Germany’s largest listed companies record 13 pct decline in turnover in Q2: EY

Turnover of Germany’s largest companies listed in the DAX, excluding banks, decreased by 13 percent year-on-year to 283 billion euros (335 billion U.S. dollars) in the second quarter (Q2) 2020, according to a study published by consulting firm Ernst & Young (EY) on Thursday.

The worldwide COVID-19 pandemic “severely slowed down the business development of the largest German companies,” EY noted.

Germany’s automotive industry recorded particularly sharp declines. The four DAX companies from the automotive sector, BMW, Daimler and Volkswagen as well as automotive supplier Continental, even recorded a 32 percent drop in sales, said the study.

After around five weeks of shutdown due to the COVID-19 crisis in Germany, car manufacturers gradually restarted production in late April.

“The pandemic has particularly affected industrial companies massively,” said Mathieu Meyer, member of the EY management board. Plant closures and shutdown of public life in many countries had led to “enormous losses.”

However, not all of Germany’s largest listed companies recorded a decline in sales. Twelve DAX-listed companies increased their sales compared to the same time last year, albeit partly due to takeovers, according to the study.

Earnings before interest and taxes (EBIT) of DAX companies fell even more sharply than sales. EBIT of Germany’s largest listed companies combined dropped by 97 percent to only 750 million euros.

This decline in EBIT was not only due to the COVID-19 crisis. Provisions for legal cases also “played a major role,” EY noted. German pharmaceutical and chemical company Bayer, for example, recorded a net loss of around 9.5 billion euros in Q2 due to provisions for the glyphosate settlement in the United States.

Meyer is expecting the third quarter to be much better. “The mood in the economy has improved noticeably recently, incoming orders are encouraging and the feared slump in the labor market has not yet materialized.”