Dusseldorf Germany’s companies want to distribute nearly 44 billion euros in dividends for their shareholders this year and thus share in the success of the past financial year. At the same time, like Adidas, BASF, Daimler and Co., they send their employees on short-time work – so they have their employees paid by the taxpayer.
“Short-time work allowance is state aid. Whoever relies on state aid cannot simultaneously distribute profits to shareholders ”, Carsten Schneider tweeted, parliamentary director of the SPD parliamentary group after the first requests for short-time work were received. The grand coalition politician said: “This is the ugly face of capitalism. In these cases, I am therefore in favor of a general dividend freeze. “
A few companies delivered to stay in Schneider’s perspective before resorting to state funds. Lufthansa cut its dividend before sending its staff on short-time work and negotiating state aid with the federal government. The sporting goods manufacturer Puma, the clothing chain Hugo Boss and the engine manufacturer MTU cut their dividends.
Adidas followed after Easter to secure a loan commitment of 2.4 billion euros. The state aid of the largest German sporting goods manufacturer remains controversial despite the abruptly cut dividend because Adidas has bought back its own shares worth two billion euros since 2018, according to Handelsblatt calculations. The money that has flowed out of the company is now missing.
Companies that cut their dividends due to the economic consequences of the corona pandemic remain the exception. Of the 160 corporations that are listed in the four most important stock market indices, Dax, MDax, SDax and TecDax, three out of four have so far maintained their distributions. The 30 Dax groups alone should transfer around 35 billion euros to their shareholders this year.
“There is currently no other decision on the dividend proposal for 2019 than that published in the 2019 BASF Report,” said a spokesman for Europe’s largest chemical manufacturer on request. As already announced after the presentation of the annual report for 2019, BASF plans to increase its dividend from EUR 3.20 to EUR 3.30 per share. The group is thus passing three billion euros on to its shareholders.
At the same time, BASF sent its employees at the Lemförde, Hiltrup bei Münster and Würzburg locations on a short-time basis. In Schwarzheide, 213 of the approximately 2000 employees are affected by short-time work.
VW indicates low payout ratio
Despite the crisis, industrial groups in particular are sticking to their distributions. The supplier Continental wants to distribute four euros per share, but has sent 30,000 short-time employees – every second employee in Germany. BMW registered short-time work for almost 20,000 employees in the Dingolfing, Munich, Regensburg and Leipzig plants. The Munich company distributes 2.50 euros per share and thus 1.6 billion euros. “There is no intention to change anything in these plans,” said a company spokesman.
Competitor Volkswagen argues similarly: “From today’s perspective, we are sticking to the communicated dividend proposal of EUR 6.50 per ordinary share and EUR 6.56 per preference share.” This would mean that the largest car maker would distribute almost EUR 3.3 billion.
VW refers to the comparatively low payout ratio. Measured in terms of net profit, it increases from 20.4 to 24.5 percent. “This means that we are still below our strategic target for a payout ratio of more than 30 percent.” According to Handelsblatt calculations, rates between 40 and 50 percent are common internationally.
Despite its planned billion-dollar distribution, Volkswagen sent around 80,000 employees in Germany on short-time work due to delivery problems and slump in sales. Production should not start again until the end of April. According to calculations by industry expert Ferdinand Dudenhöffer, every day a loss of sales means a loss of 360 million euros.
