ProfitSustainability, Re_Engineered: TheGermanWay!
Dr. Anju Sharma KtalystInsights™ | MrsSustainability
Margins didn’t collapse in Germany.
They lost protection.
When scale stopped guaranteeing profits, Germany Inc. didn’t chase growth narratives
it changed the structure.
(For context: the DAX represents Germany’s 40 largest listed companies the country’s corporate backbone.)
In YR2026, How DAX giants are re-engineering profits
Siemens
✓ ~25% of Healthineers spun off to shareholders (late-2025)
✓ Siemens retains ~50%, targeting ~37% longer term
✓ Industrial software & automation now deliver >70% of group EBIT
BASF
✓ Agricultural Solutions carved into an independent SE
✓ New board from 1 May 2026
✓ €9.8 bn revenue (2024) ≈ 15% of BASF sales
✓ Ag pure-play peers trade at 2–3× higher EBITDA multiples
Thyssenkrupp
✓ TKMS IPO (Nov-2025) unlocked defence-led valuation
✓ Defence order books in Germany up >30% YoY
✓ Holding-company structure improves capital transparency
Mercedes-Benz Group
✓ High-end luxury models generate ~2× margins vs mass market
✓ Daimler Truck separation removed cyclical capital drag
Volkswagen
✓ €20+ bn committed to PowerCo (batteries)
✓ Cariad restructuring cut software losses ~40% YoY
✓ Structural separation protects core ROCE
Evonik
✓ Specialty chemicals now >80% of EBITDA
✓ Legacy materials exits conclude H1 2026
✓ Specialty peers trade at +300–500 bps margin premium
Allianz
✓ Solvency II ratio consistently >200%
✓ Fee-based earnings now ~⅓ of operating profit
Deutsche Telekom
✓ Towers & fibre valued at 10–15× EBITDA
✓ Infra carve-outs lower balance-sheet intensity
BMW
✓ “Neue Klasse” targets ~30% cost reduction per EV
✓ EV platforms insulated from ICE margin volatility
Bayer
✓ Crop Science contributes ~45% of group revenue
✓ Rising investor pressure to separate Pharma & Ag
✓ Conglomerate discount widened post-Monsanto
📊 The YR2026 reality check
✓ 24.8% of German companies expect business deterioration
(ifo Institute, Q1-2026)
✓ Germany corporate profits ~€215 bn (2026E)
→ profit pools are more concentrated
✓ DAX +~15% YoY, despite muted earnings growth
→ structure, not volume, is driving valuation
✓ ~33% of firms plan workforce reductions
✓ Hiring is strongest in spin-offs: defence, green tech, digital infra
✓ Conglomerates trade at a 15–30% valuation discount
vs comparable pure-play peers
What Germany figured out
In 2026: Size ≠ Strength
✓ Separability = resilience
✓ Pure plays command higher multiples
✓ Focused boards allocate capital faster
✓ Geography decides margins — structure decides valuation
Profit sustainability is the outcome of strategy_sustainability & capitaldiscipline.
Dr. Anju Sharma
Source / shared link: https://www.economist.com/business/2026/01/08/germanys-industrial-conglomerates-are-breaking-up-to-stay-alive?utm_campaign=shared_article
Originally published on LinkedIn on 2026-01-10 09:44:29: https://www.linkedin.com/feed/update/urn%3Ali%3Ashare%3A7415689986395762688
