Booming Asian demand cause new challenge
With the rapid development of Asian economy, Asia becomes the largest economic organization in the world,and it contributes the world economy, propels it forward.
Booming Asian demand and a weaker euro are propelling Germany’s export-driven economy, driving up quarterly profits at some of the country’s biggest companies—from engineering giant Siemens AG to auto maker Volkswagen AG—but those factors may provide less of an earnings boost later this year.
Siemens, whose broad product range and global reach makes it a bellwether for global manufacturing and the German economy, said Thursday its profit for the quarter ended June 30 rose 9% to €1.44 billion ($1.87 billion) as sales rose 4% to €19.2 billion.
Chef Executive Peter Löscher cited growth in all businesses, which range from wind turbines to light bulbs to medical equipment. The across-the-board improvement prompted Siemens to raise its full-year operating profit forecast to “clearly” higher than last year’s €7.5 billion; it earlier expected €6 billion to €6.5 billion.
Volkswagen, whose brands include Audi, Skoda and Bentley, reported its largest quarterly profit since 2008 as profit quadrupled to €1.25 billion from €283 million a year earlier and revenue climbed 22% to €33.2 billion. Much of the profit and sales growth at Europe’s largest auto maker by sales came from China, where car deliveries soared 46% in the first half of the year.
At BASF SE, the world’s largest chemical maker by revenue, second-quarter profit tripled to €1.18 billion from €343 million on a 30% increase in sales to €16.21 billion.
The better-than-expected results, which followed a sharply higher profit forecast by Daimler AG this week, underscored the growing strength of Germany’s economic recovery and how much it owes to China and the weaker euro.
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Germany Regains Jobs Lost in Recession BASF’s sales in the Asian-Pacific region rose 55% in local-currency terms and 60% when translated into euros, the company said. Siemens reported a 35% increase in new orders from China and a 51% jump orders from the U.S.
”Such order growth last occurred in 2008,” Siemens’s Mr. Löscher said of the company’s total order intake.
Economists pointed to a further decline in German unemployment as another sign of business confidence in a sustainable economic upswing. The government reported Thursday that Germany’s jobless rate fell to a seasonally adjusted 7.6% in July from 7.7% in June.
Still, analysts warn that German economic growth is likely to slow in the second half of the year, and that German exporters may find their dependence on China and the U.S. beginning to work against them if growth in those regions slows as well, as some analysts predict. The euro’s nearly 8% rise against the U.S. dollar in July, after hitting four-year lows in recent months, also is likely to make German and other euro-zone products costlier abroad than they were in the second quarter.
As euro-zone governments grapple with debt problems, further budget cuts across Europe also could crimp still-modest demand closer to home.
“It’s not good news if a slowdown in exports occurs just as tighter fiscal policies starting to bite,” said Howard Archer, chief European economist at IHS Global Insight.
Volkswagen, Europe’s largest car maker by sales, has plans to build two additional factories in China to help double its annual production capacity there to three million cars. It said Thursday that it expects full-year sales and operating profit to be “significantly higher” than in 2009. But it added that the robust growth it experienced in the first six months “will not continue undiminished in the second half of the year.
BASF Chief Executive Jürgen Hambrecht said his company still expects a “considerable” improvement in full-year pretax earnings, and that the global economic recovery will continue at a moderate pace. But he added that demand in the second half will likely be tempered as governments seek to cut budget deficits and wind down stimulus programs. Volatile raw-material markets and excess capacities also could affect demand, he cautioned.
Since there are a lot of factors which influence the demand, choose the one suits best.
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