The economic slowdown, rising energy prices and geopolitical conflicts have left their mark on the balance sheets of the German stock market heavyweights. According to the consulting firm EY, the operating profit (EBIT) of the assessed DAX companies fell in total in 2023 for the first time since the start of the corona pandemic in 2020 in a full year.
“The days of record profits and dream margins are behind us,” said Henrik Ahlers, CEO of EY Germany. The current year is unlikely to be better for the DAX 40 companies.
Slow consumption is putting pressure on many industries
Ahlers expects overall profits to decline in the coming months. “Many industries are struggling with weak demand – especially in the Chinese market – and high energy prices. In addition, many companies face high restructuring costs.”
According to EY, sales of the assessed DAX companies increased in total by 1 percent in 2023 compared to the previous year to a record value for a full year of around €1.82 trillion. The operating result (EBIT), however, fell by 1.5 percent to 170.3 billion euros. Adjusted for (real) price increases, the balance of sales and profits was worse. “If you take inflation into account, most companies on the DAX were in the red,” Ahlers said.
Bayer and BASF were especially affected
The chemical industry was especially hard hit, suffering from rising energy and raw material prices and weak demand. Bayer's operating profits (minus 91.3 percent) and BASF (minus 65.8 percent) supposedly collapsed.
Automakers made the biggest profits
On the other hand, the automobile industry in particular had positive development. According to EY, the company with the highest profits was Volkswagen with an operating profit of 22.6 billion euros, ahead of Deutsche Telekom (20.8 billion) and the car manufacturer Mercedes-Benz. and bmw (19.7 and 18.5 billion respectively). Only on Thursday was BMW able to achieve record operating results and invest “like never before”>BMW was able to record new sales records.
However, there are also growing signs among automakers that the challenges are growing. “The slow progress of electromobility and low purchasing sentiment among customers are hitting the industry in the midst of a profound transformation,” Ahlers said.
Despite the difficult conditions, the number of employees overall increased by 1.2 percent to a record 3.99 million. As a result, 24 companies created additional jobs and 14 companies eliminated jobs. The other companies did not provide any information on the number of employees.