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Deutsche Bank Research hosts 25th dbAccess German Corporate Conference

Tim Rokossa
Deutsche Bank Research Management
Stefan Schneider

Deutsche Bank Research last week hosted its annual dbAccess German Corporate Conference for the 25th time. Joining the event this year were 300 participants, 70 of them attendees from top German blue-chip companies, representing around two thirds of the DAX index. There were more than 1,000 meeting requests between corporates and investors at the conference.

Sigmar Gabriel, Germany’s Former Vice-Chancellor and Foreign Minister, and Deutsche Bank Supervisory Board member, opened the first day with a keynote on foreign relations and the conflict in Ukraine.
Closing the event in Frankfurt, Tim Rokossa, Head of German Company Research & Global Coordinator of Automotive Research at Deutsche Bank, highlighted that against the darkening macrooutlook most companies attending were surprisingly optimistic and see themselves well prepared to navigate current macroeconomic challenges.   
Besides supply-chain issues, which are causing some of companies to rethink their low inventory and just-in-time strategies, the three main topics addressed during the conference, either as panel discussions or presentations, were input price inflation, the lockdowns in China and recessionary concerns.

Inflationary pressures and tougher price setting – caution about slowing demand

Companies see input price inflation going way beyond raw materials as they also face higher energy costs as well as upward pressure on labour costs. Some companies said that they had already increased their prices and had been able to pass on a large share of the higher costs to consumers – so far without any detrimental effect on demand. In fact, as pent-up demand remains high, most companies expect further increases in the next few quarters and tougher price setting over time. With this in mind, companies are cautious that demand could slacken eventually due to a slowdown of the economy in general.

China comeback – strong but probably not quick

The economic situation in China is seen as manageable by most companies. While lockdowns have reportedly been making it difficult to operate in China, relief is expected to come during the next few weeks as lockdowns are lifted. Volumes have reportedly already increased significantly in May over April. Also, with many companies having factory workers living on site, they have managed to keep production up despite the lockdowns. The Chinese economy is seen as resilient, and a strong comeback is expected once lockdowns end. As we expect China to continue with its zero-Covid strategy, most companies' expectation of China recovering quickly could be overly optimistic.

Recessionary concerns – still supply rather than demand constraints; outlook beyond 2022 in question

On the general state of the economy, ongoing supply-chain issues mean that the main headache for companies is supply constraints rather than slowing demand, which remains high. Some companies have started responding by shifting their focus to higher-margin products to make up for lower volumes. Most companies said they were confident about the second half of this year. As recessionary concerns mount, though, they remain more cautious beyond 2022. 
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