The success of the “50 Shades” erotic trilogy boosted Bertelsmann’s 2012 profit. Yet the media giant’s successful book publisher hides structural weaknesses. Many of the company’s markets are shrinking, and its many attempts to adjust to the digital age haven’t been convincing.
The fictitious adventures of Anastasia Steele and Christian Grey, the protagonists of the “50 Shades” erotic trilogy may have spared Bertelsmann’s management some nasty questions on declining profitability. The books’ global success helped boost operating profit at the German media group’s publishing unit, Random House, by 76 percent to a record of 325 million euros – 19 percent of group profit on only 13 percent of its revenue. Continue reading
The country’s current account surplus with the euro zone has shrunk from 4 pct to 2 pct of GDP in five years. Germany is contributing to intra-European rebalancing. Quicker progress would be hard to achieve. European policymakers should stop obsessing about German surpluses.
At first sight, Germany hasn’t done anything to curb its bad habits. According to new Bundesbank data released on Monday, the country’s current account surplus rose to 7 percent of gross domestic product last year, only slightly below its all-time record five years ago. Continue reading
Germany started liberalising its labour market 10 years ago. That brought some welcome results, but the Hartz reforms’ impact on Germany’s economic resurgence tend to be overestimated. Wage restraint and a global demand boom for capital goods have been more important.
Ten years ago, then-German Chancellor Gerhard Schroeder outlined what appeared like a bold programme of labour market liberalisation. It included an overhaul of the way the German labour agency works and severe cuts in benefits for the long-term unemployed. Continue reading
The carmaker’s 25 bln euros of pre-tax earnings are the highest ever for a listed German company. Despite a dismal European car market, current prospects are bright. But in the long term, politically charged and family-dominated governance is a source of vulnerability.
Volkswagen is defying gravity. Even though the European car market has been in terrible shape for two years, VW’s 25.5 billion euros of 2012 pre-tax profit was the highest ever for a listed German company. Continue reading
The German media group spooked shareholders with news that the restructuring of its print unit and further digital investments will eat into 2013 profit. The fears look overdone. Springer is coping with the digital transition much better than most of its peers.
Axel Springer, Europe’s largest newspaper group, spooked markets on Wednesday (6 March). It expects earnings before interest, tax and depreciation to decrease by up to 9 percent this year. Analysts polled by Reuters were expecting an increase in profitability. Subsequently, Axel Springer’s shares went down by more than 6 percent. Given the company’s solid fundamentals and a successful transition into digital businesses, the reaction smacks of myopia. Continue reading
Wages are rising, within reason. Unions are not in a bellicose mood, and stick to the pragmatic approach that has served the country’s labour market well. This is a welcome development, not only for German workers but also for the rest of Europe.
German workers fighting for higher pay don’t lack supporters. Economists and politicians across Europe would like to see them spend more, and in return help take the continent’s economy out of the doldrums. As things stand, unions aren’t wildly enthusiastic about excessive pay hikes, and settle for quite reasonable ones. Continue reading
Mainstream economics has been hijacked by vested interests and turned into an ideological weapon, Norbert Haering and Niall Douglas claim in “Economists and the Powerful”. Their case against the profession isn’t iron-clad, but it’s definitely thought-provoking.
There’s no lack of books on the shortcomings of mainstream economics. “Economists and the Powerful”, by Norbert Haering, a German financial journalist, and Niall Douglas, an Irish IT consultant, stands out from the crowd.
The authors do not only describe the dismal science’s many flaws; they try to explain why the discipline went wrong. Their claim is that the field has become the ideological servant of vested interests: “a tool for the powerful to enrich themselves at the expense of others” and a “weapon for achieving U.S. hegemony at the cost of everything else”. Continue reading
The German group’s new management is trying hard to shed its legacy of ill-fated investments, a dysfunctional culture and corporate scandals. Its turnaround is on track, but far from finished. And the bleak economy doesn’t help.
The quarterly results released by ThyssenKrupp on Tuesday would look mediocre for most companies. Measured by the low standards of the embattled German group, they don’t look that bad. More importantly, the management’s turnaround plan is beginning to produce results, even though the bleak economy isn’t helping. Continue reading
Negligent bankers could end up behind bars in Germany if a proposed bill passes. It is motivated by the current electoral climate and raises legal issues. However, the threat of imprisonment might be an effective deterrent to limit reckless behaviour in the financial industry.
Risk-addicted bankers in Germany could soon face a new occupational hazard: jail. Angela Merkel’s government is pushing for a bill that will make it easier to put failed bankers behind bars. The proposed legislation targets excessive risk-taking by financial professionals who neglect their duty of care and endanger the future of their institution: they would be committing a criminal offence and could face up to five years in jail. Continue reading
The Mercedes brand owner wants to overtake BMW and Audi as the world’s premium carmaker. While the company must avoid dropping further behind, it is silly to want simply to be the biggest. It threatens profitability, and 2012 financial results show that is already a problem.
Daimler wants to overtake BMW and Audi as the world’s largest premium carmaker. It may be an understandable annoyance for Dieter Zetsche, the CEO, to be third in the global pecking order. He is a leader who is clearly eager to lead. But targets involving smallish differences in volume relative to its peers could prove more a distraction than an incentive. Continue reading