Dusseldorf Numerous business associations, companies and environmental protection associations wrote to the Chancellor on Monday. Your demand: The billion dollar stimulus packages according to Corona should above all take climate change into account.
“The necessary investment aids can set the course that will determine social and economic development over decades,” says the letter, which the Federal Association of Energy and Water Management (BDEW), the Association of Municipal Enterprises (VKU) and others say hundred individual environmental organizations and companies like the energy company Engie have signed. “It is up to you to use the economic break from Covid-19 for a sustainable restart of our economy,” the signatories demand.
The world is currently fighting the consequences of the global corona pandemic with a lot of money. Only one industry often seems to be losing out: the energy industry. The EU Commission has already put numerous projects of the planned “Green Deal” on hold, while some politicians are already demanding that the planned CO2 tax be postponed in order to protect car and aviation companies after the crisis.
Numerous industries for which greater climate protection means disadvantages are protesting loudly against further climate policy requirements, whether nationally or at EU level. It is not just the affected energy industry that warns of such decisions.
The Agora think tank fears that the corona crisis could lead to “reluctance to make investments that are relevant to climate protection”. That is why the Berlin experts are proposing a € 100 billion program. Investments are to be made in wind power, electric cars, hydrogen and intelligent power grids.
Fatih Birol, head of the International Energy Agency (IEA), is now demanding that governments invest more in climate-friendly industries. A kind of “green reboot” as an opportunity after the crisis.
“Economic revival after the corona crisis and climate protection are not a contradiction in terms,” says Manfred Schmitz, CEO of Engie Germany, the Handelsblatt. After all, the financial crisis had learned that it was important to “invest part of the funds more appropriately in promising areas”.
At that time, Germany promoted, for example, the scrapping premium for the scrapping of older vehicles to promote the auto industry. Anyone who sent their intact car to the scrap press received a grant of 2,500 euros from the state for the new purchase.
This measure was anything but beneficial for the climate. “It is precisely for this reason that we as an Engie group joined the Green Recovery Alliance,” explains Schmitz.
Lobbying battle for economic stimulus
The alliance of more than 180 CEOs, including from UnileverIkea Eon, Engie and Volvo, Politicians and organizations want to organize measures to revive the economy after the corona crisis based on the European Green Deal.
If the economy suddenly collapses, climate protection is no longer the most urgent problem. There is growing concern that nobody wants to spend any more money on the energy transition. A real lobbying battle ensues for the multi-billion dollar economic stimulus.
While the car industry is hoping for a new scrapping premium, environmentalists fear that the turnaround in traffic will stall. The environmental association BUND therefore calls for public funds to be tied to ecological requirements.
“The smartest economic stimulus is the one that triggers investments in climate protection technologies. Because these are investments in the future, ”warns Kerstin Andreae, head of BDEW in an interview with the Handelsblatt. Suspending climate protection measures now is exactly the wrong way to go. “Crisis management and climate protection must not be played off against each other,” says Andreae.
The association presented a five-point catalog on Friday. Among other things, it calls for the cover for photovoltaic subsidies to be lifted, for the electricity price to be exempted from taxes and duties at short notice, and for distance rules for wind turbines to be waived on land. The energy transition should not be neglected because of the corona crisis, because “climate change does not stick to a lockdown,” emphasizes BDEW boss Andreae.
As good as the exit restrictions in many countries are doing the climate right now: Even during the financial crisis of 2008, there was a worldwide kink in the curve of greenhouse gas emissions. After that, however, it only rose again all the more steeply. After all, it was about jobs and the economy. Climate protection was of secondary importance.
More: Why Corona is good for the climate, but slows down the energy transition.
Dusseldorf The leading German index is currently unstoppable. In the first hour of trading the Dax 1.3 percent increase and is traded at 10,703 points.
The German leading index has risen by more than 2,500 points since mid-March. You can marvel at this rally and believe in a renewed sell-off wave. But the fact is also: According to chart technology, the situation has eased significantly.
According to many technical analysts, the significant price gains in the past are more than just a bear market rally, an intermediate recovery in the intact downward trend, but a sustained upward trend.
“As a result, the DAX should continue to rise, with the area around 11,025 / 11,032 points representing massive resistance,” say the technical analysts at Düsseldorfer Bank HSBC in her morning comment today.
Investor sentiment remains with a critical assessment of the situation. Investors should continue to sell positions that they would not keep in a new sell-off wave, advises Stephan Heibel after evaluating the current Handelsblatt survey Dax-Sentiment. “I wouldn’t run after the courses because the courses now reflect a lot of hope,” he says. Reality should be gradually presented in the coming weeks through company figures.
Positive trading data from China spur the market on Tuesday. Exports shrank in March, but not nearly as much as feared. The People’s Republic had recently relaxed the massive restrictions on public life.
Should China now come with a comparatively small economic loss from the pandemic, that would be positive for the global economy, said Thomas Altmann, portfolio manager at QC Partners.
Hopes of the peak of the coronavirus epidemic hitting Asian equity markets skyrocketed on Tuesday. The Nikkei even rose 2.8 percent. But the crucial data for future stock market developments come from the United States.
At midday in Central Europe, the US banks JP Morgan and Well Fargo as well as the pharmaceutical and consumer goods manufacturers Johnson & Johnson new business figures. The banks’ prospects in particular are likely to influence the Dax curve.
Because not only the disastrous economic development in the US, but also the key rate cut by the US Federal Reserve is a burden for US banks.
The US standard values started yesterday’s Easter Monday with losses in the new week. But the US futures contracts signal a trade opening at 3:30 p.m. Central European 1.7 percent higher.
Above all, the bank stocks there are benefiting from the economic easing in neighboring Austria. The Bawag– and the Raiffeisen papers increase by more than six percent at the opening of the trade, leading the European banking index. Erste Group’s stocks rose by more than three percent, as did the Austrian selection index ATX.
Look at other asset classes
The euro is rising. In the morning, the common currency was trading at $ 1.0944 after just a little above $ 1.09 last night. This rise has more to do with the friendly mood on the stock markets than with the Eurogroup’s agreement last Thursday on the corona crisis.
It was a compromise that didn’t make either side happy. The supporters of corona bonds did not because they were not decided. And not the opponents, because they were not excluded in bulk.
“This is how Europe squandered every chance to establish the euro as a” safe haven currency “”, the currency analysts of the Commerzbank.
Oil prices hardly react the decision to cut oil production in the 20 largest industrialized countries.
A barrel (159 liters) of the North Sea type Brent costs $ 32.20, up 1.4 percent. The price of a barrel of American WTI for May rose 0.8 percent to $ 22.60.
Because the weak demand continues. Accordingly, market observers do not expect a sustained recovery in oil prices. According to estimates, the slump in demand as a result of corona virus containment restrictions could reach up to 35 million barrels a day.
Look at the individual values
Eon: The share is one of the few losers in the Dax with a minus of almost two percent. According to traders, they were created by the experts at the US investment bank Goldman Sachs downgraded to “Sell” from “Neutral”.
Wirecard: The paper from the online payment service provider tops the Dax list of winners with a plus of four percent. The share certificate has come comparatively well through the stock market crash. The price has risen by around 25 percent in the past four weeks, since the beginning of the year the minus has been only 0.65 percent.
“When planning wealth, the rule is: never get out completely!”
On Sundays, at lunchtime, electricity wholesalers regularly get hectic during these weeks. The supply threatens to significantly exceed demand. If you cannot cut your production, you have to push electricity into the market at negative prices. In addition to electricity, the customer receives ten, twenty, or even 50 euros per megawatt hour – so that he can take his own systems off the grid and supply and demand are laboriously balanced.
This is also due to the currently sunny weather. The solar systems provide powerful electricity every noon. But it is mainly due to the corona crisis. With the pandemic measures, industrial production was reduced so much that around 4,000 megawatts of demand are still missing at midday on weekends – this corresponds to the output of four large nuclear power plants.
“With the high feed-in of solar power, this leads to negative prices at lunchtime on Sundays due to corona,” explains Tobias Federico, managing director of the Berlin-based analysis and consulting company Energy Brainpool.
The negative electricity prices at the weekend are only the most striking effect. The corona crisis is shaking the entire electricity market. Electricity consumption has dropped significantly, renewable energies cover an exceptionally high proportion of electricity consumption – and prices in short-term trading have plummeted.
Industrial customers could wake up badly in the course of the year if they are unable to completely take off the electricity they have ordered and have to sell it themselves again. On the other hand, the market also offers opportunities to stock up on energy cheaply for the coming years.
Power consumption has dropped significantly
In the past few weeks, one company after the other has shut down its factories and sent employees on short-time work. In many cases, electricity demand from large industrial customers purred to a minimum of ten to 20 percent.
According to the Federal Association of Energy and Water Management (BDEW), the total German electricity consumption was around nine percent lower than at the beginning of March, before the federal government and the federal states prescribed the harsh pandemic measures and the economy reacted with production cuts.
Temperature effects – March was exceptionally mild – could also play a role here. However, the effect of throttling industrial production should be at least six percent: Demand on a Monday noon, when the load is usually particularly high, is currently 64 gigawatts four gigawatts lower than at the beginning of March.
The effect may seem comparatively small, but it is considerable for the electricity market: In fact, electricity demand is usually very stable – and hardly responds to fluctuations in the economy.
“Energy consumption in industry and commerce is falling noticeably,” said Eon boss Johannes Teyssen, expecting “visible traces” on the balance sheet. In return, the consumption of private households increases slightly, but the effect has hardly any impact.
The slump of dormant factories or idle trams is much greater than the additional streaming of films in the living room. And those who consume more in the home office have only shifted the demand from the office to their own house.
Electricity prices have fallen in the spot market
This is directly reflected in the electricity prices for large customers. The quantities that are no longer required are sold in the electricity wholesale spot market. “This creates corresponding price pressure,” says expert Federico. In the last week of March, an average megawatt hour cost 16 euros. In the first week of March it was 30 euros. And on ten days in March, a total of 41 hours, there were negative electricity prices.
There have been negative electricity prices in recent years. With the boom in wind and solar power, which can mainly be fed primarily into the power grid, it becomes difficult to balance supply and demand, especially on windy and sunny weekends and public holidays.
Ultimately, however, this has to succeed because there are hardly any possibilities for storing electricity. If you cannot reduce your capacities in time, you have to push electricity into the market with negative prices so that others can adjust their capacities.
In the current year there were already 133 hours with negative electricity prices. The record from last year, when it was 211 hours at the end, should be easily surpassed. The peak electricity prices fell to minus 55 euros per megawatt hour. Federico expects that many more days will be added during the corona crisis: “At least for April, but also for May, we expect the development to continue.”
Tim Steinert, Senior Consultant at the energy consulting firm Enervis, agrees: “Our scenarios show that, depending on the duration and severity of a decline in demand, a significantly higher increase in negative prices – also compared to 2019 – can occur, depending on the duration and severity; that is clearly higher than expected before the corona crisis in 2020. ”
Large customers have to consume electricity
For many major industrial customers, the year could bring a nasty surprise on their electricity bills, precisely because of the low prices: Despite the fact that production is curtailed, millions of dollars are threatened. Many large customers finally secured fixed quantities at fixed prices on the futures market for this year. Those who have negotiated well can simply deduct less of the electricity booked – and the supplier bears the risk.
“But there are many industrial customers who have tolerance bands in their contracts,” says Wolfgang Hahn, managing director of the company ECG, which provides companies with energy contracts. And that’s not a good thing: it is only within these bands that it is possible to deviate upwards or downwards from the amount of electricity agreed for 2020. If you have to reduce your electricity consumption even more, you have to sell the surplus electricity on the market – and at the current prices at a loss.
“Anyone who has a tolerance of ten percent in the contract quickly gets into problems in the corona crisis,” says Hahn. After all, many companies have currently reduced power consumption to a minimum. But even with a tolerance band of 30 percent, the buffer is quickly dismantled. “The corona crisis can also be very expensive in terms of electricity costs,” says Hahn.
But the crisis also offers opportunities
However, the corona crisis also offers opportunities. The shock not only depressed quotes on the spot market, but also – albeit significantly weakened – on the futures market. The futures contract for electricity to be delivered in 2021 has since dropped from 39 to 34 euros per megawatt hour. It is thus far from the quotations from the previous year, when the prices had climbed to more than 50 euros.
“Many companies stock up on cheap prices for 2021, 2022 and also for 2023,” says consultant Hahn: “You should use the momentum.” This applies not only to electricity, but also to gas.
However, companies should take advantage of the opportunities quickly. “I don’t think the effect is sustainable,” says Hahn. When the crisis was over, prices would quickly pick up again. “I advise my customers to strike now and buy electricity and gas for the coming years.”
More: Renewable energies cover more than half of the electricity requirement
The Chairman of the Supervisory Board submits his position at Uniper.
Dusseldorf Back seat at Uniper: After the takeover of the energy company by the competitor Fortum, supervisory board chairman Bernhard Reutersberg resigned his position prematurely. “All five independent members of the Supervisory Board of Uniper SE, including the Chairman Bernhard Reutersberg (66), announced today in an extraordinary Supervisory Board meeting that they will resign from office and leave the Supervisory Board with immediate effect,” the group said on Friday evening.
The reason for this is a corresponding request by Fortum. The new members were to be appointed by the court and then elected to the supervisory board at the Annual General Meeting on May 20.
Uniper had resisted a takeover by the Finns, especially under the former boss Klaus Schäfer. The former Eon-Power plant subsidiary has freed itself from the call of a residual ramp since the spin-off in 2016 and has become a favorite on the stock exchange. As a result, she was targeted by the Finns. The long-time Eon manager Reutersberg was supposed to mediate in the dispute between the companies, but was soon to clash with Fortum boss Pekka Lundmark. The climate only improved when Andreas Schierenbeck took over as Uniper boss. Former Eon manager Klaus-Dieter Maubach, who sits on the board of Fortum at Fortum, is traded as a possible successor to Reutersberg.
Reutersberg has created the prerequisites for the success of Uniper as an independent listed company, Uniper emphasized. At its peak, Uniper’s market capitalization tripled during his time as chairman of the board. “Three years ago, Eon decided to sell its stake in Uniper to the Finnish state-owned company Fortum,” said Reutersberg. “Fortum has now increased its stake in Uniper to almost 70 percent as majority owner. For me, now is the time to say goodbye. “
Dusseldorf Germany’s companies wanted to transfer a dividend of over 45 billion euros to their shareholders after this year’s Annual General Meetings. Actually. The total is calculated from the corresponding proposals of the groups in their business deals for the past year and the annual press conferences.
But after Dax– Newbie MTU has announced that, given the corona pandemic, it is unlikely that a dividend will be distributed, “the ice has broken”, fears Commerzbank-Expert Andreas Hürkamp. The engine manufacturer originally wanted to distribute 3.40 euros per share, 55 cents more than in the previous year.
According to MTU, many companies are now rethinking their previously announced dividends. Covestro for example, plans to continue paying a dividend of EUR 2.40 per share, but a spokesman for the group restricts the Handelsblatt: “We will continue to monitor economic developments closely and, if necessary, take them into account in our dividend proposal.”
Express themselves similarly BASF and Volkswagen. With 3.3 billion euros, the car maker would be the largest payer after the alliance. On the other hand, the pharmaceutical giant Bayer announced on Friday that it would transfer EUR 2.80 per share at its purely digital general meeting on April 28, as planned.
For shareholders and the Dax prospects, dividend cuts and, above all, the uncertainty about it are bad news. Companies have never canceled the dividends proposed by the Board of Management and the Supervisory Board, not even during the financial crisis in 2009, the largest recession in German post-war history. Many stocks are held primarily because of high and reliable dividends. With the annual distributions, more could be earned in the long run than with price increases.
So it remains to be seen how companies will deal with the issue of dividends at the annual general meetings, which will probably be made up for in the second half of the year after the cancellations. With the announced 45 billion euros, for example, the crisis-shaken one Lufthansa buy almost ten times.
Twelve German companies have promised their shareholders more than one billion euros in dividends, most of all Allianz with four billion euros, Volkswagen with 3.3 and Siemens with 3.1 million. But in the face of the global crisis, are the promises actually kept?
“MTU is the icebreaker with a view to further deletions,” assumes Andreas Hürkamp from Commerzbank. The strategist has been pursuing corporate dividend policies for decades. There has never been a comparable situation in which companies have canceled dividends that have already been announced – not even in shock after the bankruptcy of the major American bank Lehman in 2008. With the cancellation, MTU would keep 177 million euros.
The approach of the Dax newcomer seems understandable given the massive loss of revenue this year, but is controversial. After all, the dividend is about the success or failure of the past financial year. There was no corona crisis yet.
Legally not clearly clarified
Jürgen Kurz from the German Association for the Protection of Securities (DSW) describes such a procedure as “legally difficult”. “After the approval of the consolidated financial statements by the Supervisory Board, the dividend proposal is also approved, and companies can no longer go back from such a decision,” Kurz argues, but adds: “The question is not legally clear.” He refers to legal opinions that are different the investor protection have previously caught up with.
In contrast, the lawyer Marc Löbbe from the renowned Frankfurt business law firm Schilling, Zutt & Anschütz grants the companies the right to make provisions with the dividend retained: “It is even permissible at the Annual General Meeting to propose a change to the original proposal for the appropriation of profits and thus the Bring in dividends, ”argues Löbbe. It is controversial among lawyers under what conditions this is possible.
The question is controversial, because nine out of ten German listed companies currently want to distribute dividends for the past financial year. You are now faced with the decision to stick to this in view of the good results in the past year or to cut the dividend due to collapsing earnings due to the corona crisis. “In the current environment, I expect the corporations to cut their dividends significantly,” predicts the chief investment strategist at German bank, Ulrich Stephan.
The focus is not on companies like Beiersdorf, handle, Deutsche Telekom and SAP. Your dividend seems certain because the business models are little to no crisis prone. Siemens and Infineon have been among the few companies that have already paid dividends because their fiscal year ended in late September. It’s about the many cyclical companies.
For days, analysts have been speculating on a dividend cut at the chemical companies BASF and Covestro as well as at the automaker Volkswagen. The general meetings, which have been postponed for almost all companies for an indefinite period – but still this year – fuel corresponding speculation. “The later the annual meetings take place, the more shareholders and management will focus on the current financial year,” says Commerzbank analyst Hürkamp.
“Covestro plans to continue paying a dividend of EUR 2.40 per share,” a group spokesman told the Handelsblatt, but at the same time restricts: “However, we will continue to monitor economic developments closely and, if necessary, take them into account in our dividend proposal.” There will only be a dividend proposal at the – postponed – general meeting.
BASF also keeps all options open. “Not so far,” answers a corporate spokesman when asked whether there are any plans to change the announced dividend of EUR 3.30 per share – and he adds: “In principle, such a proposal can also be changed at the Annual General Meeting. ”
At BASF, that would be like breaking a taboo. Shortly after taking office, CEO Martin Brudermüller put himself under pressure and announced that he would like to increase the payout every year in the future. The maxim among his predecessors was: pay more in good times and keep the dividend in bad years if possible. A cut of just ten cents would mean a dividend at BASF “only” at the previous year’s level – which would have broken the new boss’s first promise to shareholders.
Volkswagen is in a tricky situation. In view of the high after-tax profit of 14 billion euros, the world’s largest car maker has increased its dividend significantly from 4.86 to 6.56 euros per preferred share. Even so, the payout ratio calculated from the net profit is only 24.5 percent. 40 to 50 percent are common internationally. Even more: “We are still below our strategic target for a payout ratio of more than 30 percent,” says a VW Group spokesman.
Car maker considerations
So there is a lot of buffer. Nevertheless, Volkswagen is also considering reflecting on the decision again: “The decision on the dividend will be made at the 2020 Annual General Meeting. Until then, we will closely monitor the further development of the corona crisis. ”The competitor BMW intends to distribute 2.50 euros per share as planned, one euro less than in the previous year. “There is currently no intention to change anything in these plans,” it says on request. However, the Munich-based company also leaves the decision open.
Is only a little more solid Daimler to his promise. “Our proposal for a dividend has been made and there is no reason to change anything at this point,” said Daimler CEO Ola Källenius. Which means something like: Tomorrow everything can look different. There would not be much to cut at Daimler anyway, after the Stuttgart company had announced in Europe before the corona crisis that it would cut its payout from 3.25 euros to 90 cents.
In particular, companies that are considering taking government aid during the crisis are likely to be forced to cut their dividends. This applies, for example, to the automotive supplier Leoni. Lufthansa also talks to the state development bank KfW about possible aid, which has not yet been necessary. Both Lufthansa and Leoni canceled their dividends.
The banks have been in the focus of dividends since the end of last week. So far, the crisis has hardly spread to the financial industry. But the public sector does not want to have to step in again after the banks have distributed billions of dollars. It was like that a decade ago. “We advise financial institutions to handle existing capital resources very carefully,” said Felix Hufeld, president of Bafin financial supervision. He advises banks to carefully consider dividends, profits and bonuses.
Deutsche Bank need not think about this. She has no intention of spilling anything anyway. So far, Commerzbank intends to pay a dividend of 15 cents per share. Given the state share of just over 15 percent that resulted from the financial crisis a good decade ago, anything but a deletion would be surprising.
From a business point of view, a dividend waiver makes sense given the large drop in earnings, even though the companies have financial cushion. The equity capital of the Dax groups rose by almost four percent to 656 billion euros in the course of the past financial year. This corresponds to a solid average equity ratio of 34.5 percent. With the exception of the provider Eonwho, however, does not have to fear any losses in view of the corona crisis, all other groups have a quota above the critical mark of 20 percent.
Operating cash flow, i.e. the cash generated from its business activities, also grew by a good 11 percent to EUR 142.8 billion within one year. Volkswagen amassed the most cash flow with 30.7 billion euros, followed by Deutsche Telekom with 23 and Daimler with 13 billion euros.
However, liquidity is quickly lost if, during the crisis, income suddenly runs dry and costs remain the same. The companies experienced this at the turn of 2008/09. This time, the standstill in the economy is much bigger. “Many companies are likely to increase their debt in the form of new loans in the coming months. In the medium term, we also expect capital increases to strengthen equity, ”predicts DZ Bank expert Christian Kahler. This certainly includes withholding dividends to limit cash outflows.
More: Company lawyer Marc Löbbe considers dividend cuts to be a tried and tested means of maintaining liquidity.
Energy company EnBW has achieved its targets for 2019. The power grids already contribute half of the earnings before interest, taxes and depreciation (Ebitda).
Dusseldorf While large parts of the economy expect the corona crisis to cut sharply, the energy industry is largely stable. Germany’s third largest energy company EnBW expects a strong profit increase again this year: earnings before interest, taxes, depreciation and amortization (Ebitda) are expected in a range of 2.75 to 2.9 billion euros. This corresponds to an increase of 13 to 19 percent.
“Despite all the uncertainties, we currently assume that the consequences of the corona pandemic will have no significant impact on the operating result in the 2020 financial year,” said CFO Thomas Kusterer during the balance sheet press conference. The company does expect a “possible drop in consumption” among commercial customers and a negative earnings effect. “But this risk is limited,” said Kusterer.
The previous day, competitor Eon had stated that it would expect “visible traces” in the balance sheet due to the corona crisis, but only to a limited extent. Compared to other industries, the energy industry is robust, too Eon explained. Households are even expected to increase electricity consumption.
As on the previous day, Eon boss Johannes Teyssen, EnBW boss Frank Mastiaux also assured customers of a secure supply during the pandemic. “The crisis plans and preparations for our system-relevant locations and areas are in place,” said Mastiaux.
There are currently around 10,000 employees in the home office at the office locations. With a “high quality and professionalism”, the EnBW team gave everything to “continue to reliably supply the citizens with electricity, gas and water”. That was also the case with other companies in the industry, promised Mastiaux. He is in close contact with other energy companies and industry associations: “Precautionary measures have been taken everywhere to ensure the security of supply in our country,” said Mastiaux.
Earnings rose by 13 percent in 2019
Last year, Ebitda rose by almost 13 percent to 2.43 billion euros. “This means that we achieved the ambitious earnings target of EUR 2.4 billion that we set ourselves for 2013 in 2020,” said Mastiaux.
In fact, the company is on schedule with the conversion initiated by Mastiaux. In 2013, shortly after taking office, Mastiaux had set ambitious goals for the group to consistently align the energy group with the energy transition. EnBW was in the process of coping with the nuclear phase-out and at that time still achieved around half of the result with conventional power plants.
Now EnBW has not only reached the Ebitda target of 2.4 billion euros that was issued at the time, the share of conventional electricity generation and wholesale is also only 16 percent. In contrast, the electricity and gas networks now contribute around 50 percent and renewable energies 20 percent to Ebitda.
Mastiaux had already issued new goals in 2017. Ebitda is expected to increase to 3.2 billion euros by 2025 – a contribution from conventional generation is then no longer planned.
More: First State takes a 45.1 percent stake in the Mannheim municipal utility company.
“The recession will be at least double-digit worldwide in the second quarter”
Dusseldorf The Dax experience another volatile trading day. After an initial minus of five percent, the index rose to 1.3 percent at 1 p.m. and then slid back into the minus. In afternoon trading, the Frankfurt benchmark slipped 1.5 percent from the previous day’s close and stands at 8798 points. There are almost 600 points between daily low and high.
Two news items contributed significantly to the interim recovery: First, the US Federal Reserve is launching new measures to combat the economic consequences of the coronavirus pandemic. Accordingly, it wants to buy up unlimited government bonds and mortgage-backed securities.
Düsseldorf, Frankfurt, Berlin The auto parts supplier Webasto and the auditors at EY have already experienced what the worst-case scenario looks like. In both companies, employees had been infected with the corona virus. Entire office buildings were cleared, employees and teams were sent to quarantine. The corona virus is spreading more and more in Germany – and is increasingly affecting companies. But what happens in companies whose services are essential?
In power plants, the control rooms of electricity and gas networks, the control departments of the telecommunications networks or in the tower of an airport, a short-term quarantine measure is also a horror scenario. The operation of critical infrastructure, which is so important for the economy, must also be ensured during the coronavirus epidemic.
The Federal Network Agency, which is responsible for the energy networks and telecommunications, says the situation is “very serious”. “We are in contact with the transmission system operators and let us be informed about the location and about precautionary measures,” said a spokesman with a view to the large overhead power lines.
Currently, however, “neither suspicious cases nor confirmed cases are known”: “In our opinion, the transmission system operators are best prepared for possible cases.” He made a similar statement about telecommunications. Here, too, the authorities see the industry as “best prepared”.
In fact, it is standard for operators of critical infrastructure to prepare themselves for possible crises. Emergency plans must ensure that the operation of electricity or gas networks, for example, is always maintained – regardless of whether there are technical problems, disasters or terrorist attacks.
During past epidemics such as the outbreak of avian flu H5N1 since 1997 or swine flu H1N1 in 2009, the emergency plans were also designed to spread the virus. Now the companies from the affected sectors have also adapted the plans to the current Corona epidemic.
Energy companies are preparing
To this end, the Federal Office for Civil Protection and Disaster Relief has published an updated recommendation for action especially for operators of critical infrastructures. It openly warned that a pandemic “could endanger the infrastructure of the economy and society as a whole”.
“As a company, we have a social responsibility to deal appropriately with this exceptional situation,” explain the four operators of the German electricity transmission network Amprion, 50 Hertz, Tennet and TransnetBW: “Our concern is to maintain our system and business operations at all times guarantee and protect our workforce from possible contagions. “
The network operators – like many companies in Germany – have suspended business trips to high-risk areas, for example, but have also restricted business trips within Germany. However, “special requirements” still apply to the employees in the control rooms in which the networks are regulated and in the technical teams that are absolutely necessary for maintaining the network.
As a rule, companies are reluctant to give details – because some of them are also used against other crises such as terrorist attacks. At the energy company Eon, who operates hundreds of thousands of kilometers of regional power lines in Germany alone, only says: “We are well prepared for a possible crisis in order to be able to supply our customers with electricity safely and reliably at all times.”
In industry circles, however, it is said that in the control room as well as in other critical areas, employees can work autonomously and largely isolated for weeks in an emergency, thus ensuring network operation. In such cases, staff, rooms and supplies would be kept available anyway. This also applies to the technology, for example spare parts for substations or lines. In addition, every major network operator has reserve control rooms.
Power plant operators also feel ready. “An epidemic is challenging, but we’re prepared,” said David Bryson, Chief Operation Officer of Uniper. The company works with rotation plans in order to always have an operational team ready.
Whole crews in quarantine
However, maintaining traffic is also critical in traffic. The Lufthansa prepares, for example, extensive measures to ensure flight operations if the virus spreads further. “We are currently working on backup plans for key areas of our airlines, such as the operations control center, check-in, and crew management, so that we can maintain operations in the event that we need to close a building or quarantine teams,” said Group- Boss Carsten Spohr sent an internal message to the employees last Friday.
Among other things, Lufthansa has technically equipped additional employees to work from home. The employees were also reminded once again to take the computer and the token necessary for secure IT access with them every evening. Even instructions on how to use office software like Office365 at home were distributed. Wherever possible, the tasks were designed redundantly – so that they can be carried out both in Frankfurt and in Munich, for example.
Provision is also made at the German air traffic control to ensure the control of air traffic in German airspace. Business trips to the affected countries and regions are no longer approved. Private trips to affected areas must be registered. In addition, visitors no longer have access to the most sensitive area of DFS: the pilot workstations. This is to reduce the risk of infection.
In addition, the official participation in major events was canceled. The management also strongly advises against private participation in major events. “DFS has had a pandemic plan for years. It will now be adapted to the current topics and kept ready, ”explains a spokeswoman.
Precautionary measures at DFS are also important because pilotage tasks cannot simply be carried out elsewhere. Training is required for each location. Working from home is not an alternative here either. DFS operates four control centers from which it monitors German airspace. It is also active at 16 airports and controls arrivals and departures there.
When schools and day care centers are closed
In its letter, the Federal Office for Civil Protection and Disaster Relief gives the operators of critical infrastructure five key recommendations for action. First of all, this includes a plan for quarantine measures. Companies must ensure that key functions can continue to be carried out, even if some employees should fail at the same time due to illness or protective regulations. “This could include, for example, certain teams no longer working together so that employees cannot infect each other,” said one insider.
Second, the Federal Office is carrying out a scenario in which a number of public institutions are closed, such as schools or day care centers. This could lead to many employees failing because they have to take care of relatives like their own children. The Federal Office therefore recommends preparing alternative work processes such as home office, shorter working hours or shift work.
Third, the Federal Office describes how priorities can be set when troubleshooting. Should there be a massive shortage of personnel, not all problems could be solved directly. Companies have to decide what is important and when. To this end, the authority recommends that customers be informed accordingly transparently.
Fourth, the authority sees local public transport as a risk for companies. Traffic such as buses or trains could be restricted to curb the spread of the virus, as happened in Italy or China. This would prevent employees from appearing for work. For this, the Federal Office recommends home office solutions or in-house driving services.
As a last point, the authority warns of road closures or entire regions. “Some of the countries affected by the corona virus have set up restricted areas, so far this has not been necessary in Germany,” the office writes. However, this could change in the future. An exchange with authorities is therefore sensible and special permits can be obtained.
More: How Webasto got the corona crisis under control
Frankfurt They don’t like baking small rolls at Deutsche Börse, one of the largest European exchange operators. “We are convinced that the Dax 50 ESG will become the standard for sustainable investments in Germany, ”said Stephan Flägel on Wednesday in Frankfurt.
He heads the index division at stock exchange subsidiary Qontigo, which among other things manages the index families Dax and Euro Stoxx. Now there is a new addition: the Dax 50 ESG.
50 stands for the stock companies represented there, 20 more than in its big brother, the leading German index Dax. ESG stands for ecological, social and governance criteria, i.e. values of good corporate governance, which should play a particularly large role for inclusion in the index. “The index meets the criteria that institutional investors and private investors place equal value on today,” says Flägel.
In plain language means: Investors who want to invest in German companies that are particularly ecological and responsible should take advantage of the Dax 50 ESG in the future. At least when it comes to the Deutsche Börse. In the coming weeks, the first provider wants to launch a corresponding fund that tracks the index, it is said.
The question arises which companies are included in the Dax 50 ESG. The companies are selected from the 89 values of the three major indices Dax, MDax and TecDax, i.e. the leading, average and technology index of Deutsche Börse. There are exclusion criteria: companies that produce so-called controversial weapons, operate significantly with coal and nuclear power and have serious governance problems are dropped.
Due to this narrow negative catalog, only four DAX companies failed from the start: Energy companies are not represented in the new index Eon and RWE because of their coal and nuclear business, MTU because of its military production and Volkswagen due to the non-transparent handling of the diesel scandal.
Market capitalization as an important criterion
The candidates remaining after the negative test generally have the chance to land in the Dax 50 ESG. They are then selected according to the following criteria: market capitalization, exchange turnover and a sustainability rating that the German Stock Exchange sourced from the specialist provider Sustainalytics.
Example Dax company:Based on these positive criteria, only three companies in the leading German index missed the Dax 50 ESG:the medical technology company Fresenius, the housing group Vonovia as well as the payment processor Wirecard, Why remained unclear. The stock exchange representatives could not explain the exact reasons for the non-move at the press conference on Wednesday.
The remaining team of the Dax, i.e. 23 of the 30 values, can be found completely in the new sustainability index. This leads to the curious situation that the largest values in the Dax also represent the largest values in the Dax 50 ESG: the chemical giant Bayerwho is struggling with the controversial Monsanto takeover, also Allianz, SAP, Linden and Siemens, The car manufacturer is also prominently represented Daimler, despite the diesel scandal.
According to Flägel, the main reason for this picture is the strong weighting of the market capitalization criterion: This was the way large investors brought it to the stock exchange, he explained. As a result, the composition of the new sustainability index does not differ fundamentally from the previous structure in the Dax, MDax and TecDax. The top dogs of the German economy are almost entirely included in the new “Standard for Sustainable Investments in Germany”.
Criticism of this concept comes from environmental associations. This is how Lia Polotzek, financial expert of the German Federation for the Environment and Nature Conservation, calls the Deutsche Börse approach “eyewashing”. “The new sustainability index is nothing more than green packaging. The index does not finance a transformation process towards a climate and environmentally friendly economy, ”Polotzek told the Handelsblatt.
“Included are environmentally harmful chemical, cement and aviation industry values as well as with BASF a company whose wholly owned subsidiary Wintershall adorns itself with being the largest German oil and gas producer. That is anything but sustainable, ”she said.
Kristina Jeromin, Head of Sustainability at Deutsche Börse, can understand such criticism in principle: “The financial sector is part of the social sustainability debate and reflects it. There cannot be changes overnight. ”The decision was made to deliberately map the breadth of the market with the index – but at the same time paying particular attention to companies that promoted the transformation towards a sustainable economy.
“If we had taken out all companies that do not already meet the requirements of the 1.5-degree target in the fight against global warming, there would be practically no value in the new index,” explains Jeromin. In the coming years, however, the ESG criteria would increasingly become the standard when investing.
Deutsche Börse plans to launch a double-digit number of additional sustainability indices in 2020. Then also with harder onesCriteria for particularly ecologically oriented investors, that is the promise in Frankfurt.
More: French money house Natixis has developed a radical approach to greener finance. The concept is highly controversial in the industry.
Dusseldorf German companies are preparing for the further spread of the corona virus with great concern. After the management consultancy Ernest & Young initially sent 1,500 colleagues home after an employee was infected, the corporations on the Rhine and Ruhr in particular are arming themselves for quarantine measures in headquarters and business premises.
Companies have been reacting across the board with increased hygiene measures, more home offices, the cancellation of events and strict requirements for business trips since the virus spread to Europe.
“We take the risks posed by the corona virus seriously,” says the energy company Eon, Of course, one thinks about “maintaining business operations in the context of risk assessments and possible measures to be taken”.
“In the majority of cases, employees can continue to work as usual even in the event of a quarantine – for example, from home,” said a spokeswoman. “For functions where this is not possible – for example, fitters – there are corresponding emergency plans that ensure that business operations are maintained.”
According to a spokesman, employees of the electricity producer Uniper are encouraged to discuss and use individual home office regulations with the respective manager. “We have made recommendations on the company side and are examining various scenarios with the business-critical areas,” said the spokesman.
Cologne-based Lanxess AG takes the situation of the new corona virus very seriously. The specialty chemicals group has activated a steering group that monitors developments and plans and controls all necessary measures.
Employees are encouraged to avoid business trips or larger professional events as far as possible and to replace them, for example, with telephone or video conferences. Business trips to the international epidemic areas are not permitted until further notice. There is no kind of quarantine for employees at Lanxess.
The plastic manufacturer Covestro from Leverkusen has issued the guideline that employees plan all unavoidable business trips in such a way that, above all, crowds of people are avoided – for example at airports and train stations. Employees should not travel to affected areas.
If Covestro employees are currently on a trip to the affected regions or have returned from one in the past few days, they should contact their line manager immediately to coordinate the further procedure. The same applies to private trips.
At the Essen-based specialty chemicals group Evonik, no far-reaching steps like a quarantine have yet been initiated. However, a spokeswoman said that one was fundamentally prepared for a pandemic with a plan. This provides for several stages and could go as far as postponing or canceling events or reducing operations to core functions. That depends on the assessment of the respective location.
Business trips to particularly affected regions are temporarily suspended at Evonik. In principle, travel to other regions is possible if the required hygiene measures are observed. “We currently advise not to postpone non-urgent travel,” said the spokeswoman.
Also the Deutsche Telekom has taken a number of precautions. “Of course there are emergency plans to protect our employees and critical infrastructure from the effects of a pandemic as far as possible,” said a company spokesman. Asia travel restrictions apply. Employees in China work in the home office. “At the moment we also advise against business trips to Italy,” said the spokesman.
Metro AG continuously checks the situation according to its own information. The first goal is “to ensure the safety of employees and customers. In addition, everything that is necessary and possible is done to ensure business operations and the supply of goods, ”the company said on request.
There are also stricter travel guidelines. For example, business trips to China, Hong Kong and Italy are suspended. For employees returning from these areas, “Human Resources and line managers are looking for ways to minimize the risk of possible disease and infection. This includes, for example, visits to the doctor or the opportunity to work in the home office for 14 days ”. Strict hygiene rules have also been established for the countries concerned.
Telekom also canceled a conference on cyber security in Bonn planned for March 11 with 2,000 participants: “Health and care for all our guests and partners is our top priority,” said Dirk Ofen, head of Telekom Security, explaining the step ,
handle had canceled its financial press conference planned for Thursday in London next week. “We are carefully monitoring the changing situation since the virus broke out and made this decision to rule out possible health risks for the participants of the event,” said a Henkel spokesman.
Instead, the new CEO Carsten Knobel will make his first major appearance in Düsseldorf – without journalists and analysts present. He can only explain the figures for the past financial year and the key points of his new strategy to him via a webcast.
Metro AG also reacted and “canceled a larger sales fair for customers and with international suppliers, which was planned for March 2 in Offenbach,” the company said.
Despite everything, Ernest & Young is convinced that, despite the quarantine, the work can be maintained at least “to a limited extent” through home office. An employee from the Heinsberg district had been diagnosed with a corona virus infection.
“We have informed all employees of the branch concerned and asked them to stay at home until further notice,” said a company spokesman. Around 1,400 EY employees in Düsseldorf are affected, working together in a high-rise building on Graf-Adolf-Platz. In addition, 110 employees at the Essen branch, where the man also worked occasionally, have to stay at home. According to EY, the employee had no contact with clients.
The Düsseldorf adhesive, detergent and beauty group, Henkel, has also asked its employees to only make business trips. At the Düsseldorf site, Henkel’s headquarters with a large detergent production facility, no employee has yet fallen ill, said a Henkel spokesman.
As soon as the cases became known in Heinsberg, the company asked its employees living there to work from home and not to go to the headquarters in Düsseldorf. Otherwise, the usual precautionary measures apply at locations worldwide, such as thorough hand washing.
For companies like Eon and Telekom, it’s not just about maintaining the work in the headquarters. With electricity and gas networks and power plants, energy providers are operators of critical infrastructure, just like telecommunications companies with fixed networks and mobile communications.
“We are well prepared for a possible crisis in order to be able to supply our customers with electricity safely and reliably at all times. We currently see no effects on the power supply for our network areas, ”said the Eon spokeswoman.
The same applies to Innogy, The company, which Eon will take over in autumn and is currently integrating, is coordinating the measures closely with the new parent company. A central group of experts is continuously monitoring the development of the virus spread and the recommendations of the authorities, carrying out risk assessments and proposing possible preventive measures. Among other things, a “temporary business travel ban” was pronounced for affected areas. Employees who travel privately to high-risk areas must consult with their managers.
“We have carefully examined the increasingly acute situation with regard to the risk and chains of infection of the corona virus,” Telekom security chief Ofen explained the cancellation of the cybersecurity conference. Just two weeks later, on March 26, Telekom actually plans to host the annual general meeting in the same rooms in Bonn. A response from the Dax Group regarding the possible effects of the corona virus on the Annual General Meeting was initially pending.
The German postal service has suspended delivery of parcels in the regions most affected due to the spread of the corona virus in northern Italy. A spokeswoman for the post said that the pick-up and delivery of the items via Italian partners are currently not taking place in the communities of the regions most affected. SAP had, for example, instructed colleagues who were in the affected regions in Italy to stay at home for the time being.
In Germany, according to the latest information from John Hopkins University, at least 48 people were infected with the corona virus – 16 of which are considered to be cured. Recently, many infections were added in different federal states – 14 in NRW, four in Baden-Württemberg and one each in Bavaria, Hamburg and Hesse.
More: For the latest information on the outbreak of the corona virus, see the news blog.