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Profit Outlooks Worsening, Say Top Managers

Handelsblatt's latest representative survey of Germany's corporate directors found a dramatic increase in the proportion of respondents whose firms are expecting to see a decline in full-year profits.


From bad to worse?

The economic downturn has exerted a dramatic across-the-board effect on the full-year profit outlook of German businesses, Handelsblatt's latest business monitor found.

The business monitor is a monthly representative survey of Germany's corporate directors compiled for Handelsblatt by electoral research institute Psephos. Some 49% of respondents in November's business monitor expected their company to see a decline in full-year profits.

In April, the proportion had been just 32%. By industry sector, the more hopeful outlooks were presented by companies active in raw materials, chemicals and synthetics as well as the manufacturing industries apart from machine, automobiles and electronics.

In response to the deterioration in profit outlook, 18% of respondents said their company plans, as far as contracts allow, to cut seasonal payments to management, e.g. Christmas bonuses.

A further 4% had already started to implement these cuts. The investment climate, meanwhile, has fallen to its least favorable level since the Business Monitor was first drawn up at the start of 1999.

Just 17% of firms intend to raise their investment levels, while the proportion planning to reduce them was 36%. Just 17% of firms plan to take on new staff, while 43% intend to scale back their workforce.

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