“The consequences are not foreseeable”

Mr. Muller, how would you describe the dramatic collapse in the share prices of siemens, schaeffler and the two french sporting goods giants??

Leon Muller: each slump in itself is of course dramatic, but here we are talking about share price losses of 50 percent. However, in the context of the market as a whole, these slumps are not particularly noticeable. After all, with the outbreak of the corona crisis, investors blindly sold everything that could be quickly turned into money. This not only affected the shares of companies in the region. In the panic, no distinction is made between good and not so good companies. Even positions in supposedly safe havens such as gold and on the bond market have been liquidated. What differences do you see between the companies in terms of the crisis resistance of their business models?? After all, these are very different industries.

You said it, the companies here in the region are in completely different positions. Adidas and puma have to cope with the fact that major sporting events will not take place now and probably not for the whole year. The fubball leagues take a break. Basically, there is no significant sporting event taking place anywhere in the world at the moment. The sudden stop works here on the demand side. Nevertheless, adidas has told us that it will be able to cope with the resulting dip in demand. I don't expect that after the crisis everything that is now being lost can be made up for. But: when the crisis is over, people will have an unprecedented urge to move. And probably also give their health a higher priority. This was allowed to drive sales to high levels and compensate at least a part of the current losses. And: the rough events will be made up for. Postponed does not mean canceled here. Schaeffler had already had problems before corona – the keyword being the abandonment of the internal combustion engine. Can the company after the crisis simply make up for the currently suspended business? This does not necessarily apply to schaeffler. Schaeffler was already facing difficulties before the outbreak of the crisis. Does the current development make it easier for the company to master the challenges of the future?? The company claims that it is in a better financial position today than it was at the time of the global financial crisis. But the corona crisis does not make things any easier. What difficulties at schaeffler do you mean?? Schaeffler has missed many developments, especially the shift to electromobility. This also applies to many german suppliers, and schaeffler is not alone. Now there is also the fact that the factories of all the major automotive manufacturers are at a standstill almost worldwide. This is a one-time event. The fear that this exceptional state of affairs has caused one or the other supplier to go over the edge is not just a matter of imagination. Schaeffler, however, was allowed to be "too big to fail" its. We can assume that the state and federal governments will not let the rough employers fall. If necessary, they will be financially supported. But we are still a long way from that. Siemens is pursuing the strategy of spinning off business units from the parent company, for example in the case of the heal-thineers transaction or the merger of the rail division with alstom, which then fell through. Does siemens currently have an advantage or is it a "rough-and-tumble store"?? We should not be tempted to base a fundamental corporate strategy, which is designed to last for years and decades, on a snapshot. Siemens is in the process of gradually breaking up its conglomerate structure. This process has been going on for years and will continue for years to come. From the investor's point of view, the dissolution of the former mixed store is to be buried. Here, values come to light that had otherwise remained hidden. And in the long run, this should also be beneficial for the employees, because the individual areas can subsequently capitalize better. However, I do not think it is correct to derive an advantage or disadvantage from this for the current situation. Siemens has a strong balance sheet. There is little to worry about. Siemens healthineers could even expose itself as a small crisis profiteer. China is now roughly buying into german companies. This warning is currently being heard everywhere. What is the "danger"?? Do you see this possibility for the dax companies in the region?? Yes and no. China will be the first to emerge from this crisis. According to what you hear and read, the government there has the spread of the virus under control. Companies are ramping up production again, earning money. But: both the german government and the EU are assuring us that they will do everything in their power to fend off foreign investors if they want to take advantage of the crisis to make acquisitions. I leave it open to what extent this will succeed. Non-critical industries such as sporting goods and fashion companies like puma or adidas will hardly be protected in this way. But: adidas is still worth over 40 billion euros today. This is not a small event. And what about the competitor puma?? Puma has a strong coarse shareholder in kering, which no chinese can bypass to take control of the company. Takeover unlikely in both cases. In the case of schaeffler, the situation is somewhat different: what is interesting for investors here is not primarily schaeffler itself, but the investment in continental. It is now worth more than schaeffler itself on the stock market.

If this discrepancy remains, investors could become active, but not necessarily from china. There is little to worry about at siemens. Here, the state was allowed to put a stop to it. At siemens heal-thineers, a takeover is also not an issue, if only because siemens holds the majority. I consider it unlikely that siemens will agree to a sale at the current level.

To what extent can the crisis now be compared with the world financial crisis of 2008/09?? Even though comparisons are often made here, the two events are fundamentally different. Investors like to look for familiar patterns to explain the here and now at all, or at least to explain it better. That is nothing unusual, but only human. But if you are honest, then this comparison is flawed from the very beginning. The world financial crisis originated in the banking sector. What then arrived in the real economy were the run-outs of this speculative bubble. But the shock wave for the global economy was clearly sent from the financial sector. So there are differences between the two crises? The corona crisis is completely different. The financial sector could suffer collateral damage, for example because loans that were already on shaky ground now become non-performing and default. However, the corona crisis primarily affects the real economy. This has a completely different dimension.

We see a sudden stop on both the supply and the demand side. This is unique in this form, there is no pattern, no example from the past. The consequences are not foreseeable. Any forecast is coffee guesswork. Therefore, there is no room for pessimism or prophecies of an economic miracle. It's too early to make a prediction? The fact is: no one really knows how we will get out of this situation. Also, because the government has not presented an exit strategy, how the lockdown of the economy will be resolved. I'm afraid they don't know how to get us back to normal. This uncertainty is naturally also felt in the boardrooms of the companies affected, whose production has come to a standstill to a large extent. The questions were asked by christian bauriedel.