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As Tensions Spiral in Ukraine, German Auto Parts Maker DMG Sees Threat to Bottom Line

  • Why it matters

    Why it matters

    The machine manufacturer is posting record financial numbers, but concerns about trade with Russia could dampen prospects for the German company formerly known as Gildemeister.

  • Facts

    Facts

    • DMG ‘s machine parts are used for autos and airplane engines.
    • Incoming orders for 2014 at DMG have reached $1.6 billion.
    • In 2012, DMG Mori Seiki opened a factory in northern California plant.
  • Audio

    Audio

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DMG Mori Seiki Photo 4
Source: DMG/Mori Seiki

 

On the stock market, neither a gratifying look back nor an optimistic look ahead count. On Thursday, machine maker DMG Mori Seiki saw its stock drop more than 8 percent to lead the losers’ lists on the MDAX index of German companies.

Markets fell across Europe and the United States on Thursday. For DMG – the company formerly known as Gildemeister – the collapse nearly wiped out gains for all of 2014.

Traders said the drop was triggered by profit-taking and investor fears that sharper European Union sanctions against Russia would hurt the machine tool builder headquartered in Bielefeld, Germany, and its subsidiary in Japan. According to its own reports, DMG Mori Seiki had profits in Russia of nearly €100 million ($134 million), about 5 percent of total company revenue.

“We will probably not reach our growth targets in Russia,” said Rüdiger Kapitza, chief executive officer, in an interview with Handelsblattt.

Revenue from Russia is not expected to drop, however, and new construction of a plant in Ulyanovsk, the birthplace of Lenin, “will continue as scheduled,” Mr. Kapitza said. The €50 million ($67 million) facility is expected to open in mid-2015.

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