RWE and DONG at opposite ends of green power shift 12 May 2016 The soon-to-IPO Danish utility DONG embraced renewable energy early. The result is strong growth and healthy returns. Late movers like German RWE are suffering badly. Its shares have more than halved in three years. Capital is leaving the old and dirty, and going into the new.
Thyssen’s steel slump flags need for big bang 10 May 2016 Europe’s steel crisis is hitting even the most efficient players hard: German group ThyssenKrupp lowered its operating profit outlook by a fifth after a poor quarter. The ongoing slump increases the pressure on boss Heinrich Hiesinger to team up with Tata or another rival.
Digesting Krispy Kreme may require more sweetener 9 May 2016 JAB has baked a 25 pct premium into its $1.4 bln offer to take the donut maker private. The billionaire-backed owner of coffee sellers Keurig and Peet’s should be able to boost sales and margins. But Krispy Kreme may prove too appetizing for others to pass up without a fight.
VW’s activist exposes Bermuda Triangle of control 9 May 2016 Pay changes demanded by investor Chris Hohn would clearly be an improvement. So why did the Piech family and other large investors not introduce them already? Because their control of the German carmaker is illusory. Local politicians and trade unions have excessive influence.
Shaming VW could be pushy TCI’s best tactic 6 May 2016 Chris Hohn’s hedge fund has tackled the likes of Japan Tobacco and Coal India. That puts the 61 bln euro German carmaker in some bad company. Yet complaints of excessive pay, weak governance and inefficient operations are not new. Only VW’s controlling owners can force change.
Air Products and Evonik neutralize deal imbalance 6 May 2016 The U.S. industrial-gas producer is selling specialty chemicals to its German peer for $3.8 bln. A lofty valuation of 16 times last year’s EBITDA helps Air Products cover a tax hit triggered by the sale. To justify the price, Evonik is rustling up meaningful savings of its own.
Stupid names can’t hurt good companies 5 May 2016 Healthineers, Siemens’ new brand for its healthcare unit, is reminiscent of a hero in a 1950s science fiction comic. Users of its brain-scanners are unlikely to care. For investors the goofy name is, at the margin, a good thing: it shows a spin-off may have become more likely.
Siemens turns screw on rival ABB 4 May 2016 The German engineer has long trailed its more profitable and agile Swiss peer. But quarterly results suggest Siemens is closing the gap. It is growing faster while catching up on profitability, which makes a 28 pct price-to-earnings discount hard to justify.
VW leaves worrying set of tyre tracks 28 Apr 2016 Volkswagen’s stricken core brand is selling fewer cars for more money but at a loss. That’s an odd bunch of signals, but hints at price cuts and aggressive marketing to mitigate the fallout of its emissions scandal. At least its premium brands are picking up the slack.
Deutsche Bank upgrades from dire to depressing 28 Apr 2016 The German lender made first-quarter earnings of 236 mln euros, confounding forecasts for a loss about that size. But Deutsche’s capital position fell, return on equity was just 1.4 pct and the only bit that really beat revenue expectations was Postbank, which is on the block.
What’s the difference between Adidas and Nike? 27 Apr 2016 Around 30 billion euros. That’s how much more the German sportswear maker might be worth if it could match its U.S. rival’s operating margins. First-quarter earnings were strong and Adidas is getting more profitable. But incoming CEO Kasper Rorsted is starting from a low base.
E.ON’s corporate alchemy hinges on nuclear boost 26 Apr 2016 Spinning off fossil fuels and energy trading might unlock around 7.5 bln euros in hidden value at E.ON, if the remaining group can catch up to valuations of peers like National Grid. A favourable deal with Berlin over nuclear decommissioning costs is a key precondition.
CoCos can work, but the fix will be painful 25 Apr 2016 The ECB is having second thoughts about banks issuing hybrid debt, according to reports. So-called CoCos have detractors, chief among them being Deutsche Bank. Yet better than banning them would be for investors to price them properly. They may need to see real losses first.
VW’s $4.5 bln emissions fine buffer feels adequate 22 Apr 2016 The carmaker has set aside $18 bln for the dieselgate scandal. Stripping out likely costs for buybacks, recalls, compensation and lawyers implies a $4.5 bln fine - just a tenth of the theoretical maximum. But at four times the industry record, it looks a reasonable base case.
Volkswagen hurtling into guardrail, not off cliff 21 Apr 2016 The besieged German carmaker struck a crucial deal with U.S. regulators over its dirty-diesel fraud. But the full price it must pay is still unclear. Buybacks and compensation to American drivers alone can cost $11 bln, and fines come on top. Dieselgate remains a nail biter.
Germany should buy into Italy’s bad bank 21 Apr 2016 If the government reforms, Italy’s Atlante fund for banks’ bad debt could be a money spinner. German insurers and pensioners earn nothing on Bunds, and are already exposed to Italy anyway through ECB money printing. Atlante would be a better investment—and good politics.
Mitsubishi is distant second in emissions cheating 20 Apr 2016 Despite tight scrutiny of regulators and environmentalists since “Dieselgate”, it took seven months for another carmaker to get caught manipulating emissions data. For now, the scope of Mitsubishi Motors’ misconduct appears smaller. VW seems really to be in a cheat league of its own.
Finance wakes up to fintech’s systemic dangers 19 Apr 2016 The Bank of England’s Andy Haldane and Deutsche Bank boss John Cryan are among 53 financial leaders backing the launch of a new forum to debate financial technology. The abuse of data is a concern. But a bigger risk is how fast and obscurely money can move.
VW shareholders on cusp of painful clarity 18 Apr 2016 The carmaker has until April 21 to agree how many dirty cars it should buy back to avoid crushing legal liabilities from its emissions scandal. Investors will also learn how badly business has been hit. Both should show whether VW’s potential $80 billion crisis buffer is enough.
Healthier German jobs mean happier Angela Merkel 14 Apr 2016 Germany is on track to create almost 1 mln additional jobs by 2017, a group of economic think tanks predict. Wages will rise markedly, too. That is the kind of assistance the chancellor needs in her fight against right-wing populists and inner-party critics.