Headlines
European corporate profits expected to improve as results show tariff mitigation
Published by Global Banking and Finance Review
Posted on October 28, 2025
2 min readLast updated: January 21, 2026
Global Banking and Finance Review
Company
Published by Global Banking and Finance Review
Posted on October 28, 2025
2 min readLast updated: January 21, 2026
European corporate profits are improving as companies adapt to tariffs, with 56.3% beating expectations. Volvo Cars and Adidas show strong performance.
By Marleen Kaesebier and Javi West Larrañaga
(Reuters) -The outlook for European corporate health has slightly improved, the latest earnings forecasts showed on Tuesday, as early quarterly results see businesses adapting to U.S. President Donald Trump's tariffs.
European companies are expected to report growth of 0.4% in third-quarter earnings, on average, according to LSEG I/B/E/S data. That exceeds the 0.2% increase analysts had expected a week ago.
It would, however, still be the worst quarterly performance since the first quarter of 2024.
EARLY RESULTS BEAT ANALYST EXPECTATIONS
Some 96 companies from the index have so far reported earnings, with 56.3% beating analyst expectations.
Volvo Cars was among the companies that surprised investors, seeing its shares jump as much as 40% after it announced third quarter earnings that beat market expectations helped by a cost-cutting programme.
Other European companies have similarly been more upbeat than expected despite tolls from extra U.S. import tariffs.
German sportswear giant Adidas last week raised its full year operating profit targets saying it had managed to mitigate some extra costs from the higher levies.
This week rising trade truce hopes between the world's top two economies, the U.S. and China, have also helped boost European shares.
Before Trump first announced his tariff plans in February, forecasts for third quarter earnings were expected at a much higher 12.5% growth.
Revenue estimates for the STOXX 600 companies are now expected to shrink slightly with a 0.1% fall compared to last year, according to the LSEG data. That compares to a 0.2% rise expected last Tuesday.
Later this week results from companies like Volkswagen, Shell and Puma may give an indication of how well companies are mitigating higher import taxes.
(Reporting by Marleen Kaesebier and Javi West Larrañaga; Editing by Emelia Sithole-Matarise and Matt Scuffham)
Earnings growth refers to the increase in a company's profit over a specific period, typically expressed as a percentage. It indicates the company's financial performance and profitability.
The STOXX 600 is a stock index that represents 600 of the largest companies across 17 European countries. It is used as a benchmark for European equity performance.
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