European Q1 Corporate Profits Expected to Decline by 3.5%
By Javi West Larrañaga
(Reuters) -The outlook for European corporate health continues to deteriorate, according to analyst forecasts published on Tuesday, as economic uncertainty persists around U.S. tariffs and other policies.
European companies are expected to report a drop of 3.5% in first-quarter earnings, according to LSEG I/B/E/S data, worse than the 3% drop analysts had expected a week ago.
If confirmed, it would be the worst quarter for European companies in terms of earnings since the final three months of 2023.
Analysts' expectations for first-quarter results of European companies have gradually declined after months of trade war talk from an expected 3.1% increase around the time of U.S. President Donald Trump's inauguration in January, according to the report.
Consensus for revenue also continued to worsen with analysts expecting only a 1.4% increase, compared with a 2.5% increase expected last week. This compares with a 3.3% drop in earnings and a 4.6% drop in revenues a year ago, the data showed.
Trump's 90-day pause in tariffs offered limited respite after weeks of market turmoil, but his recent comments criticising Fed Chair Jerome Powell have added to the uncertainty, raising questions about whether the Fed's independence could be compromised.
One such example is Dutch giant ASML, whose shares have slumped around 7.3% since it said on Wednesday tariffs were compounding uncertainty around its 2025 and 2026 outlook after it reported lower-than-expected first-quarter net bookings.
As of Tuesday's close, the Europe-wide STOXX 600 index was flat year-to-date, the uncertainty having erased all gains.
First-quarter results of large-caps Nokia, Air Liquide and AkzoNobel later this week could shed more light on how companies are navigating the market ructions.
(Reporting by Javi West Larrañaga; editing by Tomasz Janowski and Mark Heinrich)
