Reply #52: European industry looks on the bright side of life

[Ghost Dog]

(FT) Forget for one moment all the gloom, from US subprime writedowns to an unprecedented alleged banking fraud, in the financial sector. Consider, instead, all the encouraging if not altogether bullish comments that have been dished out this week by some of Europe's biggest manufacturing companies.

On Monday, BASF's boss, Jürgen Hambrecht, told the Financial Times that he was sleeping very well at night and that business in general was doing fine. Sure, the German chemicals conglomerate would probably be selling less paint to US consumers than usual, but it was not going to be that bad either.

Mr Hambrecht's confidence has been echoed all week by other European multinationals, which have been reporting either stronger-than-expected or perfectly respectable financial results for 2007. Most also appear confident they will be able to cope with the financial turbulence this year and continue to grow - even if it is not going to be easy.

Take L'Oréal. Few seem to have noticed that the shampoo and cosmetics group has reported double-digit profits growth for the 23rd consecutive year. If North American and European women are not slapping on quite as much mascara and foundation as they have in the past, their Chinese, Indian and Russian sisters are more than making up for them. Cosmetic sales to China rose 30 per cent last year; with even higher growth in India (35 per cent) and Russia (38 per cent).

Car companies such Peugeot-Citroën and Renault also seem to be weathering the storm and managing to increase their profit margins in these difficult times. The US car market is lousy and Europe is pretty weak, as Carlos Ghosn, Renault's boss, conceded on Thursday. But he also remained confident that emerging countries - such as Russia where Renault is finalising an alliance with Avtovaz - would pick up the slack.

Other members of the European Who's Who of manufacturing have been trotting out good numbers and showing relative confidence for the future: ArcelorMittal, Diageo, Lafarge, Total and so on. All this is a striking contrast with what is happening in the financial sector. In some cases, governments are stepping in to bail out troubled banks (directly in Germany, by the back door in the UK). In other cases, sovereign wealth funds from emerging countries are coming to the rescue.

/... http://news.yahoo.com/s/ft/20080214/bs_ft/fto021420081749578387;_ylt=AiNGAb5kAubN6J6DeYi2Gsr2ULEF

... http://www.youtube.com/watch?v=jHPOzQzk9Qo