be for a new retailing joint venture. It also plans to modernize its truck fleet and invest in East Europe.