Many large German companies suspended their business in Russia or even completely left their market immediately after the start of the Russian Federation’s full-scale war against Ukraine – in late February or early March. Among them were automakers Mercedes-Benz and Daimler Truck, Volkswagen and BMW, fashion maker Hugo Boss, well-known sports and footwear brands Adidas and Puma, technology company Siemens. How do they feel today without Russian buyers and customers?

The answer to this question can be found in the detailed financial statements of these public limited companies for the 2nd quarter, published since the end of July, that is, for the period from April to June, when they all stopped actively doing business in Russia.

Daimler Truck: Strong revenue growth and mainly profit

Let’s start with the automakers. Daimler Truck, the world leader in the truck and bus market, was one of the first, on February 28, to completely end its cooperation with KAMAZ and finally exit the joint venture with this major manufacturer of equipment for the Russian army. At the same time, the German company announced that it would cancel the associated joint venture and the assets left in Naberezhnye Chelny worth €220 million.

It felt like a big loss. However, everything is known in comparison. On August 11, Daimler Truck released its Q2 results and informed its shareholders and the public that the group’s global revenue increased by 18% year-on-year to €12.1 billion, and net income increased up to 56% and amounted – over three months – to 946 million euros.

These results were driven by higher truck prices, a modest 4% growth in sales, strong development of the services business and favorable currency effects (low EUR/USD) as Daimler Truck has a strong presence in the markets. of the US and Asia. Now concern management assumes that by the end of the entire year 2022, total revenue will be in the range of 48 to 50 billion euros.

And two weeks earlier, the report was presented by the manufacturer of passenger cars “Mercedes” and minivans of the Mercedes-Benz Group – the parent company of Daimler Truck. Late last year, in the course of the separation, it spun off its now-former truck and bus division into an independent corporation, holding just over a third of its shares.

Mercedes-Benz: Sales down, finances up

Shortly after the start of Russian aggression against Ukraine, the Mercedes-Benz Group suspended both the supply of its cars to the Russian Federation and work on the Mercedes assembly plant opened in 2019 in the Esippovo industrial park in the Moscow region.

According to the group’s latest report, global sales fell in the 2nd quarter by around 7% to 487,100 passenger cars, while the group’s revenue increased by 7% to 36.4 billion euros. It grew and profited, albeit only 2%: in the quarter it was almost 3.2 billion euros.

The dashboard of the new luxury electric car Mercedes EQS

This apparent contradiction – fewer cars sold and improved financial performance – is explained by the fact that Mercedes-Benz, in the context of the current acute shortage of semiconductors (this is a problem for the entire global automotive industry), has been forced to reduce production and, first of all, to incorporate the microchips available in the more expensive models. And they did well because, the company points out, backlogs, especially for luxury cars, are full in Europe, North America and China.

Considering the very successful results of the quarter, the management of the Mercedes-Benz Group has raised its forecast for the entire current year. Now it comes from the fact that the revenue will not “slightly”, but “significantly” exceed last year’s figure.

Volkswagen and BMW: problems due to lockdowns in China

Similar results – revenue growth with falling sales – were also reported by German automakers Volkswagen and BMW, which followed suit last year – to build scarce chips mainly in expensive models.

Volkswagen’s revenue over the 2nd quarter of last year increased by 3.3% to 69.5 billion euros, although in Russia the factory in Kaluga and the automaker in Nizhny Novgorod were idle. At BMW, despite the completion of assembly in Kaliningrad, sales grew by 21.6% to €34.8 billion.

At the same time, passenger car sales fell by 22.4% for VW to approximately 1,977,000 units and for the Bavarian automaker by 19.8% to 563,187. However, BMW continues to hold the world leadership in the premium segment, surpassing Audi and Mercedes-Benz.

Advertising “People’s Electric Car” Volkswagen ID.3 in Shanghai

Both companies attributed the decline in sales and quarterly profit (for BMW it fell by more than a third to “only” €3 billion) primarily to semiconductor shortages and lengthy COVID-19 lockdowns in Shanghai and other major cities in China. China in April-May. After all, the Chinese market is extremely important for these automakers, especially for Volkswagen.

But now VW is optimistic about the outlook for the current third quarter and the entire second half of the year, as the order book is well filled, sales in China started to grow in June and component supply chains are clearly recovering. BMW’s management is more restrained in its forecasts and expects sales volumes to be “a little lower” than last year (they, however, were records), but at the same time part of the fact that profit before of taxes will be “significantly higher” at the end of the year than in 2021-m.

Hugo Boss: the best 2nd quarter in the company’s history

Now let’s move on to another large group of German companies that have stopped doing business in Russia – retailers. Fashion clothing maker Hugo Boss closed more than two dozen branded stores in Russia in early March and halted online sales. And shortly thereafter it achieved “significant acceleration in revenue and profit growth,” especially in Europe and the Americas, according to an Aug. 3 press release.

He highlights that the period from April to June 2022 was “the strongest 2nd quarter in the history of Hugo Boss”, with revenue up 40% to €878 million and operating profit (EBIT) more than doubling to €100 million. . This “enabled the company to more than offset the €15 million write-offs in connection with a chain of stores in Russia,” the company said in a statement.

Fashion manufacturer Hugo Boss bets on the “renovation and rejuvenation” of its range

Its management attributes the success achieved to the “updating and rejuvenation” of the range, started last year, as well as to the successful global marketing campaigns. After a “highly successful quarter”, Hugo Boss headquarters has raised its annual forecast to 2022, with revenue expected to increase by between 20% and 25% to a record €3.3-3.5 billion, while operating profit will increase by €25 billion. .% up to 35% up to approximately 300 million euros.

Puma has record, Adidas has big problems in the Chinese market

And for sportswear and footwear maker Puma, which closed more than 90 branded stores in Russia in March, the last quarter was generally the best three-month period in the company’s history. Quarterly revenue increased in one quarter to exceed €2 billion for the first time, while net income jumped over 73% to €84.3 million. Things were especially successful in America and Europe, while in China financial indicators worsened due to lockdowns.

But still not as strong as Adidas, longtime competitor to Puma from the same Bavarian town of Herzogenaurach. The traditional three-stripe company has always bet more on the Chinese market than Puma and has therefore suffered more from spring lockdowns and loud calls from China to boycott Western products.

A company store closed by Adidas in one of Moscow’s shopping malls

Therefore, Adidas, which was very popular in Russia and sponsored the Russian football team before the war in Ukraine, on August 4, when presenting its quarterly report, slightly lowered its financial growth forecast for the current year. But precisely because of China, where revenue fell by 35%, and not because of the abandonment of the Russian market. According to its own data, the company lost over 100 million euros during the quarter – with global quarterly revenue of 5.6 billion euros (+10% compared to Q2 2021 results).

Siemens: Everything would be fine if it weren’t for Siemens Energy

And is Siemens’ first quarterly loss of 1.53 billion euros in 12 years related to the reduction of business in Russia? No, not connected. The downside comes when the German tech giant had to write off €2.7 billion in the last quarter due to the depreciation of its stake in the Siemens Energy subsidiary. It has been frequently mentioned recently in connection with the turbine for the Nord Stream 1 pipeline, which was repaired in Canada, after which Gazprom does not want to take it out of Germany.

However, this story is not to blame for the fact that Siemens Energy’s share price has halved in the last year and a half. The reason for this is the serious and now chronic management and structural problems of the Siemens Energy subsidiary, the German-Spanish joint venture for the production of Siemens Gamesa wind turbines.

In May 2022, Siemens unveiled the first Mireo Plus H pre-production hydrogen train at the Krefeld plant.

If we leave out the problems of one of Siemens’ daughters, then Siemens’ own parent company, which previously, in particular, supplied high-speed Sapsan trains to Russia, is doing very well, according to its management. According to the quarterly report published on August 11, revenue increased by 4% to 17.9 billion euros, the volume of orders received in three months was 22 billion euros, after which the order backlog received at all the world reached a record level of 99 billion euros.

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