The Hard Times for DAX Giants: Job Cuts and Profit Declines Hit Industry Bigwigs
Reduced economic growth negatively impacts the earnings of DAX companies.
When it comes to prospering, German defense titan Rheinmetall is ruling the roost - but things aren't looking so jubilant for many of the DAX behemoths. According to an EY analysis, profits have plunged substantially in the initial quarter, with job cuts looming large.
The earnings of the 40 largest German-listed companies have dropped considerably at the beginning of 2025, as indicated by EY's analysis. Amid tough global competition and economic downturn, these corporations chose to trim workforces - over 30,000 jobs were axed in the first three months alone. The overall profit of DAX companies had already dwindled in 2023 and 2024.
Although the total revenue of these companies increased by 3.3% in the first quarter of 2025, 10 of the 40 companies noted a decline in revenue, including automakers BMW and Mercedes-Benz and chemical firms BASF and Bayer. On the flip side, Rheinmetall boasted a revenue surge of 46%, with MTU Aero Engines grabbing a 28% bump.
According to the report, Deutsche Telekom spearheaded the profit rankings, generating an operating profit of 6.8 billion euros. The telecommunications company supplanted Volkswagen in the top spot due to a 19% jump in profits, while the automaker registered a 37% decrease in earnings for the same period. The total operating profit of the DAX companies crumbled by 8%, according to the report, with 16 companies underperforming compared to the prior year, including all automakers and the two reinsurers Munich Re and Hannover Rück.
The Disquieting Blaze and Reinsurers' Struggles
The wildfires ravaging the Los Angeles region have put considerable pressure on two prominent reinsurers – Munich Re and Hannover Rück – owing to extraordinary burdens.
Despite a persistently weak economy and uncertain geopolitical and trade policy landscape, many DAX companies have displayed remarkable resilience during the first quarter, commented EY CEO, Henrik Ahlers. However, the full impact of the U.S.-initiated trade disputes remains to be seen, with many companies hedging their bets by stockpiling in the U.S. or taking advantage of lower prices by accelerating sales before tariff hikes.
EY predicts that job losses will continue throughout the year, with many large companies pursuing ambitious cost-cutting measures. The job cuts could intensify further in the coming months.
- DAX Job Cuts
- Profit Decline
- Trade Tensions
- BMW
- Mercedes-Benz Group AG
- Volkswagen
- Rheinmetall
- Reinsurers
- Wildfires
- German Exports
- Economic Downturn
- Tariffs
- To counteract the financial impact from job cuts and profit declines, DAX companies might consider reinvesting in community policy and provide vocational training programs to develop a more versatile and skilled workforce, thereby maintaining their competitiveness even during economic downturns.
- With the reinsurers Munich Re and Hannover Rück facing extraordinary burdens due to wildfires and trade tensions, it may be strategic for these companies to consider diversifying their investments, such as expanded vocational training programs, to further secure their financial stability.
