German companies brace for difficult 2013



AGENCE FRANCE PRESSE

Published — Monday 12 November 2012

Last update 12 November 2012 6:09 am

| نسخة PDF Print News | A A

FRANKFURT: Europe is in recession, but the majority of companies in Germany, the region's top economy, are continuing to defy the crisis, with strong and often better-than-expected results in the third quarter.
Nevertheless, the clouds are gathering above Germany too, and the chill winds from the global downturn are set to blow even harder here next year, causing companies to tighten their belts for what promises to be a difficult year.
While their strong overseas presence has helped shield German companies from the worst of the downturn in Europe so far, the prospect of an economic slowdown in China and an only tepid recovery in the United States is sending shivers through export-orientated German industry.
"The decline in output and revenues is going to be substantial in the fourth quarter and German companies know this," said Heino Ruland, market strategist at Ruland Research.
Last week, industrial giant Siemens, one of Germany's biggest companies, unveiled plans to slash costs by 6.0 billion euros ($7.7 billion) over the next two years.
Chief Executive Peter Loescher warned that the austerity drive would "have an impact on the workforce," but declined to reveal any details just yet.
Other companies are also trying to reduce overhead.
At the end of October, auto giant Daimler said it would aim to slash costs in its car division by 2.0 billion euros between now and the end of 2014.
In the banking sector, which is feeling the financial freeze more than most as low interest rates and tougher banking rules eat into profits, the winds blowing through the corridors of the country's two biggest lenders, Deutsche Bank and Commerzbank, are also raw.
Deutsche Bank is planning to cut costs by an annual 4.5 billion euros by 2015 and 1,900 jobs in the investment banking division are already facing the chop.
Media reports say Commerzbank, too, which is planning to focus on its core retail banking business, could be readying to axe around 10 percent of its workforce.
Airline Lufthansa is similarly stepping up its cost-cutting after already announcing the loss of 3,500 administrative jobs.
BASF, the world's biggest chemicals maker, is looking to save 1.0 billion euros by the end of 2015. And industrial gas specialist Linde, which turned in an excellent third quarter, is likewise hoping to lop 750-900 million euros off its annual bills.
"This will help to reinforce our high level of profitability even in a challenging environment," said Chief Executive Wolfgang Reitzle.
German companies are no strangers to cost-cutting and "they know they have to continually adapt to changing economic conditions as they compete globally," and with US, Japanese and Chinese companies in particular, said analyst Heino Ruland.
Portfolio rationalization, streamlining purchasing and a more flexible workforce are the chosen options.
But boosting efficiency is not always about job cuts.
"The biggest job cuts are taking place in Germany's banking sector, not more cyclical industries, where companies want to keep hold of their specialized workforces," said Baader Bank strategist Robert Halver.
So companies such as carmaker Opel or heavy industry giant ThyssenKrupp resort to measures such as short-time work.
It is thanks to instruments such as these that there is no wide-scale blood-letting in terms of jobs in Germany at the moment, said Halver.
A survey of insolvency and restructuring experts conducted by Ernst & Young found that 77 percent of those polled are expecting the number of restructuring cases to rise in the coming 12 months, with the shipping and auto industries the most likely to be affected.
Even as growth slows, unemployment in Germany is at its lowest since unification 20 years ago, at least in raw or unadjusted terms, even if the seasonally adjusted numbers are beginning to inch upward.

What's happening around Saudi Arabia

RIYADH: The Ministry of Education has suspended all parallel education programs, except in medical and engineering specialties, as well as bridging programs for health diploma certificates.Education Minister Azzam Al-Dhakil gave directions to the rec...
RIYADH: The Cooperative Health Insurance Council said it had suspended operations of six medical insurance companies for violating health insurance regulations by issuing insurance policies without completing the required documentation and violating...
JEDDAH: A local survey found that almost half of Saudis abide by rules and laws in public places outside the Kingdom more than they do inside the country.More than one-third of the respondent sample said they violate road traffic signs and directions...
DAMMAM: A 50 percent decline in the prices of some types of fish in the Dammam Central Market was noted compared to the previous month.Fish sellers attributed this decline to an increased fish supply and fall in demand from hotels and consumers durin...
RIYADH: In a two-day operation, police arrested 343 beggars including women and children during the holy month of Ramadan.A police officer said the raid was carried out in the Salehiya district and 220 of those arrested were women from Ethiopia. “Mos...
RIYADH: The Civil Defense has rescued 105 pilgrims trapped in vehicles and buildings for various reasons since the start of Ramadan. During the first 10 days of the month, it also had to deal with 255 complaints, which included 150 accidents due to f...
RIYADH: Hotels in the capital have made special arrangements by setting up Ramadan tents, where diners can visit to begin and break their fast with special suhoor and iftar meals during the ongoing fasting month.As the Ramadan tent is a popular pheno...
JEDDAH: Kaddadin, or unlicensed transporters, say there is good money to be made during Ramadan especially in transporting Umrah pilgrims from Jeddah to Makkah and back.During this month the number of visitors doubles or triples which means the price...
RIYADH: The holy month of Ramadan is lively at night following Taraweeh prayers. Nights are turned into days during the month in the industrial area where there is a large concentration of automobile workshops.The industrial areas are well illuminate...
RIYADH: The Saudi man behind the green project that ensured 3,400 trees in Khurais in the Eastern Province for a government firm has been approached by a Kuwaiti oil company for a similar project. “After learning about the project in the Eastern Prov...
RIYADH: A total of 1,300 Gambian pilgrims will come to the Kingdom to perform Haj this year, Ambassador Omar Gibril Sallah said on Thursday.“We hope that the pilgrims will observe the fifth pillar of Islam in peace and harmony and may Allah accept th...
RIYADH: The Saudi Commission for Tourism and National Heritage (SCTNH) and the Disabled Children’s Association (DCA) have launched a traffic safety campaign, to reduce the number of accidents that cause disability.Prince Sultan bin Salman, the SCTNH...
JEDDAH: The holy month of Ramadan is a period when non-Muslim expatriates too abstain from eating, drinking or smoking during the daytime out of respect for Muslims who fast from dawn to dusk and also because it is healthy. The expatriates are also...
JEDDAH: Custodian of the Two Holy Mosques King Salman opened the new Prince Mohammed bin Abdul Aziz International Airport in Madinah on Thursday night.He was met at the airport by Madinah Gov. Prince Faisal bin Salman and Suleiman bin Abdullah Al-Ham...
JEDDAH: The Interior Ministry said on Friday that it thwarted a plot by terrorists to attack targets in the Kingdom.Officers from the ministry raided a house in Taif where the suspects were staying and arrested three men, seized Daesh flags, gun sile...

Stay Connected

Facebook