Case for German immigration remains strong 14 Sep 2015 Berlin’s temporary suspension of passport-free travel is a worrying step. But it’s also unsurprising, given Angela Merkel’s need to wrestle with the politics of her stance at home. Germany still has a pragmatic interest in solving its poor demographics and its labour shortages.
German sovereign bail-ins work in alternate world 11 Sep 2015 Finance Minister Wolfgang Schaeuble wants automatic extensions in state bailouts, as a riposte to proposals for common bank insurance. It’s a logical plan. Yet given it looks hard to implement and could undermine fragile euro zone stability, it’s more of a delaying tactic.
Nuclear waste contaminates E.ON breakup plans 10 Sep 2015 The stricken German utility’s attempt to free itself from the burden of dismantling its nuclear power plants has failed. E.ON will only hive off fossil assets and energy trading. Shareholders remain exposed to the risk that long-term cleanup costs may exceed group provisions.
Lufthansa has to win dogfight with pilots 8 Sep 2015 The German airline can’t afford to buy peaceful labour relations with endless concessions. By claiming damages from the pilots union for losses incurred at the 2014 strike, Lufthansa boss Carsten Spohr has drawn a line. The carrier’s bloated costs mean victory is required.
Breakdown: Migrant crisis reshapes Europe politics 8 Sep 2015 The number of people flooding into the continent is only a small part of the story. More worrying: old political anxieties are being rekindled. While migration won’t immediately affect economic issues like Greece’s bailout or the euro, it could jeopardise European cohesion.
Volkswagen gets new chairman decision half-right 3 Sep 2015 Naming CFO Hans Dieter Poetsch as its new chair should give the German carmaker a better balance between cost discipline and engineering perfection. But a strong external candidate would have made more sense. As it is, Poetsch will start off needing to prove his independence.
VW steers towards needed boardroom harmony 2 Sep 2015 Volkswagen is extending CEO Martin Winterkorn’s term to 2018, ruling him out as next chairman. This leaves room for an independent, external candidate to replace fallen patriarch Ferdinand Piech. VW’s flawed governance might then shift up a gear.
Migration crisis echoes age-old test of finance 1 Sep 2015 The flow of desperate people to Europe has a financial-world parallel. For companies, high returns attract new entrants who threaten incumbents’ comfortable state. The options for EU leaders are similar too: shut out competition, or find new, better ways to create profit.
Rebellious Germans ignore Greek silver lining 19 Aug 2015 German Chancellor Angela Merkel is facing a revolt from her own party over the Greek bailout. The fear that Greece is a bottomless pit is fair. But it’s not all lost money: nearly a third of the 86 bln euro loaned will repay debt to public creditors, including Germany.
RWE reform spark smothered by politics 10 Aug 2015 The stricken German utility plans to cut red tape, but it really needs to cut staff. EBITDA per employee has fallen 28 percent since 2010. While rival E.ON has opted for a radical breakup, RWE would struggle to sell tough action to its political shareholders.
Allianz takes Pimco’s fall from grace in stride 7 Aug 2015 With assets under management and profit falling, the German insurer’s Pimco arm is still reeling from boss Bill Gross’ acrimonious exit. But Allianz can ride it out. Its insurance division and a growing in-house asset manager mean it can stick to full-year targets.
Coca-Cola bottling deal targets irksome tax hiccup 6 Aug 2015 Merging three of the drinks giant’s bottlers could create savings worth around $2.8 billion. The new company may even sell a few more sodas. But an undeniable draw for Coca-Cola Enterprises owners is that after the deal the group will have less need to keep the U.S. taxman sweet.
Metro cashback would spice up slow-mo turnaround 6 Aug 2015 The German retailer needs pep. Growth is lacklustre, margins are thin and Russian woes mean the shares’ underperformance may persist. Metro has offloaded 5 bln euros in assets and lowered its debts. A special dividend would perk up a disappointing valuation.
BMW´s profitability slowdown only temporary 4 Aug 2015 The 16 percent drop in carmaking operating profit in the second quarter is an embarrassment for new chief Harald Krueger, and margins have dropped below those of rivals Mercedes and Audi. While China is a concern, Europe is recovering and new models will help build momentum.
Commerz revived dividend masks unfinished business 3 Aug 2015 Germany’s second-largest lender’s first dividend since 2007 suggests a return of confidence. But Commerzbank’s costs are still bloated, it does not earn its cost of capital and may even require more funds. Much more progress is needed.
Deutsche Bank smart on growth, shabby on costs 30 Jul 2015 Germany’s biggest bank grew capital buffers and revenue briskly in the second quarter. But expenses devoured 85 pct of the top line – the same as a year ago. New co-CEO John Cryan needs to pull Deutsche out of some of the 60-plus countries it aims to be in, and cut headcount.
Improving VW can absorb looming China test 29 Jul 2015 Growing uncertainty over China is weighing on Volkswagen shares. Half-year results show that weaker demand in the world’s biggest car market is already slowing the 89 bln euro giant. But improving European operations and vast self-help potential mean it can absorb the shock.
Daimler bends the auto market norms 23 Jul 2015 The German carmaker has decoupled itself from the slowdown in China and will meet its profit margin targets early. Renewing its range of models should sustain momentum at the 90 bln euro company. The read-across for the sector is limited. Daimler’s success comes largely from self-help.
Politics is weak ally in K+S fight against Potash 22 Jul 2015 Regional politicians are siding with German fertiliser group K+S in its attempt to deflect a 9.5 bln euro offer by Canada’s Potash Corp. But apart from vocal interventions, policymakers can do little to foil a deal. With credible job guarantees, Potash can force K+S into talks.
German labour relations now worse but not bad 21 Jul 2015 Cooperation between unions and employers drives Germany’s economic success. Few days are lost to strikes. Recent headline-grabbing walkouts of train drivers, postal workers and kindergarten staff darken the picture. But in manufacturing, the economy’s core, peace prevails.