Truce gives VW time to prepare for post-Piech era 17 Apr 2015 Volkswagen’s chairman has lost a power tussle at Europe’s biggest carmaker. But boardroom support for CEO Martin Winterkorn is only a stopgap. Finding a successor for the ageing and erratic Ferdinand Piech and simplifying an overly complex empire are the real challenges.
Fat fiscal surplus will eventually weaken Germany 16 Apr 2015 Berlin is squandering the biggest windfall in a generation. Its annual budget surplus will be north of 20 bln euros both in 2015 and 2016, think tanks predict. Angela Merkel favours debt reduction over plugging the chronic investment gap. This can only harm long-term growth.
Fixing tax flaws can kick-start German investment 14 Apr 2015 A report commissioned by Berlin suggests equity capital should get debt-like tax privileges. That would be a radical reform. But Germany’s private investment slump is so deep that it requires bold steps.
German bonds are becoming like gold dust 14 Apr 2015 They’re scarce, and you increasingly have to pay to own them. The benchmark 10-year Bund may soon go negative. But like gold, it might be a good deal. The market supply is shrinking, thanks to strong German government finances and ECB buying. This paper could prove precious.
Volkswagen weakened by chairman’s grumbling 13 Apr 2015 Ferdinand Piech has distanced himself from his successor-in-waiting, CEO Martin Winterkorn. This weakens Europe’s largest carmaker in the midst of a big cost-cutting effort. It also exposes flaws in VW’s governance and divisions in the controlling Porsche family.
Hefty German wage hikes make ECB’s life easier 30 Mar 2015 German unions are proving a key ally for Mario Draghi. Civil servants and chemical workers have followed metalworkers in securing pay rises significantly above inflation. Real wages will keep rising, fuelling a consumption-driven recovery and softening deflationary forces.
Germanwings tragedy requires industry response 27 Mar 2015 The crash has drawn attention to less evident aspects of flight safety – possible risks posed by crew rather than passengers. That raises questions about procedures at parent Lufthansa and all airlines. But safety is an iterative process that innovates for unforeseen situations.
Adidas misses chance of radical fresh start 26 Mar 2015 The underperforming German company unveiled a new plan designed to push growth and profitability. The goals are ambitious, but the steps incremental. Adidas is shunning drastic measures such as selling its struggling brands. Investors have good reasons to remain unimpressed.
Edward Hadas: Deutsche Bank’s long round trip 25 Mar 2015 The German bank spent two decades expanding massively into the capital markets business. Along the way, it lost touch with its original mission of serving German businesses and their owners, without finding a viable new one. The crisis has spurred a return to traditional values.
BayernLB’s rekindled growth drive may backfire 25 Mar 2015 Germany’s No. 2 Landesbank is still haunted by the past, as shown by a 1.2 bln euro impairment on loans to Austrian lender Heta. BayernLB also has yet to repay 2.3 bln euros of state aid. With much cleaning up still to do, plans for national growth look too ambitious.
What Deutsche Bank’s strategy revamp should say 20 Mar 2015 The German lender’s co-CEOs Anshu Jain and Juergen Fitschen have cut investment bank assets by a fifth. They should chop at least that much again, faster, while exiting Postbank and marginal countries. Without radical action, Deutsche will struggle to make decent returns.
Commerz’s $1.5 bln fine brings state sale closer 13 Mar 2015 The German bank had largely provisioned the $1.45 bln in fines paid to U.S. authorities for sanctions and other breaches. Yet closure should help Berlin sell its 17 pct stake. The return of bank M&A is another plus, though Commerz’s huge balance sheet means it is a distinct case.
VW’s stingy dividend may presage more M&A 12 Mar 2015 Europe’s biggest carmaker has upped its payout to shareholders by 20 pct. But the dividend is only around one-fifth of earnings, well short of Volkswagen’s own target ratio. Yet it has nearly 18 billion euros of cash. That suggests there could be a big acquisition on the cards.
E.ON woes run against spinoff hope 11 Mar 2015 Germany’s biggest utility made a 3.2 bln euro loss after big writedowns last year. EBITDA is still falling. Investors seem unfazed, encouraged by E.ON’s plan to hive off coal, gas and nuclear plants. But it will take ages for any benefits to materialise – if they come at all.
Germany’s problem banks are running out of friends 10 Mar 2015 The ropey Landesbanken lack a business model and access to capital: state owners that paid for previous bailouts are maxed out. Now some of their other stakeholders – Sparkassen savings banks – want to cap their exposure. That could hasten much-needed consolidation.
RWE’s last, dim hope is political support 10 Mar 2015 The stricken German utility is more than keeping its promises on restructuring. But the company’s operating performance will still get worse, as heavily subsidised green energy pushes electricity prices down. The old utilities want the government to help, but that’s a long shot.
Auto industry shifts lift Continental 5 Mar 2015 The world’s largest tyre and car-parts maker has a bullish 2020 outlook. Suppliers stand to benefit greatly from the auto industry’s technological shifts. Yet investors should stay sober. Conti’s shares already price in the upside. And its dividend policy remains thrifty.
M&A optimism over Merck KGaA is about to be tested 3 Mar 2015 The chemical and drugmaker has become one of Germany’s hottest stocks, gaining 55 pct in a year. Solid revenue growth and a dividend hike for 2014 underscore the renewal. To keep investors onside, Merck must now smoothly integrate a $17 bln takeover, the biggest in its history.
Never mind Bill Gross: Allianz is thriving 26 Feb 2015 The star investor’s acrimonious departure from Pimco caused huge outflows and hurt operating profit at Allianz, the German owner of the U.S. bond-fund firm. That obscures Allianz’s real strength. Annual results underline the insurer’s renewal under outgoing CEO Michael Diekmann.
Disinflation is steelier than German metalworkers 26 Feb 2015 A big pay deal in the sector is a small positive sign. Higher wages are the only sure way to reverse a global trend of lower prices. But it’s not enough. Germany’s ability to issue five-year debt with a negative yield shows the downward trend is stronger, nationally and globally.