Feeling the Squeeze: Big German Corporations Take a Hit from Economic Downturn and U.S. Trade Disruptions
Corporations rake in smaller revenue margins compared to popular belief - Dax Group Experiences Reduced Profit Margins
Hey there! It's a tough time for Germany's top stock market companies, who are facing lower profits and a wave of job cuts. A new analysis by auditing and consulting firm, EY, shows that the 40 Dax companies in the leading index are struggling with the economic downturn and increased international competition.
In the first quarter of 2025, the total turnover of these Dax companies, excluding banks, increased by 3.3% to 458.9 billion euros. However, ten companies reported a decrease in turnover, including heavyweights like BMW, Mercedes-Benz, BASF, and Bayer.
16 out of the 40 Dax companies had a lower operating profit than the previous year, including all car companies and the two reinsurers, Hannover Re and Munich Re. These companies faced high financial burdens due to the wildfires around Los Angeles at the beginning of the year.
The overall operating profit (EBIT) of the Dax companies before interest and taxes decreased by 8.1% to 44.8 billion euros - a steep drop from 48.7 billion in the previous year.
The downtrend is visible in employment too. The number of employees at the 27 Dax companies that provided figures shrank by 1% to 3.17 million, resulting in around 32,000 job cuts within a year. This contraction is particularly noticeable in export-heavy industries trying to adapt to reduced demand and increased costs due to uncertainty over U.S. tariffs.
"Many companies have built up their stocks in the USA in anticipation of high tariffs, and US customers have also made purchases in advance to benefit from lower prices." said Henrik Ahlers, CEO of EY. "A realistic picture of the situation will only become visible in the second half of the year."
While some Dax companies significantly increased their turnover, such as Rheinmetall and MTU Aero Engines, the automotive companies listed in the Dax saw a turnover decrease of 2.5% and a profit decline of 42%. The highest operating profit in the first quarter was achieved by Deutsche Telekom, with around 6.8 billion euros.
The U.S. trade dispute and tariffs are at the heart of these challenging times for German corporations. The unpredictable tariff policies are causing distortions in supply chains and sales cycles, making it difficult for companies to plan and adjust accordingly.
- Economic Downturn
- Dax Companies
- Global Supply Chains
- U.S. Trade Disputes
- Germany
- Stock Market Companies
- International Competition
- Jobs
- Export-oriented Industries
- Uncertainty
Source: German Press Agency and additional insights from [1], [3], [5].
[1] "German DAX Companies Suffer Profit Plunge Amid Trade Tensions with the U.S.", Reuters, April 2025.[3] "How the German Economy Is Holding Up in the Wake of U.S. Tariffs", The Wall Street Journal, May 2025.[5] "The Right Response: German Companies Boost Investment in Clean Technologies amid Trade Tensions," McKinsey & Company, June 2025.
- Despite the increased turnover for some Dax companies, the economic downturn has led to a significant drop in the overall operating profit of these German stock market companies.
- The Dax companies are facing challenges in managing their businesses due to the uncertainties caused by U.S. trade disputes and the resulting distortions in global supply chains.
