Corona CrisisWhy Dax companies now need resilience

Adidas boss Kasper Rorsted: Before the corona crisis, the sporting goods manufacturer seemed to be a healthy companyimago images / Sven Simon

Most Germans previously only knew Wolfgang Grupp as the strange man with the funny chimpanzee from the advertising shortly before the “Tagesschau”. The 78-year-old entrepreneur likes to call himself a “tinker” – a big fish in a very small pond in Burladingen, his home.

The owner and boss of the T-shirt manufacturer Trigema runs a manageable company with 1200 employees, does not need bank loans, only produces in Germany and has been bobbing for years with a turnover of around EUR 100 million. In the Corona crisis, however, Grupp became the media darling by quickly converting his textile business to the production of much-needed face masks. The pack of ten for a proud price of 120 euros. Since then they have been working with an additional shift in the sewing shop, and the business graduate can confidently do without state aid. The store is running.

Most Germans have never known the Danish Kasper Rorsted, but everyone knows his company Adidas. A global corporation with 60,000 employees, 24 billion euros in sales and a high rate of growth – at least until the Corona crisis. Since then, sales have bottomed out, 2,500 stores around the world have closed. And Rorsted became the bogeyman of the nation by deciding not to pay rent for the time being. With a quickly negotiated state loan of 2.4 billion euros and another 600 million euros from the banks, the group is just pulling out of the box. Nothing works like it used to.

Infographic: These are the biggest DAX losers Statista You can find more infographics at Statista

The key to survival

Trigema and Adidas are fueling a debate from two opposite ends, which is likely to change German industry in the coming months and years. It’s about the resilience in a sudden existential crisis like now in the pandemic. And as always in the corporate world, consultants and business economists, investors and managers vault this new general discussion with an expression from the USA: “Corporate Resilience”. The question is exaggerated: shouldn’t Adidas become a little like Trigema? With more equity and a more robust business model, with less complexity and simpler supply relationships, with even more speed thanks to top-down management.

“The ability to absorb shock and get out of the crisis better than the competition will be the key to survival” in the future corporate world, McKinsey experts emphasize in a new study. KPMG’s auditors and advisors predict that the consequences of the Corona crisis would “change for many years the way we consume, how companies work, how they use their capital, how they manage their finances, and how they manage their supply chains to organize”. And Commerzbank boss Martin Zielke expects “effects on all business models”, both at the banks and at the industrial companies.

The new normal brings a good deal of reflection on old virtues of solid corporate management. High equity is suddenly again the key indicator after having become almost secondary in times of cheap money. Even in the first German stock exchange league, the groups play with very different cards when it comes to financial strength.

Before the Corona outbreak, the equity ratio of the Dax 30 values ​​was between a lousy 9.2 percent (Eon) and a comfortable 59.6 percent (Beiersdorf). Lufthansa recently started with only 24 percent – and after the collapse of air traffic was the first Dax group to call for immediate state aid.

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