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Germany to order large companies to include women on executive boards

German listed companies must include women on their executive boards as part of a landmark bill agreed by the country's coalition government Wednesday after voluntary efforts failed to close a gender gap.

Germany to order large companies to include women on executive boards
Belen Garijo, set to take over as Merck's CEO in May. Photo: DPA

Listed companies with four executives or more must appoint at least one woman to their boards, according to a draft law to be voted on by parliament.

The law sends “a very strong signal”, Justice Minister Christine Lambrecht said, urging corporations to “take advantage of the opportunity presented by highly qualified women”.

The law sends “a very strong signal”, Justice Minister Christine Lambrecht told reporters, urging corporations to “take advantage of the opportunity presented by highly qualified women”.

READ ALSO: How much do women in Germany earn compared to men?

“We can show that Germany is on the way to becoming a modern society fit for the future,” Family Affairs Minister Franziska Giffey said.

One step closer

With the new legislation, Germany is “one step closer” to the goal of equal opportunities and equal rights, Finance Minister Olaf Scholz said.

The women's quota is “overdue” and the time for voluntary measures is
“finally over”, he added.

Europe's largest economy fares relatively poorly in terms of representation of women in senior positions, particularly striking in a country led by the world's longest-serving elected female leader.

Chancellor Angela Merkel, in power since 2005, has spoken out at
foot-dragging by business leaders, against the resistance of some in her own conservative bloc.

The boss of her CDU party's economic council, Astrid Hamker, last year
called the idea of a quota system “completely counterproductive”, and said diversity should be “not according to gender, but rather competence”.

Yet evidence suggests companies with women at the top outperform the
average of Germany's blue-chip DAX companies by more than two percent, according to a report by the management firm Boston Consulting Group (BCG).

Included in the new legislation, companies in which the government holds a majority stake — such as the rail group Deutsche Bahn — will have stricter rules, with at least one woman on management boards with more than two members, and a 30-percent quota to come in the future.

'Snail's pace'

German research institute DIW said it welcomed the women's quota but noted that female participation in management boards continues to move at a “snail's pace”.

The new regulations cover around 70 companies, of which about 30 have no women on their boards.

They would raise Germany to 18th from 24th place by 2022 in representation on company boards among EU nations, the BCG said.

Just 12.8 percent of management board members at Germany's 30 largest listed companies are women, according to the AllBright Foundation, which works to promote boardroom diversity.

By comparison, women account for 28.6 percent of top roles in the United States, 24.5 percent in Britain and 22.2 percent in France, AllBright said.

Female representation has fallen in Germany during the coronavirus
pandemic, with 11 DAX companies still led by all-male board executives,
AllBright said in October.

Women also earn an average 20 percent less than men in Germany, compared with 14 percent less across the European Union.

No DAX company is currently led by a woman, although pharmaceutical firm Merck is set to break the glass ceiling when Belen Garijo takes over in May.

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BUSINESS

Volvo profits plummet on rising material costs

Swedish automaker Volvo Cars said on Thursday that rising raw material costs and inflation had driven down profits in the third quarter.

Volvo profits plummet on rising material costs

The group posted a net profit of 665 million kronor ($61 million) in the July-September period, a drop of 71 percent compared to 2.3 billion kronor during the same quarter a year ago.

The figure was far below analysts’ forecasts of between 2.15 and 2.19 billion kronor, according to Bloomberg and Factset.

The company’s share price was down by around seven percent in midday trading on the Stockholm stock exchange.

Chief executive Jim Rowan said the company was hit hard by rising raw material prices, record inflation, higher interest rates and the war in Ukraine.

“The macroeconomic uncertainties around the world weighed on our third quarter performance”, he said in a statement.

Revenue meanwhile rolled in slightly higher than analysts’ expectations, rising by 30 percent to 79.3 billion kronor, boosted by “robust” demand for the company’s SUVs.

Analysts had predicted third quarter sales of between 78.1 and 78.7 billion kronor.

Retail sales declined however in some markets, including its main markets Europe and the United States, where the number of vehicles sold fell by 14 and 32 percent respectively.

The carmaker insisted however that its order book remained solid.

Volvo Cars, which aims to have an all-electric fleet by 2030, also reported “sharp pick-up” for its fully-electric vehicles at the end of the quarter, especially in September.

It said sales of fully-electric cars soared by 87 percent in the third quarter, accounting for seven percent of its total sales during the period.

The company, a subsidiary of Chinese group Geely, said manufacturing output continued to improve in the third quarter, but “unforeseen factors” such as power outages and Covid-19 related lockdowns in China “slowed down the pace of normalisation”.

It expected production, wholesale and retail growth in the second half of the year.

“For the full year 2022, we expect slightly lower wholesale volumes than 2021, assuming no further major supply chain disturbances. Wholesale and retail volumes will be on similar levels”, it said.

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