Economic Struggles: DAX Corporations in Germany Report Lower Profits and Job Cuts
Significant Profit Decline Observed Among Leading Businesses - Dax Group Experiences Substantial Drop in Revenue
A downward spiral has hits Germany's biggest stock market companies, as they're grappling with a stiff financial hit due to the economic slowdown. The 40 giants in the Dax index are feeling the heat from the slowing economy and fiercer international competition, according to a fresh analysis by audit and consulting firm EY.
The first quarter of 2025, saw the total turnover of these Dax companies (excluding banks) balloon by 3.3% to 458.9 billion euros. However, ten companies experienced a decline in revenue, with heavyweights BMW, Mercedes-Benz, BASF, and Bayer among them.
Insurance companies bear the brunt of wildfire losses
Sixteen of the Dax companies suffered a lower operating profit last year, including all car manufacturers and the two reinsurers, Hannover Re and Munich Re, who dealt with hefty financial burdens due to the wildfires raging around Los Angeles at the start of the year.
The combined operating profit (EBIT) of the Dax companies shrank by a whopping 8.1% to 44.8 billion euros in 2025, down from 48.7 billion in the previous year.
Job cuts galore
The bleak economic landscape has also seen the number of employees at the 27 Dax companies that provided data, reduce by 1% to 3.17 million. This means that around 32,000 jobs were axed within the year, underscoring the companies' desperate race to stay afloat.
In spite of the economic distress, political crises, and the trade disputes with the USA, many Dax companies have demonstrated remarkable resilience, said Henrik Ahlers, CEO of EY. While a majority of these companies still saw an increase in turnover, it merely represented a slight uptick, rather than a robust recovery.
Tariff troubles
The lingering uncertainty about US tariffs is a significant concern, especially for export-oriented industries. However, the actual impact of these tariffs hasn't yet been reflected in the balance sheets. Companies have maintained their inventories in the USA, anticipating high tariffs, or rushed to make sales to reap lower prices before the tariffs kick in.
A more accurate picture of the situation will become clear only in the second half of the year.
Winners and Losers
While some Dax companies saw a substantial jump in revenue – Rheinmetall boasted a 46% surge in revenue, and engine manufacturer MTU Aero Engines had a 28% growth – the car manufacturers took a hit. The auto manufacturers listed in the Dax together registered a 2.5% drop in turnover and a eye-watering 42% fall in profits.
Deutsche Telekom was the biggest money-spinner in the first quarter, posting a staggering 6.8 billion euros in profits. Allianz came second with earnings of 4.2 billion, followed by Siemens with 3.1 billion. Only one Dax company, Porsche Holding, reported an operating loss.
- Economic Struggles in Germany
- Dax Companies
- Stock Market Companies
- Slowdown
- Leading Index
- Frankfurt am Main
- US-EU Trade Disputes
- BMW
- Mercedes-Benz
- BASF
- Tariffs
- Germany's Economic Downturn
- Acknowledging the economic struggles in Germany, vocational training initiatives might be necessary to help Dax companies, particularly those in the automotive sector that have experienced job cuts and decreased profits, to adapt and prepare for a more competitive business landscape in the future.
- To counteract the financial burdens faced by Dax companies due to the economic slowdown, financial assistance could be provided to invest in vocational training programs that focus on fostering skills relevant to current and future business needs, further promoting economic growth and resilience.
