Study,
Forecast study by Kirchhoff Consult and DSW: increasing number of DAX companies with low transparency
- Number of companies with low forecast quality rises to three: Deutsche Bank, Commerzbank and Merck
- Once again, 18 of the DAX 40 companies achieve a high level of forecast transparency
- Best practice: Deutsche Telekom and Fresenius with particularly transparent forecast
- Transparency of non-financial performance indicators stagnates
Hamburg, 03 July 2024 – The Hamburg-based communications and strategy consultancy for financial communications and ESG Kirchhoff Consult, together with the Deutsche Schutzvereinigung für Wertpapierbesitz e.V. (DSW), has once again examined the transparency of the forecast reports of DAX 40 companies. The study has been conducted regularly since 2005 and analyses the qualitative and quantitative information on the future business development of the companies. The current survey is based on the forecast reports of the 2023 annual reports. Airbus and Qiagen did not submit a forecast report and were therefore not included in the study.
Compared to the previous year, the forecast transparency is stable overall. This year's analysis offers a particularly high level of comparability with the previous year, as there were no changes in the composition of the DAX 40. The data collection methodology also remained the same: the forecast reports were categorised into the transparency categories "high", "medium" and "low" on the basis of 15 criteria. With 18 companies, just under half of the DAX 40 companies achieved the "high" category. These include the best-practice reports of Deutsche Telekom and the healthcare provider Fresenius. In contrast, the forecast transparency of Deutsche Bank, Commerzbank and Merck is categorised as low. This increases the number of companies in the lowest transparency category from one to three.
Jens Hecht, CFA, Managing Partner at Kirchhoff Consult: “The future is traded on the stock market. Nevertheless, no investor expects every forecast to materialise. However, they do expect companies to handle their forecasts carefully and transparently. A correspondingly good management of expectations creates confidence and can strengthen the share price. It is therefore surprising that more companies have fallen into the low transparency category this year than in previous years.“
Group earnings are quantified most frequently
The most important criterion in the survey is the forecast of future group earnings. The clear majority of 33 companies quantify the group earnings. Compared to the previous year, this is an increase of two companies. The earnings at segment level are quantified by 25 companies. With regard to a medium-term forecast beyond a period of one year, however, the trend is negative. With a decrease of two companies, only three corporations publish a quantified medium-term forecast.
Extensive reports do not always mean a high level of transparency
As in previous years, this year's survey shows that a higher number of pages does not necessarily go hand in hand with better forecast transparency. The forecast reports in the lowest transparency category are actually the longest with an average of six pages. The page average in the "high" category is 5.2 pages. In addition, companies such as Bayer and RWE (2 pages each) as well as Covestro, DHL Group and Siemens (3 pages each) show that a high level of transparency can also be achieved with short reports.
Stagnation in forecasts for non-financial performance indicators
The importance of non-financial performance indicators is constantly increasing. To date, however, less than a third of the DAX 40 companies analysed publish information in this regard in their forecast reports. In a year-on-year comparison, there was a decrease from 13 to 12 companies at a qualitative level. In contrast, the number of companies with quantitative forecasts has increased to 8 (previous year: 6).
Marc Tüngler, Managing Director of Deutsche Schutzvereinigung für Wertpapierbesitz e.V. (DSW): “The quality of forecasts often reflects the good or poor governance of a company. It becomes particularly critical and sometimes fatal from an investor's point of view when adjusted figures are used. The fact that the quality of forecasts has now suffered in the area of non-financial key figures is both remarkable and alarming in view of the implementation of the CSRD and CS3D.”
Vincent Furnari, Managing Partner at Kirchhoff Consult: „“Through the Corporate Social Reporting Directive (CSRD), generally applicable reporting standards for sustainability reporting have now been introduced by means of the European Sustainability Reporting Standards (ESRS). Key performance indicators for sustainability targets have already been defined in the current sustainability reports. Unfortunately, such non-financial performance indicators are only included in the forecast report of less than a third of DAX 40 companies. Yet these are becoming increasingly important on the capital market. As a result, there is often no link between the financial report and the sustainability report. We assume that this will improve significantly with the mandatory integration of the sustainability report into the management report.”
This year's forecast report study is available for download here.
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With around 70 employees, Kirchhoff Consult is a leading communications and strategy consultancy for financial communications and ESG in German-speaking countries. For more than 30 years, Kirchhoff has been advising clients on all aspects of financial and corporate communications, annual and sustainability reports, IPOs, investor relations and ESG and sustainability communications. 'Designing Sustainable Value': Kirchhoff combines content expertise with excellent design to create sustainable value.
Kirchhoff Consult is a member of TEAM FARNER, a European alliance of partner-led agencies. The common goal: to build the European market leader for integrated communications consulting.
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Janina Schumann
Head of Corporate Communications
janina.schumann@kirchhoff.de
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