German large companies see Q1 profits decline by almost a quarter: study

Xinhua News,BERLIN
2020-05-15 00:44

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BERLIN, May 14 (Xinhua) -- Operating profit (EBIT) of Germany's large companies shrank by 23.5 percent to a total of around 20.3 billion euros (21.9 billion U.S. dollars) in the first quarter (Q1) of 2020 compared to the same quarter last year, according to a study published by consulting firm Ernst & Young (EY) on Thursday.

Despite the global spread of the coronavirus since the beginning of the year, the majority of DAX-listed companies in Germany, excluding banks, still increased their year-on-year sales by 1.6 percent to 339.5 billion euros in Q1, according to the study.

The U.S. market still "proved to be a growth driver" as sales of German companies rose by three percent year-on-year, according to the study. In Europe, a decline of almost four percent was recorded while sales in Asia shrank by almost six percent year on year.

"Not least the German car manufacturers, for whom China is now the most important sales market, are benefiting from the fact that restrictions have been relaxed there and the desire to buy is apparently returning," said Hubert Barth, chairperson of the management board of EY Germany.

Germany's top companies could still rely on "considerable financial resources," EY noted. At the end of Q1, cash and cash equivalents of the companies amounted to 95.3 billion euros.

"How large the financial losses caused by the pandemic will actually be, can only be seriously estimated after the second quarter," said Mathieu Meyer, member of the EY management board. "Many companies have already announced that they expect to be in the red in the second quarter."

Provided that the spread of the coronavirus could "continue to be contained," Meyer only expected the situation to improve again in the third quarter. (1 euro = 1.08 U.S. dollars)
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