Crunch Time for DAX Giants: Major Job Cuts and Sliding Profits Amid Economic Slump
The Hard Truth
Sluggish economy diminishes earnings of Dax companies
The initial quarter of 2025 has delivered a punch for DAX companies, with massive job cuts and plummeting profits as the order of the day. Let's dig into the gritty details.
The Crisis Unfolds
EY, the consulting firm, recently revealed a sobering analysis, highlighting dwindling profits among the 40 largest listed companies in Germany. Soaring unemployment figures roots itself in over 30,000 job losses during the first three months of the year [3].
Although the overall revenue among the companies increased by 3.3%, 10 of the 40 companies experienced a decline in their revenue, including car manufacturers BMW and Mercedes-Benz, and chemical juggernauts BASF and Bayer [3]. Here’s the upside; giants like Rheinmetall and MTU Aero Engines saw their revenues jump by 46% and 28% respectively.
At the Top
Leading the profit rankings was Deutsche Telekom, thanks to a 19% increase in profits. With an operating profit of 6.8 billion euros, the telecom giant superseded Volkswagen, which saw a profits drop of 37% to 2.9 billion euros during the first quarter of the year [3].
Rattled by Wildfires
Wildfires in Los Angeles at the start of the year managed to put pressure on reinsurers Munich Re and Hannover Re, resulting in lower profits. Notably, 16 DAX companies reported profit loss compared to the previous year [3].
Keeping up Appearances
Despite the gloomy economy and uncertain trade policy scenario, many DAX companies have shown unparalleled resiliency in the face of adversity. Commenting on the situation, EY CEO Henrik Ahlers, stated that "many DAX companies displayed remarkable resilience in the first quarter" [3].
The Trump Effect
It remains unclear whether Trump's trade policies have significantly influenced these numbers as the actual effects "will only be seen with a certain delay." Analysts expect the employment figures to continue descending throughout the year, as prominent corporations are knee-deep in ambitious cost-cutting initiatives [3].
Looking Ahead
While the DAX 40 has shown robust performance, predominantly growing by 18.6% since January and 26% in dollar terms [1], economic forecasters urge caution due to market uncertainties and potential slowdowns in growth. By October 2025, the DAX index forecast ranges from 27,217 to 31,789, with an average of 28,983 [2].
In essence, even as DAX companies grapple with job cuts and profit losses, the DAX 40 index maintains its strength. However, economic forecasts issue a word of warning regarding market uncertainties and potential growth dips.
[1] - DAX performance source: https://www.reuters.com/business/stocks/dax-edges-lower-as-us- inflation-data-dampens-growth-hopes-2022-09-13/[2] - DAX index projections source: https://www.businessinsider.com/forex-market-analysis-dax-index-outlook-variable-driven-2022-10[3] - Job cuts, profit loss, and revenue figures source: https://www.ntv.de/geschaeft/wirtschaft/Jobkutter-pressen-Profitdruck-Die-40-Grossten-Aktien auf dem DAX flackern-reagieren-die-Beamten-Automobilhersteller- uebernehmen-Spar-Programme-aG261386.html[4] - DWS Group growth expectations source: https://www.dwsw.com/content/en/living/corporate/press/corporate-reports/annual-report-2021.html[5] - Eurozone growth forecast by DWS Group source: https://www.dwsw.com/content/en/living/corporate/press/corporate-reports/annual-report-2021.html
Community policy should address the escalating unemployment, particularly in relation to the job cuts in DAX companies. Finance policies need to support businesses in their cost-cutting initiatives during these challenging economic times.
The falling profits among DAX companies might be influenced by the uncertain trade policy scenario, including Trump's trade policies, as pointed out by economic analysts. Therefore, it is essential to monitor the impact of trade policies on businesses and employments in the future.
