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Mannesman doubles profits
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February 19, 1999: 8:27 a.m. ET
German engineering and telecom giant earned 630 million euros in 1998
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LONDON (CNNfn) - German engineering and telecommunications giant Mannesmann doubled net profits last year, driven by strong growth in telecommunications as well as the disposal of several loss-making businesses.
Net profits at Mannesmann surged 102 percent to 630 euros in 1998, while pretax profits leapt 57 percent to 1.4 billion euros.
The Dusseldorf-based company, which did not break out its profits, said telecommunications "strongly increased its profits again in 1998," driven by its position as the leading mobile phone operator in Germany through its Mobilfunk subsidiary.
The numbers were in line with analysts' expectations. Peter Metzger, at Salomon Smith Barney in Frankfurt, had forecast net profits of 626 million euros.
Mannesmann's (FMMN) shares were up just under 1 percent in Frankfurt at 118.55 euros at midday. The stock was the best performing share among German blue chips last year, gaining a massive 110 percent versus a 16 percent rise for the Dax.
Analysts say the massive outperformance is due to management's decision to divest its problem businesses and increase its focus on telecoms. "In terms of strategy, Mannesmann is one of the most advanced companies in Germany," said Metzger.
Earlier this month the company completed a $1.8 billion deal to increase its holding in Italian cellular network operator Omnitel, by buying a majority stake in US-based Cellular Communications International (CCIL).
Mobilfunk's sales rose 30 percent in 1998 to 3.7 billion euros as it doubled its subscriber base from the year before. By the end of December, the company had 2.4 million customers.
Start-up costs in its fixed-line start-up joint venture Arcor fell, as it reported a 52 percent increase in sales to 939 million euros. Its remaining fixed-line operations in Austria, France and Italy are still losing money.
Most of the 29 percent boost to sales in the automotive division to 5.5 billion euros was a result of the acquisition of Philips Car Systems last year. Excluding the new business and the consolidation of the division's Indian subsidiary, sales rose 14 percent.
Profits in the engineering unit were helped by the disposal of a number of loss-making businesses, but sales fell 20 percent, to 6.6 billion euros. 
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Mannesmann
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