E.ON investors underrate green energy risks 13 Nov 2013 Germany’s largest utility has pruned profit guidance again. The dash for renewable energy in Europe’s powerhouse economy endangers E.ON’s business model. Yet a share-price rebound, kicked off in September, goes on. Overly optimistic investors should brace for a rude awakening.
Germany can’t change until France reforms 12 Nov 2013 Euro zone leaders can’t convince the German chancellor that the country’s current account surplus causes problems. She worries about France and other euro members’ commitment to reform. That could leave space for a pro-growth deal.
Deutsche Tel has big M&A calls to make 7 Nov 2013 Rene Obermann is leaving Germany’s biggest telephone company in decent shape. Still, his successor as CEO faces big decisions on DT’s U.S. and UK units - and how to react if AT&T gatecrashes the European market. Timotheus Hoettges’ dealmaking skills may be quickly tested.
Commerz makes less progress than market thinks 7 Nov 2013 Germany’s second largest bank is ahead of plan on cutting down its big pile of non-core assets, and it beat modest net profit forecasts. The market responded ecstatically. But any expectations that strong returns, or a bid, are imminent are unlikely to be realised.
New Siemens boss calms market hopes of quick win 7 Nov 2013 Joe Kaeser offered lots of cash to the German industrial giant’s shareholders - a generous dividend and a 4 bn euro share buyback. But the promised 15 pct hike in earnings per share in 2014 is half what analysts hoped for. Kaeser needs time to engineer a new long-term strategy.
BMW profit miss just a bump on safe road 5 Nov 2013 Shares of the German carmaker dropped 4 percent after its quarterly earnings disappointed. Investors should be more relaxed. BMW’s profit is dented by heavy investments in new cars and technologies. And the company’s future prospects still look better than its competitors’.
U.S. attacks Germany for being virtuous 31 Oct 2013 The Treasury doesn’t like the EU leader’s high trade surplus and relatively slow growth. Would they really like Germans to emulate bad American habits? German industrial efficiency may worsen global financial problems, but U.S. monetary policy is a greater threat to stability.
Investors unfairly ground Lufthansa 31 Oct 2013 Europe’s largest airline faces many challenges, but is in much better shape than its battered stock-market valuation suggests. The numbers are confusing, but Lufthansa is en route to becoming a leaner and more profitable airline by 2015. The market hasn’t caught on.
Porsche performance disguises VW’s weak spots 30 Oct 2013 Europe’s largest carmaker is far from firing on all cylinders. Volkswagen lifted operating profit by a fifth in the third quarter with Porsche doing especially well. But its mass-market brands are slowing and there are nagging doubts about a large-scale revamp of production.
Renault hit by adverse geopolitical winds 25 Oct 2013 The French carmaker’s falling quarterly revenue sent its shares down. Yet Renault is recovering and in better shape than the numbers suggest. Unit sales and prices are on the rise. Now the group must also face the vagaries of the euro exchange rate.
Daimler’s catchup race switches to higher gear 24 Oct 2013 The premium carmaker had a bad start to the year but is gaining ground fast. Quarterly numbers confirm that major investments in new cars are paying off and that cost-cutting is on track. Investors anticipated the turnaround and the stock, up 46 pct this year, looks fully valued.
McKesson’s $8 bln Celesio bid falls a bit short 24 Oct 2013 U.S. pharmaceutical wholesaler McKesson has struck a deal with Celesio’s owner to buy the German group in a 6.1 billion euro deal. But the 39 percent premium it implies still leaves the offer on the lower end of what minorities could expect. There may be room for more.
Germany could afford well-designed minimum wage 22 Oct 2013 The Social Democrats want a minimum wage in Germany as a condition of governing with Angela Merkel. Launched with care, it could do some good. Safeguards should include regional flexibility and rigorous independence of the wage-setting process.
At last, central bank candour on property bubbles 22 Oct 2013 The Bundesbank says apartment prices in some German cities could be 20 pct overvalued. Policymakers usually avoid such blatant views on prices, saying distortions aren’t their problem unless leverage is a factor. That’s too narrow: central banks have a role as market critics.
SAP’s bet on the cloud is beginning to pay off 21 Oct 2013 The world’s largest business software company has shown that web-based computing isn’t a fad. Strong growth in cloud revenue offset declining software licence sales in Q3. SAP’s expensive cloud deals were a strategic necessity. The task now is to improve their profitability.
Merkel can build coalition with minor left turn 16 Oct 2013 The German chancellor’s only option is to strike a deal with the Social Democrats. She will have to compromise on a nationwide minimum wage and on taxes. The SPD will also want the finance ministry. Policy differences on the euro won’t be more than a side show.
Hugo Dixon: Bundesbank right to focus on doom loop 7 Oct 2013 Bundesbank President Jens Weidmann has criticised rules which encourage euro zone banks to load up on their own governments’ debts. The ECB will have the power to end this bad practice when it becomes the industry’s regulator. But how to do this without triggering a new crisis?
Political decay threatens developed economies 2 Oct 2013 The United States and Italy are bouncing along the bottom. Germany is without a government, France and the UK have weak ones. Extremism, self-serving politicians and the end of strong ideology have taken a severe toll on the single most important part of any economy.
Siemens’ task is about more than cutting jobs 30 Sep 2013 Germany’s industrial giant is slashing headcount by 15,000. Though it has plenty of work on its books, streamlining the workforce is necessary. Yet Siemens’ woes will persist until it tackles its tendency to mismanage large-scale projects and overpay for acquisitions.
What ThyssenKrupp’s new investor should fight for 27 Sep 2013 Activist investor Cevian, known for its penchant to streamline conglomerates, has increased its stake in the troubled German industrial group. A breakup of ThyssenKrupp makes sense but would be hard to achieve. Cevian should rather push for a comprehensive governance reform.