Sennheiser 2011 Annual Report Download - page 28

CONSOLIDATED MANAGEMENT REPORT 2011
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CONSOLIDATED MANAGEMENT REPORT 2011
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The disparities regarding economic developments in Europe identified in 2010 worsened in 2011. While countries
such as Germany, Austria, Finland, Belgium, Luxembourg and, to some extent, France and the Netherlands,
enjoyed robust economic growth, the economies in Southern Europe stagnated or were even already in the grips
of recession, as was the case with Greece and Portugal. The main reasons for the widening gap are increasing
differences in competitiveness, as revealed by the 2008/09 financial crisis, as well as varying levels of public
finance consolidation needs.
The development of the Eurozone government debt crisis is the decisive uncertainty factor for 2012. In spite of
some encouraging developments at the end of 2011 – a greater willingness to reform following changes in
government in Greece, Spain and Italy; and falling government bond yields in the case of Spain and Italy – the
bankruptcy of the Greek state cannot be completely excluded.
On the other hand, there were signs in 2011 of stronger US economic growth as well as at least a stabilization
of the business climate and consumer confidence in Europe. The declining inflation at present, which also allows
the ECB to further loosen the fiscal reins, is also expected to give the European economy a boost. However, IHS
Global Insight believes that this will only prevent the recession from deepening.
GERMANY
Germany’s economy posted above-average performance in 2011; however, not even Germany was able to
completely avoid the downward spiral resulting from a weakening of global economic momentum and the
exacerbation of the European government debt crisis. The first quarter was very strong (up 1.3% year on year),
due in part to a mild winter, although the following two quarters saw significantly weaker growth averaging at
0.4%.
Despite this, the German economy demonstrated remarkable resistance, with the domestic economy and exports
also proving to be of note. Although the pace of export growth slowed in the course of the year as against 2010
and at the beginning of 2011, the third quarter still saw 8.0% year-on-year growth. In addition, export growth
pretty much kept pace with import growth, meaning that exports ultimately made a positive contribution to
GDP. At the same time, investments continued to grow, at least until the third quarter; private spending in 2011
grew by almost as much as in 2006 (approximately 1.5%), outpacing every year since 2001. This relative strength,
which is also reflected in consumer confidence and still remained above the long-term average at the end of
2011, lies in the exceptionally robust labor market. The latest data for December shows falling unemployment
figures and rising employment and vacancies. There have to date been no signs of wage growth easing.
German industry capacity utilization saw above-average growth until mid-2011 and only fell slightly in recent
months. Macroeconomic indicators, such as the purchasing managers’ index or the Ifo business climate index,
fell by less than half that seen in 2008/09. This means that the German economy overall started 2012 relatively
robust.
The expected slight GDP decline in the winter half of 2011/12 will cause average growth rates to plummet from
the 3.0% seen in 2011 to only 0.2% in 2012, but this oversubscribes forecasted growth momentum losses.
Assuming that the Eurozone will not see a completely disordered insolvency and/or Greece leaving the euro, the
region is likely to once again experience a recovery from the second quarter of 2012. This will be due in part to
the expected renewed increase in growth rates in the USA and key emerging markets.
Private spending may cool but is not expected to crash. There are also no signs of a sudden deterioration in the
labor market or rapidly falling pay deals. On the other hand, the German government has already indicated that
it would increasingly subsidize short-time working, an extremely successful instrument introduced following
the shock of the Lehman collapse, in the event of an unexpected renewed slump on the labor market. This would
mean a stabilization of expected income as well as a boost to consumer spending. Even if investments in 2012
were to weaken for a time, this would be nowhere near as bad as the collapse seen in 2009. The same also applies
to exports, meaning that the worst that could happen is that net exports have a moderately dampening influ-
ence on GDP growth.
THE SITUATION OF THE ELECTRICAL AND ELECTRONICS INDUSTRY IN GERMANY
2011 saw the continuation of the previous year’s strong recovery following the 2009 collapse. As a result, the
ZVEI estimated that the real output of the German electrical and electronics industry rose by a further 13% in
2011, after growth of 13.8% in 2010 and a 20.3% decline in 2009.
Turnover, which had slumped by more than 20% in 2009, has not yet returned to pre-crisis levels. There was also
a relative shift in focus towards domestic customers, as turnover from business with foreign customers fell from
17% in 2010 to 6.0% in the period from January to November 2011; turnover from business with domestic
customers also declined, from 10% to 8.0%.
Falling growth rates for incoming orders and turnover show that output growth is likely to weaken further in
the coming months. The above-average weakening of sales outside Germany against sales in Germany in 2011
is due to the declining pace of growth in the (Asian) emerging markets as well as the government debt crisis in
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