The Economic Slump: DAX Giants Struggle with Profits and Job Cuts in Germany (2025)
Major businesses rake in significantly lower earnings compared to expectations - Dax Group Experiencing Substantial Dip in Earnings
The German stock market giants are battling the brutal reality of less profit and a sharp increase in job losses. According to an analysis by audit and consulting firm EY, obtained by the German Press Agency, the 40 companies in the DAX leading index are feeling the squeeze of the economic downturn and heightened global competition. In the first quarter of 2025, the combined revenue (excluding banks) of the DAX companies increased by a modest 3.3% to 458.9 billion euros. However, ten companies saw their revenues decrease, including heavyweights such as BMW, Mercedes-Benz, BASF, and Bayer.
Insurance Companies in the Firing Line
Sixteen of the DAX companies reported a decrease in their operating profit compared to the previous year, including all car manufacturers and reinsurers Hannover Re and Munich Re, which faced hefty financial costs due to wildfires around Los Angeles in the beginning of the year. Overall, the operating profit (EBIT) for DAX companies, before interest and taxes, contracted by 8.1% to 44.8 billion euros, after 48.7 billion in the prior year.
Thousands at Risk
The unemployment trend is discouraging, with EY reporting a 1% decrease in employees at the 27 DAX companies that provided figures, amounting to around 32,000 jobs being cut within a year.
Henrik Ahlers, CEO of EY, noted that many DAX companies are remarkably tough amidst the weak economy, geopolitical crises, and ongoing trade dispute with the USA. However, he emphasized that a significant majority still achieved an increase in revenues.
The impact of the US tariffs has yet to be reflected in the balance sheets as companies have pre-emptively stockpiled products in the USA in anticipation of high tariffs, and US customers have purchased products to benefit from reduced prices. The true picture of the situation will become apparent only in the second half of the year, and the uncertainty surrounding the US tariffs represents a major challenge, particularly for export-oriented industries.
Mixed Fortunes for DAX Companies
While some DAX companies, like Rheinmetall (46% increase in revenue) and MTU Aero Engines (28% increase), saw a boom in their earnings, the car manufacturers suffered losses. Overall, the car manufacturers listed in the DAX experienced a 2.5% decrease in revenue and a staggering 42% drop in profits. The highest quarterly operating profit was claimed by Deutsche Telekom, with around 6.8 billion euros, followed by Allianz (4.2 billion) and Siemens (3.1 billion). Porsche Holding was the only DAX company to report an operating loss.
- Economic Downturn
- DAX Companies
- Stock Market Corporation
- Germany
- German Press Agency
- Leading Index
- Frankfurt am Main
- USA
- Economic Crisis
- Stock Market Company
- Trade Dispute
- Wildfires
Insights on the Economic Downturn:
- The economic downturn has affected the profits and job security of DAX companies, with many experiencing revenue decreases and job cuts.
- The car manufacturing industry has been particularly hard hit, with some companies experiencing a drop in profits of up to 42%.
- The uncertainty surrounding US tariffs continues to pose a significant challenge for export-oriented industries.
- Despite the challenges, some DAX companies have reported significant revenue growth, with Rheinmetall and MTU Aero Engines seeing increases of 46% and 28% respectively.
- The economic downturn in Germany, as reflected in the DAX leading index, has led to a decrease in operating profit for many companies, particularly car manufacturers and reinsurers, with some reporting hefty financial costs due to external factors like wildfires.
- Despite the severe economic crisis, some DAX companies in Germany, such as Rheinmetall and MTU Aero Engines, have managed to increase their revenues significantly, showcasing a mix of resilience and strategic fortitude within the stock market corporation landscape.