Positive trend in forecast report transparency of DAX 40 Companies
- 18 DAX 40 companies with high transparency of forecast report.
- Best practice: Deutsche Telekom and BASF with particularly transparent forecast report.
- Only Deutsche Bank in the "low transparency" category.
- DAX 40 entrants Commerzbank, Porsche AG, Rheinmetall and Siemens Energy with high transparency of forecast report.
Hamburg, 20 July 2023 – The Hamburg-based financial communications consultancy, Kirchhoff Consult AG, and the Deutsche Schutzvereinigung für Wertpapierbesitz e.V. (DSW), publish the latest edition of their annual outlook report study. The study analyzed the qualitative and quantitative information on the future business development of the DAX 40 companies. The subject of the study are the outlook reports in the annual reports for the financial year 2022.
Overall, the study reveals a positive trend in the transparency of forecast reports. The methodology of the study has not changed compared to previous years. 15 criteria were used to assess the transparency of forecasts. Based on these criteria, a classification was made into the three categories "high transparency," "medium transparency" and "low transparency," with 18 companies achieving the highest transparency level this year. The two best practice forecast reports came once again from Deutsche Telekom and this year from BASF. The DAX entrants Commerzbank, Porsche AG, Rheinmetall and Siemens Energy made it into the highest category newly. Daimler Truck, on the other hand, slipped down into the "medium transparency" category, while Deutsche Bank dropped into the "low transparency" category. In the absence of a forecast report for the Group, Airbus and Qiagen fell out of the rankings.
"Investor trust in a company is highly affected by expectation management. Transparent forecasts are one of the most important tools for this. It is therefore very pleasing that many companies are confident in making quantitative forecasts even in economically challenging times. They are aware of the importance of forecasts for the capital market. The challenge will now be to communicate possible deviations in an understandable way," comments Jens Hecht, Managing Partner of Kirchhoff Consult AG.
Earnings forecasts quantified by almost all companies
The most important criterion in the study is forecasting the future earnings situation. 37 of the 38 companies analyzed quantified their earnings forecast at Group level and/or segment level in their 2022 annual reports. Deutsche Bank is the only company to forecast neither quantified Group nor segment earnings for the current fiscal year 2023, but only a medium-term outlook for fiscal 2025, making it the only company in the "low transparency" category. Overall, the transparency of the DAX 40 companies in their earnings forecasts still remains at the good level of the previous year. However, there is a negative trend in the medium-term earnings forecast beyond the period of one year. Only five companies have published a quantitative forecast for this criterion.
„There are still many imponderables, which makes a company's very own outlook on the future all the more valuable for investors. Investors do not expect a precision landing, but rather an orientation and the presentation of basic assumptions. A valid way is also to present a forecast in different scenarios. This combines what is feasible and what is ambitious in a clear way," emphasizes Marc Tüngler, Chief Executive Officer of DSW.
Even short forecast reports with high tranparency
The reports that rank in the highest transparency category have an average length of 5.7 pages, while reports in the middle transparency category are only 3.5 pages long. The two best practice forecast reports from Deutsche Telekom (11 pages) and BASF (6 pages) are also among the longest. RWE (2 pages), Bayer, Deutsche Post DHL and Siemens (3 pages each) show that a transparent forecast report does not necessarily have to be long. These reports are among the highest level of transparency.
Non-financial performance indicators are rarely quantified
The importance of non-financial performance indicators for companies is increasing steadily. They are therefore part of the transparency criteria for forecast reports. The DAX 40 companies still have a lot of potential in this criterion. Only six companies provide a quantitative forecast for non-financial performance indicators, one less than in the previous year. Seven other companies make qualitative statements.
Vincent Furnari, Managing Partner of Kirchhoff Consult AG, says: "The importance of ESG (Environment, Social, Governance) factors in the capital market is continuously increasing. According to our assessment, a trend reversal is not to be expected. For more and more investors, sustainability factors are a compelling criterion for an investment decision. This is reflected in companies' annual reports. ESG factors are also slowly making their way into forecast reports. Nevertheless, only one-third of DAX 40 companies publish sustainability indicators as performance indicators in their forecast reports. There is still further room for improvement here."
This year's forecast report study is available for download here.
ÜBER KIRCHHOFF CONSULT AG
Kirchhoff Consult ist mit rund 60 Mitarbeitenden eine führende Kommunikations- und Strategieberatung für Finanzkommunikation und ESG im deutschsprachigen Raum. Seit über 25 Jahren berät Kirchhoff Kunden in allen Fragen der Finanz- und Unternehmenskommunikation, bei Geschäfts- und Nachhaltigkeitsberichten, beim Börsengang, im Bereich der Investor Relations sowie der ESG- und Nachhaltigkeitskommunikation. ‘Designing Sustainable Value’: Kirchhoff verbindet inhaltliche Kompetenz mit exzellentem Design und schafft damit nachhaltig Werte.
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