Gaming the Gamers

High-Level Whining

daimler in USA_reuters-DISTORTED
Daimler boss Dieter Zetche. Companies with a strong presence in the U.S. will fare well.
  • Why it matters

    Why it matters

    Major German corporations are lowering expectations for their future performance. They are doing so to avoid disappointment, but most companies are in a relatively strong position.

  • Facts

    Facts

    • Handelsblatt companies’ expert, Ulf Sommer argues that lower profit targets are not a reason to be concerned about DAX companies’ future performance.
    • Despite companies announcing lower expectations for 2015, share prices held steady.
    • Only companies that do not have a presence in the United States have reason to worry over future earnings, he argues.
  • Audio

    Audio

  • Pdf

Many of Germany’s large industrial corporations are using their third-quarter business results to prepare the public for lean times ahead.

Executive boards are lowering forecasts for next year, or they are tempering expectations by holding out the prospect of only minor increases in revenues and profits. Last Thursday, sporting goods maker Adidas announced that it expected growth to decline in 2015. Lanxess, a specialty chemicals company, is slashing 1,000 jobs to achieve future savings in the triple-digit millions.

But instead of plunging, share prices are holding up surprisingly well. In fact, Adidas has been one of the biggest winners on the market. Are shareholders simply refusing to believe what executives are telling and showing them? No, shareholders are interpreting executive caution as high-level whining – and they’re right.

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