Illustration: Jens Bonnke
The 200 largest German companies achieved a total of 3.9 trillion euros in sales in 2023. That’s not quite as much as in the record year 2022, when revenues exceeded the 4 trillion euro mark for the first time since the F.A.Z. archive began surveying. The F.A.Z. list of the largest companies appeared for the first time 65 years ago. Despite the decline of almost 3.6 percent, 2023 sales significantly exceed the totals from 2011 to 2021. At the top, the list of companies looks very stable. As usual, the car industry with the manufacturers Volkswagen, Mercedes and the supplier Bosch, the retail sector with the Schwarz Group (Lidl, Kaufland), Aldi, Rewe and Edeka as well as the suppliers Eon and Uniper dominate here. Can the war in Ukraine and the numerous crises have no impact on companies at all? That would be too nice, but a closer look at net sales and surpluses shows how unusual and unpredictable the situation has become for companies.
The truth is that profits have fallen significantly more than sales. The total annual profits of the 200 largest companies on the FAZ list fell significantly by 12.8 percent to 118 billion euros. The effects on the companies from the top stock market league were not quite as serious. The 40 DAX companies achieved a manageable increase in sales of one percent, while their profits fell by a total of 1.5 percent. The big profits of the car manufacturers Volkswagen, Mercedes and BMW and Deutsche Telekom, which generated the highest annual profit of all large companies at almost 22 billion euros, brightened things up. In contrast, six of the 40 DAX members suffered losses.
Unrest in the energy industry The energy industry experienced quite a rollercoaster ride. The sharp rise in prices for oil, gas and electricity has inflated the sales of many providers and suppliers. Among the ten companies with the largest sales increases in 2023 there are seven representatives of the energy industry, with the network operator 50Hertz Transmission at the top. The company, which is primarily responsible for the eastern German networks, increased sales by almost 45 percent to 10 billion euros. However, 50Hertz points out in its annual financial statements that the sales largely contain items that the company only passes on in order to comply with requirements such as the Renewable Energy Act, network fee-based levies or the electricity price cap. Adjusted for these items, which immediately become expenses, sales only amount to 2.4 billion euros, slightly less than in the previous year. The figures from the supplier Uniper also require a second look. In 2023, the company suffered a deep drop in sales of over 60 percent and fell from 2nd to 7th place on the current FAZ list of large companies. Nevertheless, the company, which has been nationalized since the energy crisis, celebrated its most financially successful year with a profit of 6.3 billion euros – after a horror loss of 19.1 billion euros in the previous year. What was happening? Uniper’s latest sales slump can be seen as a normalization after revenues shot up absurdly in 2022 due to the enormous increase in electricity and gas prices as a result of the Ukraine war. The international accounting standards IFRS require sales to be presented based on daily prices on the energy exchanges. Energy prices have fallen again from these peaks, so that Uniper was also able to price derivatives, i.e. financial contracts to hedge against capricious raw material prices, more favorably in 2023. The supplier was also able to release provisions that had been set up to protect against the loss of Russian gas deliveries. The lower raw material prices also caused chemical giant BASF’s sales to fall sharply by 21 percent. In addition, demand from customers of the DAX company has fallen significantly due to the weak economy. Nevertheless, BASF was able to make a profit again in 2023, which at 379 million euros was roughly the same amount as the loss in the previous year – only with the opposite sign.
Is the turnaround in armaments policy making itself felt in the corporate world? In order to make it onto the current list of the 200 largest companies, sales of almost 3.9 billion euros were necessary in 2023 instead of almost 3.8 billion euros in the previous year. Therefore, the stock market star Biontech, which rose to the top 200 largest companies for the first time two years ago thanks to its invention of the corona vaccine Comirnaty, narrowly missed out on the list with a decline in sales to 3.8 billion euros in 2023. In contrast, the Nuremberg family business Diehl barely got its foot in the door in 200th place. It has recently become known for its armaments division, which offers anti-aircraft systems and guided missiles. Overall, however, the turning point, i.e. the completely changed importance of the arms industry, is not yet particularly noticeable in the corporate landscape.
The steel and technology company Thyssenkrupp, which also produces systems for submarines and naval vessels, moved to 23rd place on the list with a decline in sales of almost 9 percent. Sales in the marine division remained stable at 1.8 billion euros due to a sharp decline in incoming orders. In contrast, the tank manufacturer Rheinmetall has worked its way up to 112th place after a 12 percent increase in sales to almost 7.2 billion euros. However, the stock market expects significantly stronger growth; at least the price of Rheinmetall shares has increased approximately fivefold since the outbreak of the Ukrainian war in February 2022. Rolls Royce Power Systems’ sales also increased significantly, by almost 17 percent to 4.5 billion euros. The versatile company based in Friedrichshafen on Lake Constance produces, among other things, engines for military vehicles, aircraft and ships. However, the sales growth in 2023 was not due to the turning point and increasing defense spending, but rather to the increased demand for energy systems for data centers and from commercial shipping.
What’s left of the sales
The F.A.Z. archive’s list of the largest companies, which was first published 65 years ago, measures size by net sales. The key figure shows how much money a provider receives from the sale of its products and services each year, minus ongoing items such as VAT or energy taxes. But sales are not an end in themselves. What is much more important for companies is what they can keep of the money they receive in order to invest in new technologies and business ideas, to save it for bad times or to distribute it to the owners. High sales do not automatically lead to high profits, as a look at the companies with the highest annual profits, with Deutsche Telekom at the top, shows. Here, the largest company in terms of sales, Volkswagen, comes in second place.
However, absolute profit does not yet show how profitable a company is. It is therefore interesting to take a look at the return on sales. It shows how much of the sales remains in the cash register. A return on sales of 10 percent means that the company can keep 10 cents of every euro in sales. Deutsche Börse is therefore the most profitable among the major German corporations, which is primarily due to its digital trading platform, which can cope with a sharp increase in demand for trading activities at largely constant costs. Of the ten largest companies in terms of sales, only Telekom made it into the ten most profitable. That’s no wonder, because the sales giants are car manufacturers, for example, who incur high costs for materials and production for every vehicle sold. And while the high-volume retail groups don’t report profits, they probably don’t have very high margins because of their competition for price-sensitive consumers.
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