Economic Woes Hit DAX Heavyweights: Job Cuts and Profit Dips
Sluggish economic growth negatively impacts the earnings of Dax corporations
Thriving giants like Rheinmetall, but struggling DAX companies paint a diverse economic picture in Germany. According to EY's analysis, profits plummeted in Q1, with the auto industry and countless employees feeling the heat as jobs disappear.
Economic Struggles and Global Competition
The profit of Germany's 40 largest publicly traded companies dipped in the initial quarter, EY's report reveals. company response? Job cuts - over 30,000 positions were axed in the first three months of the year. This downward trend persisted in 2023 and 2024.
While total revenue increased by 3.3% in Q1 2025, 10 companies saw a drop in revenue, including automotive titans like BMW and Mercedes-Benz, as well as chemical giants BASF and Bayer. In stark contrast, Rheinmetall recorded a 46% revenue hike, and MTU Aero Engines grew by 28%.
Deutsche Telekom claimed the top spot, racking up an operating profit of 6.8 billion euros, surpassing Volkswagen thanks to a 19% profit increase. Volkswagen's Q1 operating profit slid by 37%, landing at 2.9 billion euros.
Wildfires Strike Reinsurers
The total operating profit of DAX companies shrank by 8%, with 16 companies posting lower profits than the previous year, including all automakers and reinsurers Munich Re and Hannover Re. The pair grappled with extraordinary financial burdens caused by wildfires around Los Angeles early in the year.
In a nutshell, the EY analysis reported a 1% decrease in the number of employees, from 3.20 million to 3.17 million, representing around 32,000 job cuts compared to the previous year. With 12 of the 27 companies providing figures, 12 reduced their workforce.
The Trump Effect Lags on DAX
Despite a "persistently weak economy and challenging geopolitics and trade policy environment," EY CEO Henrik Ahlers acknowledged many DAX companies' resilience in Q1. Trade and tariff disputes between the US and trading partners haven't yet markedably influenced DAX companies' financial figures, according to Ahlers, with companies stockpiling goods and US customers buying in advance to circumvent higher tariffs.
EY anticipates job cuts to continue throughout the year, with cost-cutting programs in place at many large companies, likely leading to an intensification of layoffs.
- Dax
- Dax Companies
- Profit Decline
- Layoffs
- BMW
- Mercedes-Benz Group
- Volkswagen
- Rheinmetall
- Economic Stimulus
- Economy
- Trade Tensions
Bonus Insights
The DAX index experienced substantial growth in 2025, with a 18.6% increase since January. However, forecasts predict a slowing momentum in May 2025, with an estimated maximum DAX value of around 24,938 points and a mean value for the month near 23,264 points 1.
The profit decline among DAX companies is attributed to economic sluggishness, intensified international competition, sector-specific challenges (e.g., automotive industry transitions and increased competition, insurers bearing high costs from natural disasters), and a 8.1% overall decrease in operating profit in Q1 2025 compared to the previous year 3.
The layoffs among DAX companies, particularly within the automotive industry, are driven by economic hardships and the need for restructuring 3.
- Employment policy changes might be necessary for DAX companies to mitigate the impacts of the profit decline and job cuts, as seen in Q1 2025.
- As finance plays a crucial role in business decisions, a comprehensive review of the community policy and employment policy of these companies could help address the current economic challenges and future-proof their operations.
