Made in Germany: Q1 Earnings Special

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Made in Germany: Q1 Earnings Special

Q1 Earnings Special – Summary

DAX Q1 earnings, sales & margins:

• Earnings growth in the DAX reached 5% yoy in Q1, a substantial acceleration from the previous quarters and the highest growth rate in

more than two years. By far the strongest growth contribution came from Financials, which posted earnings growth of more than 30%. In

addition, negative growth from Autos was less pronounced than in previous quarters. Industrials earnings continued to weaken (-20% yoy)

and weighed most on DAX earnings growth.

• Sequentially, profits in the DAX were up 12% vs Q4. Except for Industrials and Autos, earnings rose in all sectors. On aggregate, earnings

beats were in line with their long-term average rate (3%), but the breadth of beats was slightly below the historical average. Beats were the

strongest in Chemicals and Health Care while Consumer Discretionary disappointed.

• Aggregate revenues in the DAX declined for a fourth straight quarter, down 5% both year-over-year and sequentially. Again, Industrials

and Autos weighed most on sales growth, but weakness was broad-based and most sectors saw sales decline year-over-year. As earnings

held up much better than sales, margins accelerated sharply and reached their highest level since Q1-23. Over the coming quarters,

margins are expected to remain elevated.

DAX revisions & outlook:

• FY earnings estimates continue to be revised down sharply, especially since the beginning of the war in Iran. While earnings estimates for

Chemicals, Tech and Energy are being revised higher, Consumer Discretionary, Real Estate and Staples continue to see strong downward

revisions. While analysts lowered their earnings forecasts substantially, the majority of DAX companies kept their guidance unchanged.