Things remain tough for cyclicals, it was said at the meeting of investors and company managers at Deutsche Börse. Donald Trump’s tariff announcement caught some off guard. Chip suppliers like Aixtron and medical engineers like Stratec are hoping for improvement in 2025. Some companies are pushing ahead unimpressed by the domestic misery.
There was little confidence in the German economy at the annual meeting of analysts, fund and company managers that Deutsche Börse hosted in Frankfurt from November 25th to 27th. “The mood among small and medium-sized companies is very negative. They are reducing their costs this year,” says Christof Leiber, CFO Atoss Software. The larger companies would have started saving earlier. Atoss enables hospitals, factory operators or logisticians to optimize their human resources. The people of Munich therefore have a good insight into who is currently cutting jobs.
Atoss Software is a German stock market star
Many companies have put on fat until 2022 in the low interest rate era and now have to fast, like the real estate asset manager Patricia. «Patrizia has grown very quickly and has also built up a large cost base. We’ve learned how that can affect you,” said Patrizia’s CFO Martin Praum. “Cost discipline is of utmost importance.”
The Equity Forum 2024 at the Hotel Steigenberger at Frankfurt Airport was a good opportunity to find out from company leaders who will continue to suffer from the economic downturn in their home market, how they are dealing with risks such as the threat of US tariffs and who are making strong profits despite all the odds more.
As head of investor relations for external and digital advertising Ströer Christoph Löhrke is a good crisis sensor because advertising spending is often the first to be cut. And Ströer is focused on Germany. Löhrke says: “We all know that the overall situation in Germany is becoming more difficult.”
Ströer: Advertising business is an economic indicator
The valuation of economically sensitive stocks could fall even lower, warned Frank Fischer, head of the fund provider Shareholder Value Management: “For cyclicals such as forklift and warehouse technology manufacturers Kion or Jungheinrichbut also with the IT equipment suppliers like Bechtle or Cancom The fourth quarter will be bad.” The Market remains convinced that Bechtle’s business model is promising in the long term.
The news that… Brenntag-Boss Christian Kohlpaintner will not extend his contract with the chemical logistics company, which runs until the end of 2025, “for private reasons”. Kohlpaintner will then be 62 and no longer wants an operational role after that. The decision raises the question of whether the CEO wants to leave just when business is fun again – or whether things will continue to be difficult at Brenntag for a longer period of time.
Cyclicals may still have the price bottom ahead of them
Years of stagnation are already leading to more payment defaults. The IT leasing specialist Bitter therefore announced on November 14th a decline in consolidated earnings of 11.5%. For the Federal Republic, the Halle Institute for Economic Research recorded 4,071 bankruptcies in the third quarter, which is the highest level in fourteen years.
Everyone whose customers had built up high inventories after the delivery bottlenecks during the Corona period and are still using them up is under pressure to save. «The market is oversaturated after Covid. We have to get through this,” said Markus Wolfinger, head of the laboratory equipment manufacturer strateg. He can’t estimate exactly when customers will order more again: “It will be over soon – I don’t know whether at the beginning of 2025 or not until 2026.”
The semiconductor industry supplier is also hoping for improvement from the second half of 2025 Aixtron. Customers had invested heavily in new production facilities during the electric car and power electronics boom. “There was certainly a speculative exaggeration. But everything will be digested in 2026,” predicts investor relations manager Christian Ludwig. The end markets for chips would grow significantly.
“I would like to see unity, implementation and deregulation from the new government,” said Uta Anders, CFO of the beverage bottling plant manufacturer, which is very successful in its niche Crowned.
An analyst who traveled from abroad asked Patrizia’s chief financial officer Praum on Monday what the prospects were for a reform of the debt brake and more government investment. “Everyone hopes that this would lead to more economic activity. “That could be an impulse for the industry,” replied the manager.
However, on Wednesday, Friedrich Merz, candidate for chancellor of the Union parties leading in the polls, dashed this hope. In an interview with Deutschlandfunk Merz ruled out reforming the debt brake before the federal election in February. After the federal election, however, the Union could be confronted with a blocking minority from the AfD and Alliance Sahra Wagenknecht, which would make changing the debt brake impossible. Little will happen until a new federal government is formed in the spring or summer.
On Tuesday morning, conference participants received news that Donald Trump had announced overnight that he would impose tariffs of 25% on imports from Mexico and Canada and a further 10% on imports from China on the first day of his term in office.
The tariffs increase pressure on companies to expand production in the USA. Vossloh-CFO Thomas Triska pointed out that the German share in the production of the railway technology manufacturer, which is promising due to its strong position in its niche, is expected to fall from 82% in 2019 to 58% in 2028.
Vossloh has largely lost its annual increase since October
Also the medical technician Eckert & Ziegler wants to produce more where it sells. “We are building production facilities in North America and Europe,” said CEO Harald Hasselmann.
At the laboratory equipment manufacturer Stratec, CEO Markus Wolfinger announced far-reaching changes. “Stratec needs to become a more US-based company, perhaps also with headquarters,” he said. 90% of the innovations in his business come from the greater Boston area or Silicon Valley. Stratec has 100 of 1,500 employees in the USA. “But production and development must also take place in the USA,” he announced.
Some companies were largely unprepared for Trump’s announcement on Monday night, such as the fertilizer manufacturer K+S. The company delivers from Canada to the USA and does not expect any major restrictions, said a K+S investor relations manager on Monday. According to the annual report, the Hessians achieved a good 6% of sales in North America in 2023.
The logistics company’s business is significantly affected by any kind of customs duties DHL. Investor relations manager Alexander Kirschall pointed out that Trump linked the announcement to demands to curb migration: “Trump appears to be using tariffs as a means of pressure.”
However, this interpretation is optimistic, warned Deutsche Bank chief economist George Saravelos in a study. He assumes that mentioning such demands is necessary so that Trump can justify the tariffs as an emergency and then announce them via executive order. The announcement shows the importance of tariffs for Trump’s political agenda.
Anyone who leads technically and is a market leader in a niche, such as the professional kitchen appliance manufacturer Rationalcan also face Trump’s tariffs more calmly. “If the USA imposes tariffs, we assume that competitors will immediately increase their prices, so that there would be no real change in the competitive situation,” said investor advisor Stefan Braun. Rational generates almost a quarter of its sales in North America.
When the economy is weak, strong, structural trends become even more valuable. Rational benefits from the fact that its kitchen appliances replace the scarce skilled personnel and reduce costs.
The digitalization of many company processes is another strong trend. It not only inspires the very highly rated Atoss software mentioned above, but above all SAPwhose run of success doesn’t seem to have been exhausted yet.
Because of the war in Ukraine and the threat situation, the demand for military equipment will continue to grow and suppliers like Rheinmetall, Hensoldt and Colour keep them busy for years to come, said Susanne Wiegand, CEO of the tank transmission manufacturer Renk. An example: “In Europe we have lost 90% of the tanks since the end of the Cold War.” Wiegand appeared in Frankfurt, although Renk had previously announced on Sunday that she was leaving the company at her own request at the end of January.
Industry experts believe it is plausible that, after the successful IPO in February and the resolution of some supply chain problems, Wiegand is leaving the operational business “for personal reasons,” as announced. Working for a private equity owner is considered particularly demanding, and Triton Partners continues to hold a third of the shares in Renk.
Things are also going well with insurers and reinsurers, says fund manager Frank Fischer: “The providers have gold-rimmed balance sheets, and because of the recent natural disasters, the premiums will remain high for future deals.” The Market holds the insurance group Talanx for promising, as well as for the reinsurer Munich Re.
CFO Philipp Grosse presented the apartment manager in strong condition They smell. After first having to restructure the balance sheet since interest rates rose from 2022, it is now the turn of the apartments. “We invest in modernizations with a 6 to 7% cash return,” he said. This enables rent increases, which should increase their announced rate of increase of 4% per year. “With a higher proportion of modernized apartments, we will be closer to 5% rent growth in 2028,” said Grosse. He confirmed that Vonovia wants to ramp up additional business such as new construction, which The Market had already reported in August.
So many German business models are growing and thriving. This is particularly true for companies that do not depend too heavily on the growth of the German economy.
