Mannesmann first-half result shows 89% slump

MANNESMANN, the German engineering group, yesterday reported a sharp fall in first-half net profits from DM134m ( pounds 47.6m) to DM15m and warned that it did not expect any recovery in the second half of the year, writes Michael Harrison.

The 89 per cent slump in earnings was blamed on a series of factors including the start-up costs of its mobile telephone business, Mobilfunk, which suffered losses of DM150m, and weak demand in most other divisions, including engineering and plant, steel tubes and trading.

The decline was steeper than analysts had expected and sent Mannesmann shares down 11 per cent to DM238.2, pulling the entire German bourse lower.

In its interim report Mannesmann warned that 1992 would be a difficult year for capital goods, saying it did not expect a fundamental change during the remaining months of this year.

Werner Dieter, chairman of the management board, said the first- half results had not been satisfactory. Weak demand in international markets had been compounded by a downturn in domestic orders. 'High costs, global competition with insufficient prices, the continued disappearance of markets and the dollar- mark relation pressured earnings. Mannesmann is no exception.'