(Bloomberg) -- Germany’s biggest industrial companies reported their lowest profit margins in four years in 2019, and conditions are unlikely to improve until well into this year, according to a study by consulting firm EY.
The relatively poor performance for the likes of Daimler AG, BASF SE and Bayer AG was partly down to one-time effects and rising restructuring costs, but was also due to weak global demand and increasing trade barriers, said Hubert Barth, EY managing partner for Germany.
The cumulative profit margin for the top 100 firms in Europe’s biggest economy sank to 6.4% in the first nine months of last year from 8.2% in the same period a year earlier, EY said. While sales rose 4.2% to almost 1.3 trillion euros ($1.45 trillion), profit before interest and taxes slumped by 19% to 81.4 billion euros.
Chemicals companies suffered the biggest profit decline, with a 38% plunge, while the critical auto industry’s returns dropped 26%. Earnings at telecommunications firms rose just under 7%, the study showed. Banks, insurers and holding companies were not included in the analysis.
Mathieu Meyer, EY managing partner for audit, said pressure will remain on margins for the time being.
“Only in the second half of the year could the current signs of an easing in international trade conflicts unleash new growth impulses,” Meyer said.
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