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Alsharq Tribune- M.Essam
The majority of German large companies listed on Germany's benchmark DAX index suffered a sharp profit decline of 8 percent in the first quarter (Q1) of 2025, according to a report released by consulting firm Ernst & Young (EY) on Friday.
Henrik Ahlers, chairman of the executive board and country managing partner at EY Germany, warned that the U.S.-initiated trade disruptions pose serious challenges to Germany's export-oriented industries. "Many firms built up inventories in the U.S. or accelerated sales to pre-empt tariff hikes," he said. "The full impact of these tariffs is likely to become apparent in the second half of the year."
The automotive sector alone experienced a dramatic 42 percent plunge in profits, with industry giants BMW, Mercedes-Benz, and Volkswagen struggling. The overall situation of German industry is more challenging than ever, said Jan Brorhilker, managing partner for assurance at EY Germany.
Germany's chemical industry is also preparing for a prolonged downturn, as trade tensions intensify and customer sentiment continues to weaken. Major players such as BASF, Covestro, Evonik, and Lanxess have reported a significant drop in global orders, based on their newly released Q1 reports.
The companies cite escalating trade tensions and the unpredictable tariff policies of the U.S. administration as key drivers behind the slowdown. "In particular, there is a risk of further economic slowdown in the second half of the year," said Evonik CEO Christian Kullmann, emphasizing that many sectors are finding long-term planning increasingly difficult.
DAX companies cut 32,000 jobs in the first quarter of 2025, reversing several years of workforce expansion, according to EY, which also anticipates further reductions as companies pursue aggressive cost-cutting strategies.
Germany's current economic downturn is exceptional, said Frank Grell, head of the german restructuring and special situations at Latham and Watkins. "In past crises, specific industries were hit hardest - this time, companies across nearly all sectors are facing significant struggles.
