The new profit forecast for 1998 is 15 per cent below the market consensus.

"Based on analysis of the trend experienced in Asian markets since May, Chargeurs is forecasting sales over the full year between 7.5 billion ($1.33 billion) and eight billion francs. For 1998, excluding exceptional events, the group confirms the net income should reach three percent of sales," it said in a statement.

Chargeurs had expected full year sales of nine billion francs back in May. In 1997, it made a net profit of 302 million francs on sales of 9.0 billion. According to Edinburgh Financial Publishers, analysts had been expecting a 1998 net income of 283 million francs, rising to 325.5 million in 1999.

The new company forecast puts the net income figure in a range of 225 to 240 millionfrancs.

In the first half, net income was up by 23 per cent to 181million francs from 147 million for the six months period but Chargeurs said the economic downturn had already affected its operating income in the first half which fell to 283 million from 329 million.

Sales too were down to 4.27 billion francs from 4.67billion. "The decline stemmed from the impact of the Asian crisis, felt to its full extent at Chargeurs Wool and to a lesser degree at Chargeurs Interlining," the company said.

The group, led by Eduardo Malone, said that in response tothe current economic climate, it was stepping up measures required to bring its wool business into line with new market conditions.

At Chargeurs Wool, sales dropped 16 per cent in the period."This was primarily due to the decline of business experienced in Korea and Japan since the beginning of the year and in China as of May 1998," it said. Chargeurs is maintaining its policy of only making deliveries on contracts where full payment is guaranteed.

Itsaid it was strenghtening its ties with partners in order to make more effective use of its production capacities.

Chargeurs said that within its plan to reduce capitalemployed by one billion francs at the Wool unit, it will have achieved 300 million francs by the end of 1998.

Group borrowing was down to 1.51 billion on June 30 against 1.76 billion at the end of December.

Chargeurs said it held seven per cent of its own shares, of which 90,653 have been purchased since the beginning of the year "to ensure an orderly market for shares". It said it would continue with this policy as required.