Europe's Blue-Chip Companies Set for Strongest Q2 Earnings in Years
Q2 Earnings Surge Driven by Energy and Materials Sectors
Profit Expectations Reach New Highs
Aug 13 (Reuters) - Second-quarter profit expectations for Europe's blue-chip companies have risen for an eighth consecutive week, putting the region on track for one of its strongest earnings seasons in years as soaring energy and materials profits offset signs of softer demand elsewhere.
Companies in the STOXX 600 index are now expected to report aggregate earnings growth of 23.4%, according to LSEG I/B/E/S data, based on reported results from 268 companies and estimates for those yet to publish results.
Sector Performance Highlights
Energy Sector Leads the Way
Energy companies are expected to lead the gains, with profits forecast to more than double from a year earlier after oil prices surged during the U.S.-Iran conflict.
Basic Materials Sector Shows Strong Growth
Basic materials is projected to be the second-fastest growing sector, with earnings expected to rise nearly 70%, helping broaden the earnings recovery beyond oil producers.
Broader Market Trends
Earnings Growth Beyond Energy
Excluding the energy sector, STOXX 600 companies are still expected to report earnings growth of 12.3%, suggesting the strength of the reporting season is not solely dependent on higher commodity prices.
Revenue Growth Moderates
Revenue growth is expected to be more modest. STOXX 600 companies are forecast to increase sales by 11.4% from a year earlier, down from a 12.6% growth estimate last week.
Analyst Expectations and Investor Outlook
Beating Analyst Expectations
Of the 268 companies that have reported results so far, 58.6% have beaten analyst expectations, above the 54% average for a typical quarter since 2012.
Future Earnings Momentum in Question
While the reporting season has generally exceeded expectations, investors remain focused on whether earnings momentum can be sustained in the second half as global growth slows and geopolitical tensions continue to cloud the outlook.
(Reporting by Rafal Nowak in Gdansk;Additional reporting by by Tharuniyaa Lakshmi and Ragini Mathur in Bengaluru;Editing by Matt Scuffham)