According to an analysis, companies in the German stock index (DAX) posted record earnings in the second quarter (April to June): the operating profit of the 40 corporations rose by 16 percent year-on-year to a record high of €52.6 billion, the consultancy firm EY announced on Friday. However, this growth was driven by only a few sectors. At the same time, DAX companies cut 41,000 jobs over the course of the year.
According to EY, the operating profit of DAX companies was ten percent higher than the previous record set in the second quarter of 2024. Total revenue also reached a new high of around €463 billion, rising by 4.6 percent.
EY emphasized that this growth in revenue and profit is driven largely by a handful of sectors currently benefiting from exceptional, specific market conditions—ranging from the defense industry and beneficiaries of the global AI and data center boom to chemical companies that were able to raise prices due to tensions in the Middle East and the resulting supply bottlenecks in Asia.
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In contrast, there is no sign of a turnaround among many traditional industrial groups. Automakers in the DAX, for instance, recorded a 1.2 percent drop in revenue and a 12 percent slump in profits during the second quarter, according to EY’s calculations.
Employment at Germany’s largest listed companies continues to decline, according to EY: as of June 30, these companies had a workforce of approximately 3.49 million—a decrease of 1.2 percent, or 41,000 employees, compared to the previous year.
Jan Brorhilker of EY explained: “The current surges in profit are largely due to special external factors, not to any newly gained competitive strength.” They could vanish just as quickly as they appeared. “After all, bloated administrative structures, high vulnerability to geopolitical crises and a new wave of tariffs and protectionism, as well as excessive costs associated with Germany as a business location—these fundamental problems persist unchanged.” Consequently, pressure would remain high even if the economy were to pick up again.
Author: AFP – ilo/pe – Translated by Blackout News
Sources: AFP Press Portal