The weak economy is also reflected in the consolidated balance sheets. Most DAX companies were able to increase sales and profits in the second quarter, but growth was below the inflation rate.
According to a study, the largest listed companies in Germany increased their sales and profits between April and June. However, growth slowed in the quarter and overall was below the inflation rate of more than six percent recently.
In addition, the development was inconsistent, numerous DAX companies also recorded lower sales and profits than in the same period last year, as a study published today by the consulting firm EY shows. “Many companies are feeling the weak economic development more and more,” is the conclusion.
The total sales of the 40 companies listed in the German share index rose by 1.1 percent in the second quarter compared to the same period last year to around 446 billion euros. That was the highest value in a second quarter since the beginning of the evaluation in 2014. The operating profit of the company rose by almost three percent to 40.5 billion euros. However, the prior-year period was also heavily impacted by the effects of the war in Ukraine, as EY pointed out.
“Air has become very thin for many companies”
In 14 companies, however, sales fell compared to the previous year, in 18 the profit. “After a very strong previous year, the air has now become very thin for many companies,” summarized Henrik Ahlers from EY. “It’s getting harder and harder to maintain the high level of profits we’ve achieved.”
Chemical companies in particular have recently reported falling demand and corrected their forecasts downwards. For example, the largest chemical company BASF. The company suffered a significant drop in sales and profits in the second quarter. Revenue fell by a quarter to 17.3 billion euros. Net profit fell from a good two billion euros in the previous year to 499 million euros.
Auto companies most profitable companies
According to the analysis, the growth drivers in the second quarter were the car companies. These benefited from the decreasing shortage of chips and from profits, which they generated primarily from sales of models with internal combustion engines. Volkswagen, Mercedes-Benz and BMW were among the top earners in the second quarter at 5.6 billion euros, 5.0 billion euros and 4.3 billion euros, respectively. They came first, third and fourth in the prize rankings. Deutsche Telekom made it to second place with an operating profit of 5.2 billion euros.
But the wind is also blowing more and more in the face of the car industry, analyzed EY. Incoming orders are weak. In view of the high inflation, increasing concerns about the economy and the persistently high level of interest rates, customers are becoming less willing to buy. Overcapacity and discounts could soon put pressure on margins again.
How will the second half of the year be?
Overall, Ahlers also expects that the second half of the year will be even more difficult than the first. Growth impulses are not in sight, the low sales growth is being more than eaten up by the persistently high inflation. “In fact, we are already dealing with negative growth in many cases.”
The EY expert warned that the cost problem in Germany was becoming “more and more pressing”: Above all, the high energy prices led to investments being postponed and consideration being given to relocating production abroad. “This trend is also reinforced by the very complex and lengthy approval procedures in this country. There is no sign of any reduction in bureaucracy.”