Record Profit Margins – follow up German companies

Following up on Tim’s comment, I had a quick look at German HDAX companies. Unfortunately, only a subset of 2011 figures are currrently available.

What I did was the following: For those companeis where 2011 net margins were available, I calculated the 10 year average net margin. I then subtracted this from the 2011 margins to see if 2011 was better or worse than the average.

name avg 10 Y margin 2011 NI margin Current vs. average
FUCHS PETROLUB AG -PFD 6.0% -0.3% -6.3%
PUMA SE 10.6% 7.6% -3.0%
BEIERSDORF AG 7.3% 4.4% -2.9%
MUENCHENER RUECKVER AG-REG 3.9% 1.2% -2.8%
SALZGITTER AG 4.7% 2.4% -2.3%
KRONES AG 3.2% 1.8% -1.5%
RWE AG 5.1% 3.6% -1.4%
HEIDELBERGCEMENT AG 4.5% 3.2% -1.3%
QIAGEN N.V. 15.4% 14.2% -1.2%
HOCHTIEF AG 0.5% -0.7% -1.2%
DEUTSCHE LUFTHANSA-REG 2.1% 0.9% -1.2%
ADIDAS AG 4.8% 5.0% 0.2%
HENKEL AG & CO KGAA VORZUG 7.6% 8.0% 0.4%
AURUBIS AG 2.1% 2.6% 0.5%
BECHTLE AG 2.6% 3.1% 0.5%
BILFINGER BERGER SE 1.9% 2.7% 0.8%
DEUTSCHE TELEKOM AG-REG -1.9% -1.0% 0.8%
COMMERZBANK AG -0.5% 0.7% 1.1%
GILDEMEISTER AG 1.3% 2.7% 1.4%
CONTINENTAL AG 2.3% 4.1% 1.8%
CARL ZEISS MEDITEC AG – BR 6.7% 8.9% 2.1%
BAYER AG-REG 4.5% 6.8% 2.3%
SGL CARBON SE 2.5% 4.8% 2.3%
LEONI AG 1.8% 4.2% 2.4%
SOFTWARE AG 13.6% 16.2% 2.6%
BAYERISCHE MOTOREN WERKE AG 4.4% 7.1% 2.7%
FRAPORT AG 7.5% 10.1% 2.7%
DAIMLER AG-REGISTERED SHARES 2.5% 5.3% 2.8%
BASF SE 5.5% 8.4% 2.9%
DUERR AG -0.5% 3.2% 3.7%
SIEMENS AG-REG 4.5% 8.6% 4.1%
ADVA AG OPTICAL NETWORKING 1.3% 5.5% 4.2%
PSI AG -0.2% 4.3% 4.5%
DEUTZ AG -0.1% 4.5% 4.6%
HUGO BOSS-PFD 8.9% 13.8% 4.9%
K+S AG-REG 6.9% 12.8% 5.9%
VOLKSWAGEN AG-PFD 3.2% 9.7% 6.4%
SAP AG 16.7% 24.1% 7.5%
DRILLISCH AG 2.0% 12.0% 10.0%
AIXTRON SE 3.1% 13.2% 10.1%
MORPHOSYS AG -7.6% 7.9% 15.5%
DIALOG SEMICONDUCTOR PLC -6.1% 10.7% 16.8%

So from the 42 companies with relevant data, only 11 are below average, whereas 31 are above the 10 year average net income margin in 2011.

On average, 2011 profit Margins were 6.4% of sales for those companies against 3.9% for the last 10 years. If we would assume constant P/Es, than a return to “normal” would mean a drop in earnings on average by -39% or implcitly an over-valuation of those companies of 39% (keeping everything else constant).

I will try to update as sson as more results are published, but if one believes in reversion to the mean, some of those comapneis should be avoided.

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