Loewe stands with its back to the wall

Loewe stands with its back to the wall

Confidence at loewe lasted just one month. At the end of march, the new boss of the long-established TV equipment manufacturer was still hoping for a small increase in sales this year. But that will probably come to nothing. On thursday evening, matthias harsch had to admit surprisingly poor quarterly figures and, above all, had to announce in a mandatory release that the losses will have already eaten up half of the share capital by the end of may. The group writes that earnings will now also fall in 2013, and the loss will be greater. And the air is getting darker for loewe.

The notification is a legal obligation, which initially has no direct consequences but the obligation to convene a general meeting. But it reveals how serious the situation is for the group, which has been in crisis for years. Investors reacted with shock: on friday, the price of loewe shares, which were not particularly shiny anyway, plummeted at times by a third to under 2 euros. Matthias harsch must now quickly raise fresh capital. He will consider everything from raising the company's capital to finding investors to buy into loewe, he says.

But even that was not to be an easy road, because both variants require donors who believe in the future of loewe. Not an easy task given the state of the consumer electronics market. There is almost overwhelming competition from asia, which produces larger quantities at ever lower prices. Samsung and panasonic are also on the radar in germany. In this country, only loewe and metz remain from their former glory. Brands such as normende, saba and grundig have disappeared or been sold to foreign mass producers.

In addition to fierce competition, loewe has also made mistakes. For too long, the upper franconians remained loyal to the tube TV and were late to jump on the trend toward flat LCD sets. Loewe has pinned all its hopes on a premium strategy: modern technology and, above all, elegant design are to justify higher prices. But the niche strategy, which is working in the automotive industry at BMW and audi, for example, is not without risk. Customers seldom voluntarily pay more for a TV set than necessary. A television has long ceased to be a status symbol, and rivals have also stepped up their game in terms of design. Even the push into audio technology as a new business area did not bring a turnaround.

Market for LCD tvs shrinks by 19 percent
But loewe remains committed to its premium business model, will continue to invest in new products and invest heavily in advertising. "All our product and communication measures are designed to be sustainable and to strengthen the premium loewe brand, but they will only take full effect in the second half of the year", declared harshly. The remaining german manufacturers cannot take on the tough competition on the price side anyway. "If you go for price wars, you've already lost, because there's always someone in asia who's cheaper", said metz press spokesman thomas hey last year.

The crisis in many european countries makes business even more difficult, and the growth boom in TV ratings is probably over for the time being. Many german living rooms already have modern flat-screen televisions. In the first three months of this year, loewe writes, the market for lcd tvs in this country shrank by 19 percent in the first three months. "In the case of loewe's most important retail partners, the qualified specialist retailers, the decline was significantly higher at 37 percent."

In order to control its own costs, loewe recently laid off one in five of its nearly 1,000 employees, with the others foregoing up to 10 percent of their salaries. IG metall was already not entirely sure about this drastic program when it was agreed: "I admit that the principle of hope plays a major role here, said jurgen apfel from IG metall at the time.

Apple has been mentioned twice in media reports as a possible savior – the iphone company is reportedly working on an entry into the TV market. But the speculations about a takeover offer were always denied. And the coarse shareholder sharp, who holds just under 30 percent of loewe, is fighting for survival himself.

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