The Share
Capital Market Climate
Since the real estate crisis began in the USA in mid-August 2007, pressure on the global capital markets has been increasing. The crisis has now spread to the global financial markets, and central banks and governments are trying to gain control of the situation by intervening on an unprecedented scale.
The negative impact on interbank lending has been severe and financial institutions around the world are tightening their lending criteria. The capital market expected the crisis to spill over into the real economy in October 2008 and, as a result, has become considerably more volatile.
This market environment also adversely affected stock indices. In the course of financial year 2007/2008, the DAX® fell by 26.4 percent, the MDAX® by as much as 32.65 percent. More massive falls were recorded after the end of the reporting period, with high trading volumes and high volatility. At the time of writing this report, the DAX® had fallen by another 24 percentage points since 1 October 2007, the MDAX® by 28 percentage points.
Development of the Demag Cranes AG Share Price
Against this backdrop, the Demag Cranes AG share price fell overall over the financial year, although it still outperformed its benchmark share indices. It dropped by 14.86 percent from EUR 32.69* on 1 October 2007 to EUR 27.83 on 30 September 2008. At the time of writing this report on 28 November 2008, the share price closed at EUR 16.52.
There was plenty of good news over the course of the financial year, especially the higher than expected growth in revenue and profits, which provided for a number of recoveries throughout the year. Hence the chart shows a sideways movement overall.
At the end of the financial year on 28 September 2007, the Xetra closing share price for Demag Cranes AG was EUR 33.04. Once the achievement of the revised targets for the financial year was confirmed on 24 October 2007, and the already successful measures to improve earnings in the Port Technology segment had been presented to the capital market, the Demag Cranes share price achieved its peak for the year at EUR 39.75 on 31 October 2007.
In November and December 2007, a number of international funds sold some of their Demag Cranes shares and announced that they had fallen below the reporting threshold of three percent. This ongoing selling pressure – which was attributable to international investors turning away from European small caps in general – was partly offset by purchases, notably on the part of German funds. However, these purchases were not able to help the share price recuperate. After the start of trading in the new calendar year, the share price at first continued its downward trend, plunging to an annual low of EUR 21.05 on the “Black Monday”, 21 January 2008.
The excellent business results for the first quarter were received positively by the capital market. Demag Cranes AG found rejuvenated interest in its shares at several roadshows. The share price recovered strongly, reaching EUR 31.71 on 26 February 2008.
The second quarter of the 2007/2008 financial year brought two major events for shareholders of Demag Cranes AG, the first being the Annual General Meeting of Demag Cranes AG at the Dusseldorf Congress Centre on 6 March 2008. All motions from the Company’s administration were passed with a more than 98 percent majority. The next day, the Company paid out a dividend of EUR 1.10 per share – a 10 percent increase on the previous year.
The second major event was the promotion to the selective MDAX® index. In a very difficult capital market climate, the Company’s shares outperformed the benchmark share indices in terms of both market capitalisation and trading volume. This qualified the shares for inclusion in a higher index. Profit-taking and the ex-dividend markdown following the Annual General Meeting caused a drop in the share price to EUR 24.97 by mid-March. The inclusion in the MDAX® had a positive impact thereafter. On 25 March 2008, the share price gained a good 16 percent to EUR 29.01.
On 8 May 2008, Demag Cranes AG reported very strong business performance in the second quarter. As a result, almost all the analysts who cover Demag Cranes AG raised their target prices and fair-value estimates. Initially, the share price continued to climb, closing at EUR 38.70 on 19 May 2008. The subsequent slump in the global capital markets also pulled down Demag Cranes shares. After the resurgence to EUR 38.31, helped along by the good figures for the third quarter and the raising of profit forecasts on 7 August 2008, the share price fell back to EUR 27.83 by the end of the financial year.
