2024 could be a difficult year for the DAX. Video Media Studio Europe / Shutterstock.com
A study by the consulting firm EY shows that the operating profits of DAX companies fell in 2023. And this despite sales being at an all-time high.
Sales rose in Europe while they fell in North America and Asia Pacific. This indicates an upswing in the local domestic market.
The auto industry, particularly Volkswagen, reported strong sales and profits, while the chemical industry came under pressure.
After the past year, the 40 companies in the German leading index DAX are under operational pressure again for the first time since 2020. The reason for this is the fall in operating profits (EBIT) in the annual financial statements. This is the result of a study published on Thursday by the consulting firm EY. Only mixed results are expected for 2024.
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Despite record sales, a mixed balance sheet
According to the analysis, the financial giants’ sales rose to an all-time high of 1.82 trillion euros – but the increased costs more than outweighed the increase. The main reasons for this are renewed weakness in demand as well as high energy and restructuring costs, according to Henrik Ahlers, Managing Director at EY. This costly period primarily brought the energy-intensive chemical industry into economic difficulties.
The regional differences in the shares of the DAX companies’ total sales are also of interest. While these rose by a full six percent in Europe, they fell by one percent in North America and even by four percent in the Asia and Pacific region. This means that there are signs of an economic upswing in the local domestic market. This is also proven by the year-on-year comparison in terms of proportional sales: Europe’s contribution rose by 1.5 percent from 43 percent in 2022 to 45.5 percent in 2023. So Europe is slipping into the role of the DAX cash cow, so to speak.
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Volkswagen and Continental: Auto industry gives hope
While the chemical industry was reeling, a look at the figures from the automotive industry certainly provides a glimmer of hope. Volkswagen in particular delivered a noticeably strong year of sales with around 322 million euros and an increase of 15.5 percent compared to the previous year. The largest German car manufacturer is also the leader in terms of profits: with around 22.5 million euros, it leads the ranking. Mercedes-Benz and BMW are also in the top 5 most profitable DAX companies in 2023.
When it comes to profit development, the car parts supplier Continental and the online mail order company Zalando can boast of outstanding results. With profit increases of 145.6 and 135.7 percent compared to 2022, they are the stars in this category. On the one hand, the driving force behind growth is likely to be the lively situation among car manufacturers, which has a positive impact on the entire supply chain. on the other hand Zalando announced In August of last year, new brands were added to the product range as well as a new AI tool for size recommendations.
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The operating result of the 40 DAX companies fell by 1.5 percent to 170.3 million euros despite isolated cases of success. “The times of record profits and dream margins are over,” said Henrik Ahlers, summing up the descriptive study last Thursday. He also expects a negative trend in profits in the coming months: “Many industries are struggling with weak demand – not least on the Chinese market – and high energy prices. In addition, many companies have high restructuring costs.” The DAX is currently in the shadow of huge waves of costs, which Ahlers believes have little chance of collapsing in the near future.
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