Hello everyone,

how do you see the technological strengths/weaknesses of European armor values, such as $RHM (+0,16%) , $LDO (+1,5%) , $BA. (-0,21%)
$AIR (-0,54%) in direct comparison and in comparison to American counterparts like $LMT (-0,75%) ?

Do we Europeans have any chance at all of keeping up? Where are we perhaps even pioneers? What is missing?

Open discussion

A little update on current events: I took a look at the largest defense companies in Europe and thought it might be of interest to you.

So here's a brief overview of the ten most important players - with a few basics about the companies, their figures (turnover, valuation, etc.) and an assessment of how much potential they still have.

These companies are currently the focus of the armaments boom and are very popular with many investors.

➡️ BAE Systems (UK) $BA. (-0,21%) - British defense technology

• P/E RATIO (P/E): approx. 21.7 on a trailing basis; expected ~19.4 (2025e)
• P/E RATIO (P/S): approx. 1.60 current; expected ~1.37 (2025e)
• Dividend yield: ~2.2 % (annual dividend ~31 pence)
• Share price (March 2025): ~£14.07 (approx. €16)
• Market capitalization~£42 billion
• Outlook: Solid sales growth (~+5% expected for 2025)
• Analysts mostly with Buy-recommendation (11 buy, 5 hold, 1 sell)

📈 Rating:

BAE Systems appears to be fairly valued at the current fairly valued to slightly favorable. The P/E ratio in the low 20s already reflects good business figures, but is in line with the industry as a whole

In view of rising defense spending and a solid order situation, moderate growth is expected, which underpins the valuation. The share is therefore considered neither highly overpriced nor a bargain - with slight upside potential. upside potential thanks to sustained demand in the defense sector.

➡️ Airbus (Defense & Space, EU)
$AIR (-0,54%) - European aerospace group

• P/E RATIO (P/E): ~30.9 current; expected ~24.9 (2025e)
• P/E RATIO (P/S): ~1.89 current; expected ~1.73 (2025e)
• Dividend yield: ~1.5 % (incl. special dividend; regular ~1.1 %)
• Share price: ~165 €
• Market capitalization: ~131 bn €
• Outlook: Civil and military aircraft demand high; 2025 delivery target raised
• Analyst consensus positive (price targets ø ~€182, ~+10% upside)

📈 Valuation:

Airbus is primarily rated as fair to slightly fair to slightly demanding valuation is seen as fair to slightly demanding. The high current P/E ratio ~31 reflects pandemic-related earnings weakness, but should fall significantly in 2025.

At a P/E ratio of ~1.8, the sales valuation is moderate. As production and profits are likely to increase in the coming years, the share appears reasonably valued. Greater share price potential depends on growth (e.g. higher jet deliveries); if this is successfully realized, the valuation could prove to be justified be justified.

➡️ Leonardo S.p.A. (Italy)
$LDO (+1,5%) - Italian defense and aerospace group

• P/E RATIO (P/E): ~22.5 current; expected ~20.6 (2025e)
• P/E RATIO (P/S): ~1.35 current; expected ~1.17 (2025e)
• Dividend yield: ~0.7 % (share price € 38.56, dividend € 0.28)
• Share price: ~38-39 €; Market capitalization: ~21 bn €
• Outlook: Strong order situation due to defense technology (market cap. +100 % in 12 months)
• Analysts see further upside potential; earnings estimates moderately rising (double-digit sales margins).

📈 Valuation:

Leonardo appears favorably valued compared to the industry favorably to fairly valued. With a P/E ratio of around 20 and a P/E ratio of ~1.3, the valuation is below that of many Western European peers. The low dividend yield reflects a strategy focused more on reinvestment.

In view of double-digit growth (share price +~100 % YoY), there could still be upside potential upside potential if margins continue to rise. Overall, the moderate valuation level suggests that Leonardo is rather slightly undervalued provided that growth in defense electronics and aerospace continues.

➡️ Thales S.A. (France) $THALES (+3,87%) - Defense Electronics, Aeronautics & Security

• P/E RATIO (P/E): ~28.5 current; expected ~24.3 (2025e)
• P/E RATIO (P/S): ~2.0 current; expected ~1.9 (2025e)
• Dividend yield: ~1.8 % (rising towards ~2 % expected)
• Share price: ~197,7 €
• Market capitalization: ~39 bn €
• Outlook: Solid sales growth (orders in defense and cybersecurity). 2024/25 profit increase expected (forward P/E <25)
• Analysts mostly positive (stable business areas, diversification).

📈Valuation:

With a P/E ratio close to 28, Thales is listed at the upper end of the industry scale, but this is partly justified by the stable earnings situation and growth in the civil electronics business. The P/E ratio of ~2 signals that investors are paying slightly more for sales than for pure defense companies - a premium for the profitable cyber/digital business. Overall, the share appears fairly valuedalthough not cheap.

Since Thales, as a broad-based technology group, is benefiting from rising defense budgets, the current valuation seems justifiable; there is further growth potential. growth potential growth potential exists, but larger share price gains are likely to be linked to higher-than-expected earnings growth.

➡️ Rheinmetall AG (Germany)
$RHM (+0,16%) - Vehicle and weapon systems, ammunition

• P/E RATIO (P/E)very high, ~76.9 current (TTM); expected ~51.8 (2025e)
• (current profits depressed by investments).
• P/E RATIO (P/S): ~4.95 current; expected ~4.37 (2025e)
• Dividend yield: only ~0.6 % (5.70 € div. / share price ~1006 €)
• Share price: ~1.040 €; Market capitalization~44 bn €
• Outlook: Extraordinary sales growth expected - forecast for 2025 raised to € 11-12 bn sales (compared to ~€ 7 bn in 2023)
• Investors have already strongly priced in this expectation (share price > €1000; +≈50% in 6 months)

📈Valuation:

After the rapid rise in the share price, Rheinmetall appears very ambitiously valued. Although the current P/E ratio (>75) is not very meaningful due to extraordinary costs, even the forward P/E ratio of around 52 signals high expectations

The low dividend yield and P/E ratio of ~5 underline that the share is already anticipating a major future jump in sales and earnings. If Rheinmetall achieves its optimistic growth targets (keyword: special assets of the German armed forces, NATO orders), the key figures could fall in the future. Until then, however, the share is considered overvalued - Investors are paying a high price for the growth potential. The upside potential is therefore subject to risks; setbacks in major orders could lead to corrections.

➡️ Dassault Aviation (France) $DAU - Fighter aircraft (Rafale) & business jets

• P/E RATIO (P/E): ~24.1 current; expected ~21.4 (2025e)
• P/E RATIO (P/S): ~3.8 current; expected ~3.2 (2025e)
• Dividend yield: ~1.37 % (div. € 3.37 at share price ~€ 246)
• Share price: ~249 €
• Market capitalization: ~19 billion €
• Outlook: Increasing export demand for Rafale jets and growing business with private jets. Analysts expect profit growth in the coming years (P/E ratio declining <22). Participation in Thales provides strategic added value.

📈Valuation:

Dassault Aviation appears to be moderately valued. The current P/E ratio of ~24 is in the mid-range and the company has little debt, which puts the higher P/E ratio (~3.8) into perspective. Investors are paying a premium for the high net cash position and future major orders (fighter jets).

Overall, the share is considered fairly valued - neither obviously undervalued nor too expensive. In view of the stable margins and special role (high-end military aircraft), a slightly higher sales multiple is justifiable. The growth potential (e.g. through defense projects and new Falcon business jets) could provide medium-term share price momentum without the valuation getting out of hand.

➡️ Saab AB (Sweden)
$SAAB B (-0,36%) - Defense systems, aircraft (Gripen) & security

• P/E RATIO (P/E): ~40.9 current; expected ~32.0 (2025e)
• P/E RATIO (P/S): ~2.7 current; expected ~2.3 (2025e)
• Dividend yield: ~0.7 % (estimate) - Saab pays out small amounts every six months due to dividends.
• Share price~320 SEK (Swedish krona);
• Market capitalizationSEK ~173 bn (approx. € 15-16 bn)
• OutlookStrong order backlog (e.g. fighter aircraft, submarines). For 2025, 12-16% organic sales growth is forecast with disproportionately high EBIT growth. Analysts mostly Buy (5 Buy, 2 Hold) - they are counting on a catch-up effect in margins.

📈Valuation:

Saab is currently quite highly valuedwhich reflects the future opportunities. A P/E ratio of ~41 is above average for defense companies and signals that current profits are (still) low - in fact, Saab invests heavily in development, which squeezes margins. The price/sales ratio of ~2.7, on the other hand, is roughly comparable with other aerospace companies. Should the envisaged double-digit growth materialize and profitability increase, the valuation will be put into perspective (forward P/E ~32).

However, the company is currently paying an advance on future profits, so that Saab is rather slightly overvalued is slightly overvalued. The growth potential (in particular through higher defence spending in Scandinavia and new Gripen export orders) is high - if it is realized, the valuation should return to a normal range in a few years.

➡️ Rolls-Royce Holdings (UK) $RR. (-1,76%) - Engines for civil aviation & military, energy

• P/E RATIO (P/E)~25 (TTM) according to current share price; profits are returning after years of losses.
• P/E RATIO (P/S)~3.3 (based on Feb. 2025)
• Dividend yield: 0 % (dividend suspended since 2020)
• Share price: ~£6.20 (approx. €7.35; equivalent to ~$9.35)
• Market capitalization: ~$79.5 billion (≈ £52 billion)
• Outlook: Turnaround underway - profit growth expected again from 2025 after restructuring. Analysts are optimistic (12 Buy, 3 Hold, 1 Sell) and see long-term upside potential of ~5% above current levels. High debt remains a risk, but commercial engine maintenance contracts and defense division provide cash flow.

📈Valuation:

After the share price multiplier in 2023 (share price +~245 % in 2023), Rolls-Royce is now no longer clearly undervalued. The P/E ratio of ~25 looks moderate, but it should be borne in mind that this is based on the recently positive earnings - margins are still low.

The sales valuation at approx. 3.3 times sales is in the midfield between classic defense and civil aircraft manufacturers. Without a dividend and with a debt burden, Rolls must first prove that the turnaround is sustainable. Overall, the share is currently fair to slightly overvalued as there is a lot of future potential (e.g. new generations of engines, small modular reactors) in the share price. If the hoped-for jump in profits is achieved in the next few years, Rolls-Royce could catch up further - however, the current upside potential is rather limited. limitedas long as tangible results are awaited.

➡️ Safran S.A. (France)
$SAF (-1,38%) - Engines (e.g. CFM), aviation supplier

• P/E RATIO (P/E): n/a (TTM negative - recent loss or special effect); to 2025e about ~31.7
• P/E RATIO (P/S): ~3.76 current; expected ~3.35 (2025e)
• Dividend yield: ~1.7% (dividend ~€3.50 p.a.)
• Share price: ~255 €
• Market capitalization: ~102 bn €
• Outlook: Safran suffered from one-off costs in 2024 (engine issue), but expects solid profits again. 2025 earnings per share should increase significantly (P/E normalized ~32).
• Analysts are divided: ~13 Buy, 6 Hold, 1 Sell - the majority see further share price potential, as Safran benefits in the long term as a high-quality supplier (duopoly with GE in aircraft engines).

📈Valuation:

Safran appears distorted by the disclosure of a loss (negative TTM P/E ratio), in fact the share is highly valued on the basis of the underlying earnings power. A forward P/E ratio of over 30 and P/E ratio close to 4 are well above the sector average, which anticipates the market position and growth opportunities (increasing aircraft production, maintenance business). The dividend yield is relatively low at <2%.

Overall, Safran is probably rather overvalued investors are paying a premium for quality and market position. The growth potential (recovery in aviation, new engine programs) does exist, but is largely priced into the share price. Setbacks could ease the valuation somewhat; in the long term, however, Safran remains an expensive but very solid value.

➡️ Hensoldt AG (Germany) $HAG (-0,31%) - Specialist for sensor and radar technology

• P/E RATIO (P/E)extremely high (TTM >400) due to low profits; forward P/E 2025e approx. 36-37
• P/E RATIO (P/S): ~3.0 currently
• Dividend yield: ~0.7 % (expected dividend € 0.40)
• Share price: ~52 €; Market capitalization: ~6 bn €
• Outlook: In high demand as an electronics supplier to the German armed forces (radar, night vision, avionics). Incoming orders from the German special fund and NATO programs will increase sales significantly in the coming years. However, Hensoldt is still in the start-up phase - profit margins are only expected to increase significantly in the medium term.

📈Valuation:

After a sharp rise in the share price, Hensoldt is clearly expensive. The current P/E ratio is hardly reasonable (triple-digit due to special effects in the balance sheet); even on a forward basis, it is in the high 30s, which is high even for high-growth tech stocks.

Investors are therefore paying in advance for expected future profits. The KUV ~3 reflects the enormous sales growth, but is not low for a defense electronics specialist. The low dividend yield shows that profits are being retained. Overall, the share seems overvalued - the high momentum (+54 % last year) already largely prices in future growth. Although Hensoldt has excellent growth prospects (digitization of defence, networking), but these would first have to translate into significantly higher profits to justify the current valuation. An entry is therefore considered speculative, as setbacks are possible if expectations are not met.

👉 Conclusion:

Europe's largest defense companies are benefiting from the rearmament cycle, which is reflected in higher valuations in some cases. Undervalued Leonardo appears undervalued in this group (thanks to more favorable ratios), while established companies such as BAE, Airbus, Thales and Dassault are largely fairly valued. fairly valued appear to be fairly valued.

Stocks with a turnaround character (Rolls-Royce) or a high future share (Rheinmetall, Hensoldt, Safran, Saab) show higher multiples and tend to be considered overvalued. overvaluedas a lot of growth is anticipated.

The growth potential is high across the industry - higher defense budgets, technology purchases and retrofitting requirements are keeping order books full. The decisive factor for further share price increases will be whether companies can translate these growth opportunities into rising profits in order to put the ambitious valuations into perspective.

Airbus $AIR (-0,54%) and Boeing $BA (-0,89%) are under pressure due to a fire at a supplier. Both Boeing and the French aircraft supplier Safran have already contacted their suppliers to clarify the possible effects of a major fire at SPS. This incident occurred on February 17 and could significantly disrupt the aircraft manufacturers' supply chains. In a letter sent to suppliers after the fire, Boeing asked whether parts from the SPS factory in Jenkintown are regularly used and what the consequences would be if these parts were missing. Airbus has also commented on the incident. A spokesperson confirmed: "It is too early to confirm the extent of our exposure, but we expect the impact on our operations to be limited." Engine manufacturer GE Aerospace has already sent teams to SPS to find alternative production sites and replacement suppliers.

In the USA, Donald Trump is causing a stir after announcing a doubling of the tariffs already in force on Chinese goods. This measure, which will apply from next Tuesday, will raise tariffs to 20 percent. Trump justifies the increase with the fight against fentanyl, which enters the United States from China via Mexico and Canada. China has already threatened to take countermeasures, although these are still unclear. The world's second-largest economy had previously imposed tariffs on imports from the USA and imposed export controls on important raw materials for the high-tech industry.

Sources:

https://www.spiegel.de/wirtschaft/airbus-und-boeing-grossbrand-bei-zulieferer-bringt-flugzeugbauer-in-not-a-196ea0db-171e-4254-b531-eea6b7dd1b5b

https://www.spiegel.de/wirtschaft/donald-trump-china-droht-mit-gegenmassnahmen-gegen-zoll-ankuendigung-a-f83077c2-9dd5-41dc-a3e3-ad78355859ec

Hello everyone,

I am quite new to "trading" and need your advice.

I own two Airbus share programs and am currently considering selling a package worth €15,000. My aim is to reinvest the money in other stocks, in particular Novo Nordisk, Tesla, Vistra and TSMC.

Background: In 2-3 years I will need the capital to build my house. I am therefore wondering whether it makes sense to hold the Airbus shares or to switch to other shares now in order to achieve a better return.

How would you proceed? Continue to hold Airbus or switch to the shares mentioned?

I am looking forward to your opinion.

$AIR (-0,54%)

$NOVO B (-0,5%)

$2330

$VST (-2,42%)

$TSLA (-2,82%)

The Airbus share $AIR (-0,54%) has lost a lot of value recently. Following a downgrade by Jefferies from "buy" to "hold", the share price fell to 160.50 euros, a drop of over 3 percent. 📉

Analyst Chloe Lemarie emphasizes that investors should wait for an improvement in production momentum to refresh sentiment around the aircraft manufacturer. Her new price target is EUR 180, which signals only limited upside potential. After the record high of almost EUR 174, investors must be prepared for a correction, as the share has lost around 7 percent since then.

Despite the current declines, the Airbus share is still up around 5 percent this year. It remains to be seen whether the production figures will develop positively and whether the new price target from Jefferies will make investors more optimistic again. What do you think about the future of Airbus shares?

Airbus shares $AIR (-0,54%) have initiated a correction following the latest business figures. The share price is now more than 6% below Tuesday's record high and lost more than 2% on Thursday. One reason for this? The outlook has not been well received by the market. UBS analyst Ian Douglas-Pennant notes that expectations have recently been very high, but the current forecasts are rather disappointing.

Airbus shares have already risen by 12% in 2025, but the uncertainty about future developments could now give investors pause for thought.

What do you think? Is this a good time to get in or is it better to wait and see? Let's discuss in the comments! 📈

Airbus $AIR (-0,54%) has just published its business figures for 2024, causing mixed reactions. While turnover rose by 6% to 69 billion euros, adjusted operating profit fell by 9% to 5.4 billion euros. This is mainly due to bottlenecks in components and challenges in the aerospace and military business.

Despite these setbacks, Airbus has increased its dividend to 3 euros per share, which should please investors. Last year, the payout was 2.80 euros. A special dividend of 1 euro will also be retained.

For 2025, the Group is aiming to deliver around 820 passenger jets - over 50 more than in the previous year. Operating profit is expected to rise to around 7 billion euros. However, analysts are skeptical and had expected more. How do you see the future of Airbus? Could the share price continue to rise or are we facing challenges? 📈

Etsy falls after sales miss expectations + Microsoft with breakthrough in quantum computing + Mercedes-Benz with profit slump due to China + Airbus sets itself significantly higher targets for 2025 + Knorr-Bremse announces higher dividend

Etsy $ETSY (-1,54%)falls after Q4 revenue misses expectations

• Shares of Etsy (ETSY) fell more than 10% on Wednesday after the company's fourth-quarter revenue fell short of analysts' expectations.
• The company reported Q4 net income of $1.03 per diluted share, compared to $0.62 a year earlier.
• Analysts polled by FactSet had expected $0.93.
• Revenue for the quarter ended Dec. 31 was $852.2 million, compared with $842.3 million a year earlier.Analysts surveyed by FactSet had expected $861.8 million.
• The company said it expects gross merchandise sales growth in the first quarter to decline at a similar rate to the fourth quarter of 2024, which saw a 6.8% decline.
• FactSet analysts expect Q1 gross revenue of $2.90 billion.

Microsoft $MSFT (-1,03%)with breakthrough in quantum computing with new Majorana-1 chip

• Microsoft has spent 17 years researching a new material and a new architecture for quantum computers.
• Now the breakthrough has been achieved with the new Majorana 1 chip, as The Verge reports.

Mercedes-Benz $MBG (+0,43%)suffers significant drop in profits due to weakness in China

• The car manufacturer Mercedes-Benz suffered a significant drop in profits last year, mainly due to poor business in China.
• Consolidated earnings fell by a good 28 percent year-on-year to 10.4 billion euros, as the DAX-listed company announced on Thursday.
• The Stuttgart-based company had already had to drastically cut its profit expectations in September.
• The dividend is to be reduced by one euro to 4.30 euros per share.
• Mercedes also intends to launch a further share buyback of up to 5 billion euros, subject to approval by the Annual General Meeting.
• In China, the most important single market, wealthy customers are buying less expensive Mercedes cars, which is causing the high profitability of previous years to dwindle.
• In 2024, only 8.1 percent of sales before interest, taxes and special items remained as operating profit in the passenger car business across the Group.
• This was slightly less than experts had expected.
• A year earlier, it had been 12.6 percent, and even higher in the two previous years. Turnover fell by 4.5 percent to 145.6 billion euros for the year as a whole.
• Earnings before interest and taxes fell by almost a third to 13.6 billion euros, which was slightly better than experts had feared.

Airbus $AIR (-0,54%)is aiming much higher for 2025 - profit forecast disappointed

• After a bumpy year, the world's largest aircraft manufacturer Airbus is aiming for higher deliveries and profits in 2025.
• CEO Guillaume Faury plans to deliver around 820 passenger jets in the current year, more than 50 more than in the previous year, as the DAX-listed company announced in Toulouse on Thursday.
• Operating profit before special items (adjusted EBIT) is expected to climb to around 7 billion euros after falling to less than 5.4 billion euros in 2024.
• Analysts had expected a little more, especially for 2025.
• However, shareholders can expect a higher dividend for the past year: Airbus intends to pay out 3 euros per share, 1 euro of which will be a special dividend.
• For 2023, the Group had paid out 2.80 euros per share - and there was also a special dividend of one euro at that time.
• In the past year, the manufacturer increased its turnover by six percent to 69 billion euros.
• However, the adjusted operating profit fell by nine percent to 5.4 billion euros.
• On the one hand, Airbus delivered 766 fewer passenger jets than originally expected due to a shortage of components.
• On the other hand, burdens in the space business and the A400M military transporter weighed on the result.
• The surplus grew again by twelve percent to 4.2 billion euros, after suffering from unfavorable exchange rates in the previous year.
• While Faury is sticking to its latest expansion plans for passenger jet production, buyers of the new A350F freighter will have to wait longer for their aircraft.
• Instead of 2026, the first aircraft is now not scheduled to enter service until the second half of 2027.

Knorr-Bremse $KBX (-1,45%)wants to grow further and holds out the prospect of a higher dividend

• Truck and train brake manufacturer Knorr-Bremse is aiming for further growth in the current year.
• The company announced on Thursday in Munich when presenting its figures for 2024 that sales are set to increase to between EUR 8.1 and 8.4 billion.
• The management expects the adjusted margin on earnings before interest and taxes (EBIT) to be between 12.5 and 13.5 percent in 2025. At almost 7.9 billion euros, revenue in the past financial year was roughly on a par with the previous year.
• Declines in the commercial vehicle business were offset by growth in the rail division.
• Adjusted EBIT increased by 8.2 percent to EUR 966.4 million, while the corresponding margin improved by one percentage point to 12.3 percent.
• Knorr-Bremse benefited from its ongoing restructuring program.
• The company announced an increased dividend for 2024.
• Most recently, Knorr-Bremse had held out the prospect of at least a stable payment - compared to EUR 1.64 per share most recently.

Thursday: Stock market dates, economic data, quarterly figures

• ex-dividend of individual stocks
• BP USD 0.08
• Microsoft 0.83 USD
• Imperial Brands GBP 0.54
• Applied Materials USD 0.40
• AstraZeneca 21.00 GBX
• easyJet 0.12 GBP
• GSK 0.16 GBP

• Quarterly figures / company dates USA / Asia
• 05:00 Lenovo quarterly figures
• 13:00 Walmart quarterly figures
• 13:30 Alibaba quarterly figures
• 14:00 Walmart analyst conference
• 17:00 Visa Investor Day
• 22:00 Booking Holdings quarterly figures

• Quarterly figures / Company dates Europe
• 07:00 Mercedes-Benz | Airbus | Zurich Insurance | Knorr-Bremse | Krones | Renault Annual results
• 07:30 Schneider Electric | Indus Holding Annual results
• 08:00 Anglo American | Repsol | Lloyds Banking Annual Results | Mercedes-Benz Analyst and Press Conference
• 09:00 Knorr-Bremse BI-PK
• 09:15 Airbus PK
• 10:00 Infineon | Siemens Energy AGM
• 13:00 Zurich Insurance Analyst Conference
• 14:30 Krones conference call
• 18:00 Leonardo | Imerys quarterly figures

Economic data

08:00 DE: Producer prices January FORECAST: +0.5% yoy/+1.2% yoy previously: -0.1% yoy/+0.8% yoy | Turnover in the hospitality industry December and year 2024

08:00 CH: Trade balance January

12:00 EU: ECB balance sheet 2024

14:30 US: Initial jobless claims (week) previous week FORECAST: 215,000 Previous: 213,000

14:30 US: Philadelphia Fed Index February FORECAST: 13.2 PREVIOUS: 44.3

15:30 US: Fed Chicago President Goolsbee, speech at "Chicagoland Chamber Mid-Market" event, Chicago

16:00 EU: Eurozone Consumer Confidence Index (flash estimate) February FORECAST: -13.9 previous: -14.2

16:00 US: Leading Indicators Index January FORECAST: -0.2% yoy previous: -0.1% yoy

The euro has been weakening since September 2024 and is approaching parity with the dollar - the currency ratio would then be one to one. The dollar is currently still worth around 1.04 euros, up seven cents in the fall.

German companies with strong business in the dollar area can benefit from this development in several ways.

"The strength of the dollar is good news for exporting German companies," comment the analysts at Baader Bank. This is because their products are comparatively cheaper in the USA.

A weak euro makes exports cheaper, making European products and services cheaper and more competitive in the dollar area and thus in large parts of America and Asia. Import duties in the USA would make products more expensive again - but in the end, the two effects could almost balance each other out.

For example, the medical technology group Siemens Healthineers $SHL (-1,1%) is hardly worried about the threat of import duties in the USA. The company shares the fear of a global trade war. However, the company expects that the headwind from tariffs and the tailwind from the stronger dollar will largely balance each other out, says CFO Jochen Schmitz.

The tailwind from the strong dollar could remain with companies for a long time to come. "The euro will become a really weak currency. It should quickly fall below parity with the dollar and be at 0.95 euros per dollar quite quickly," expects the well-known fund manager Jens Ehrhardt, founder and CEO of DJE Kapital.

The European Central Bank (ECB) expects the strength of the dollar to ease the burden on exporting companies in the event of possible import tariffs in the USA. ECB Governing Council member Pierre Wunsch says: "The euro would have to be brought to parity in order to essentially compensate for a tariff of ten percent."

The many companies that produce locally in the USA and sell their goods there also benefit from a strong dollar. This is because the effect on the balance sheet is even stronger as soon as companies convert their earnings generated in the dollar zone into their home currency. For every dollar earned, there are currently seven euro cents more than in the fall.

Companies are already feeling the effects. For example, Infineon $IFX (-3,76%) raised its forecast for the current financial year a few days ago. Previously, the Munich-based semiconductor manufacturer had assumed a slight decline in turnover. The DAX-listed company now expects stable to slightly increasing revenue in 2024.

One reason is the strength of the dollar. Infineon is now assuming a euro-dollar exchange rate of 1.05 euros this year - after previously assuming 1.10 euros. "This adjustment and the better exchange rate in the first quarter increase our revenue expectations by around 450 million euros," calculates Group CEO Jochen Hanebeck.

The estimates show: The biggest currency beneficiaries of a weaker euro are highly globalized companies with strong business in the dollar area. In addition to Infineon, these include $BAYN (+2,19%) Bayer with its strong US business and the DAX heavyweight Airbus $AIR (-0,54%). The European joint venture mainly builds aircraft in Germany and France, but they are sold worldwide at dollar prices.

Rheinmetall $RHM (+0,16%) also benefits: Armaments are usually invoiced in dollars, but the Düsseldorf-based group reports them in euros, which results in higher revenues from the conversion alone.

There are also profiteers in the financial sector. Deutsche Bank $DBK (-2,76%) CFO James von Moltke hinted at the outlook for 2025: There is potential for higher Group revenues than the 32 billion euros targeted so far, he said. So far, the bank has been planning with an exchange rate of 1.10 dollars per euro - i.e. a euro that is more than five cents stronger than it is currently worth. However, as Deutsche Bank has more income in dollars than costs in dollars and does not hedge this currency risk, it benefits from a weak euro, according to Moltke.

The weak euro also helps the automotive industry. Many luxury vehicles are produced in Germany, but sold worldwide, especially in the USA. Porsche $P911 (+2,78%) sells every fourth car there - but does not produce a single one.

"This will have a positive impact of several hundred million euros on Porsche's balance sheet," says a Frankfurt stock trader with a view to this year's results. However, US tariffs on imports of European cars could offset this positive effect.

Source & graphic: Handelsblatt

DAX reaches new all-time high again 🇩🇪📈💶👑. The left, trade unions and Wahra Sagenknecht would say that the stock market is a casino and a game of chance. Some people just always want to be wrong. Samsung Galaxy Watch 7 Which German shares do you have and how have they performed? #dax
#dax40
$LYY7 (-1,25%)
$SIE (-2,95%)
$ALV (-0,41%)
$SAP (-0,81%)
$VOW (-0,62%)
$BMW (-0,44%)
$P911 (+2,78%)
$RHM (+0,16%)
$ENR (-3,55%)
$AIR (-0,54%)
$DTE (-0,1%)
$DBK (-2,76%)
$DHL (-2,13%)
$CBK (-2,78%)
$MBG (+0,43%)
$PAH3 (+0,8%)