The carmaker earned 23 billion euros last year – more than any other Dax group.
(Photo: Daimler AG)
Dusseldorf The German economy is facing a difficult year. With the war in Ukraine, “a new stage of uncertainty and geopolitical confrontation has been reached, which makes all previous economic forecasts waste,” said Henrik Ahlers, Germany head of management consultancy EY, on Tuesday. With the VW parent company Porsche SE, the penultimate Dax group presented its balance sheet for the past year.
In these uncertain times, however, the large German listed companies are stronger than ever: According to Handelsblatt calculations, the 40 Dax companies earned 128.5 billion euros net in 2021 – after 45.6 billion euros the year before.
That is more than ever before – and is not solely the result of the increase in the leading index last September. The ten newcomers together contributed only 6.7 billion euros to the total profit. The previous record year was 2017 with almost 94 billion euros.
For most companies, 2021 was an exceptional year. 28 of the 40 DAX companies earned a net billion euros or more, most of them Mercedes-Benz with 23 billion euros, followed by Volkswagen with a good 15 and BMW with 12.4 billion euros. The three car manufacturers thus account for almost 40 percent of the total profit of the 40 companies. Once again, this underscores the importance of the auto industry for the overall index.
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With the exception of the Siemens Energy and Delivery Hero divisions, which were spun off from Siemens, all other companies were in the black. In the previous year, seven companies had made losses. The food supplier Delivery Hero, which has been in deficit for years, will not publish its annual report until the end of April and is expected to post a net loss of 1.6 billion euros. This is included in the overall calculation.
The strong constitution is remarkable, because the consequences of the pandemic have been weighing on companies since spring 2020. For the past two years, they have repeatedly had to respond to disrupted supply chains and rising material costs. Lockdowns in China, for example, have repeatedly caused a complete standstill in the production and transport of goods that are ordered worldwide. The economic metropolis of Shanghai with its 26 million inhabitants is currently being hit by a curfew due to new corona cases.
The high profits result from backlogged orders from the Corona year 2020 and the strong growth of the global economy. Rising demand from the three major regions of Asia, Europe and America made it easy to pass on increased costs to customers. The semiconductor manufacturer Infineon, for example, cannot produce as many chips as the customers would like to buy – the prices play at most a subordinate role for the customers.
The operating cash flow, i.e. the liquid funds from ongoing business activities, also rose rapidly. According to EY calculations, it increased by almost a quarter to 195 billion euros within a year. Here, Deutsche Telekom with 37 billion euros is ahead of the car manufacturer Volkswagen with 32 billion euros.
Companies benefit from an international orientation
Once again, German companies benefited from their strong international focus. The Dax companies generate more than two thirds of their sales outside their home country. It paid off. Sales in Asia increased by 16 percent, in North America it was 15 percent and in Europe total sales were ten percent higher than in the previous year.
“Despite the difficult framework conditions, China in particular is and will remain an enormously important growth market for many top German companies,” says EY Germany boss Ahlers. “Significant investments are being made here, and research and development are also increasingly taking place locally.” The bottom line is that Germany as a location has benefited greatly from the strong commitment of companies in China, at least so far – despite all the increased risks.
Companies have armed themselves with a financial buffer for the impending downturn resulting from the sanctions against Russia, the shortage of materials and rising prices: cash and cash equivalents rose by two and a half percent to 158 billion euros. BMW, Siemens, Airbus, Mercedes and Volkswagen have each accumulated more than ten billion euros in cash. That should at least provide some protection if times get tougher in the coming months.
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