Despite an upgraded outlook, the deeply fallen share price has not recovered.
(Photo: AP)
The high write-downs of German companies on their Russian holdings are bitter for the shareholders. They reduce profits, equity and thus future dividends.
Nevertheless, the prompt adjustment in the first half of the war is gratifying. Even before industrial companies like Mercedes-Benz and Linde or insurers like Allianz and Munich Re can foresee with 100% certainty whether their holdings and loans might not pay off again in the distant future, they write them off in the midst of the Russian war of aggression in Ukraine .
This is good because it ensures transparency in the balance sheets. Something else remains unsatisfactory: the many risks arising from the war, sanctions, disrupted supply chains, rising prices and an impending gas shortage are completely inadequately described by the companies in their risk assessments. Scenarios of how high possible sales and profit slumps could be are missing.
BASF, for example, raised its forecast for the year as a whole when it presented its half-year results. However, this does not include risks in connection with production losses if there is not enough gas in Germany in the winter. The fact that the share price, which had fallen so far, has not recovered after the surprisingly raised outlook speaks volumes: Shareholders distrust this confidence shown.
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Even an imminent recession is not reflected in the balance sheets. In terms of good corporate governance and stock culture, more risk assessment would be needed here – and a qualitatively better one. This applies not only to BASF, but to all companies that rely on gas and are dependent on the course of the global economy, i.e. for industrial and service companies, banks and insurance companies.
More: Business in Russia: Risks worth billions are still slumbering in the balance sheets of the Dax companies