Writing in the Frankfurter Neue Presse (FNP), 2 February, Panagiotis Koutoumanos said that Messe Frankfurt was “fighting for survival”, as the trade fair site continued to suffer due to Covid restrictions breeding uncertainty for organisers and exhibitors.
In 2020, the effects of coronavirus were calculated to have cost the business €122m, with the final loss expected to be even higher in the full 2021 accounts.
“We hope that we can avert the figure of €200m,” CEO, Wolfgang Marzin has said. The company has seen around 200 events (two-thirds of all those planned) cancelled in the Covid period.
The situation is a worrying one for shareholders - the City of Frankfurt (60% shareholder) and the State of Hesse (40%), with FNP's article raising the possibility that bankruptcy could even be a threat to the business.
Last February shareholders loaned the company €150m and FNP noted a new capital grant of €250m was in the pipeline, so important is the trade fair in terms of the local economy and employment.
The possibility of further state aid would seem to get around EU law which allows corporate capital contributions by the public sector if it is clear that the aim is not to continue unprofitable activities. The Messe has of course been a profitable business model in the past.
Events at Messe Frankfurt generate an estimated €3.6bn in Germany every year and secure 33,260 jobs, while generating tax revenue of €657m, according to one leading German economic research institute.
It seems also that the €600m federal Economic Stabilisation Fund (WSF), which had been made theoretically available to German trade fair operators, with organisers eligible to be reimbursed up to 80% of initial costs up to a maximum of eight million euros per trade fair, does not really pay out, because long before the federal authorities decide on Covid regulations – usually at short notice – exhibitors have usually already pulled out, meaning it is not the state that is technically ‘cancelling’ the event and therefore the fund is not available.
FNP said Messe Frankfurt had submitted an application for reimbursement for eight trade fairs that have been cancelled during the pandemic and had received no pay outs to date.
Contacted by EW, Messe Frankfurt provided a statement saying the FNP article had presented "the current status of the ongoing talks in a factually correct and objective manner, even if the impression could be created that Messe Frankfurt's existence would be directly threatened. This is not the case."
Messe Frankfurt said auditors had attested the annual financial statements of the past year and made "a positive forecast for the future", although agreeing that depended on the shareholders pledging binding support in the form of further equity capital.
"Accordingly, the risk of imminent insolvency only exists if there were no change in the current situation, in which it would not be possible to continue staging trade fairs and the shareholders would not support us again. In order to avoid this, Messe Frankfurt and the shareholders are in communication," the Messe Frankfurt statement said, adding that €250m in loans from the shareholders have made available in 2021. The Messe added that "a positive statement" had also been made as to the form and maximum amount the shareholders are considering to further stabilise Messe Frankfurt in 2022." The Messe confirmed "inclusion of private investors is not an option".
The Messe also pointed out that the responsible parliaments of the city and state must still give their approval to any solution. "Due to the broad coordination required and the fact that such an extensive capital measure is not an everyday occurrence, numerous discussions between the management and the various shareholder representatives have been agreed for the coming weeks," the statement said.
"For our part, the time required for this has already been taken into account in the ongoing discussions with our shareholders, so that the funds can be made available to the company sufficiently early."
