Despite the limitations, most German companies have been optimistic that they will weather the Corona crisis well. However, as a new survey by the auditing and consulting firm PwC shows, the fear of a second wave leads to great uncertainties in the companies.
As the “Handelsblatt” reports, the auditing and consulting firm PwC has repeatedly questioned the CFOs of listed German companies. While the majority in March still assumed that the crisis would last about three months, the results of the new survey show less optimism. The CFOs estimate that it will take up to half a year for business to normalize again.
Even when the shops reopen and businesses slowly return to normal, there is often a lack of demand. Companies are already anticipating a decline in both sales and profits. Since these losses would be even greater with a second corona wave, the companies are preparing for the worst.
Loans in preparation for a second wave of corona
“We cannot rule out that we will get another wave of the pandemic with the closing of shops,” Bernhard Düttmann, head of Ceconomy, the parent company of electronics retailers Media Markt and Saturn, emphasized to the “Handelsblatt”.
An important countermeasure is securing liquidity. With the help of new loans, companies ensure that they will continue to be able to act in the future.
Düttmann explains that Ceconomy has extended an existing credit line of almost one billion euros by another 1.7 billion euros. “This gives us sufficient reserves for a possible second pandemic wave,” says Düttmann.
As the “Handelsblatt” reports, companies whose economic prospects are not too bad can easily get financial help from banks. These include, for example, the aircraft engine supplier MTU or the dialysis company Fresenius Medical Care.
“We responded positively to all liquidity inquiries from our existing customers,” explains Heinz Hilger, head of Germany at British bank Standard Chartered. “However, the vast majority of the liquidity lines have not yet been drawn. There is still enough buffer. “
One reason that there is still no shortage of refinancing by the banks is the sufficient reserves that German companies have for such a crisis. As the results of PwC show, most large companies assume that their financial cushion is sufficient for twelve to 18 months.
Reduction of dividends, jobs and investments
But as the “Handelsblatt” writes, taking out loans is not the only measure that companies use to prepare for a second wave of corona. In many companies, for example, dividends are cut or even canceled entirely.
Although, according to PwC, fewer and fewer companies want to introduce short-time work, the workers cannot yet breathe a sigh of relief. As a comparison of the survey results clearly shows, more and more companies are planning to cut jobs in order to save money.
Not only are jobs at risk, investments and projects are also being cut in preparation for a second outbreak of the virus. For example, the automotive supplier Continental plans to reduce investments in production or development projects such as fully automated driving by at least 20 percent.
But it is not the only company. More than half of the finance directors surveyed plan to cancel or reduce such projects altogether.
“Company leaders have to differentiate between ‘good’ and ‘bad’ costs,” said PwC Germany boss Störck. “In the crisis, there are investments that should definitely be made because certain issues also play an important role in the success of companies in the ‘new normal’.”
A new project to help prevent a second lockdown is being developed by PwC itself. The testing and consulting company is working on a Corona app. This program is intended to enable outbreaks in companies to be identified and contained.