Finance
Europe Inc Outlook Improves, but Still Points to Paltry Earnings
Published by Global Banking & Finance Review®
Posted on April 23, 2026
3 min readLast updated: April 23, 2026
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Europe’s Q1 earnings outlook improves modestly—non‑energy blue‑chips set to grow 0.4% vs 0.3% expected a week ago, while revenues slide 0.9%. Energy gains, propelled by high oil prices, boost STOXX 600 earnings to 3.2%.
Europe Inc outlook improves, but still points to paltry earnings
First Quarter Earnings and Sector Highlights
April 23 (Reuters) - The outlook for European corporate earnings has slightly improved, with most companies set to report slight profit growth for the first quarter, the latest LSEG I/B/E/S forecasts showed on Thursday, although a fragile detente in the Middle East presents risks.
European blue-chips, excluding energy majors, are expected to report a 0.4% increase in first-quarter earnings on average, slightly better than the 0.3% gain analysts expected a week ago.
On the other hand, revenues for large non-energy companies are expected to fall 0.9% on average. Declining revenues and growing profits could be a sign that companies' efforts to cut costs and restructure businesses are paying off.
Sector Performance Overview
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STOXX 600 Index and Energy Sector
Earnings of companies included in Europe's benchmark STOXX 600 index are expected to rise by 3.2%, though the average is skewed by the energy sector, which is forecast to deliver 27% growth
Oil and gas companies have benefited from higher crude prices due to the war in the Middle East
The forecast contrasts with pre-war estimates: energy majors' first-quarter profits were expected to fall 2.0% as of February 26
Crude futures are about 45% higher than before the war that began in late February, as peace talks between Iran and the U.S. have stalled and amid continued restrictions on trade through the Strait of Hormuz
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Real Estate and Utilities
Earnings of real estate companies and utilities are expected to fall by 15.4% and 13.6%, respectively, according to the I/B/E/S report
Company-Specific Updates
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Investor Focus and Market Reactions
Investors will closely watch results of more than 80 companies next week to see how they expect to navigate the year
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Major Corporate Announcements
Nestle
Nestle beat first-quarter sales forecasts and stuck to its annual outlook on Thursday, saying it had so far seen "very little impact" from the war in the Middle East on its global business
Sainsbury's and Tesco
However, British supermarket group Sainsbury's warned that uncertainty is clouding its outlook and could drag profits lower this year, echoing concerns voiced by market leader Tesco
LVMH
LVMH's CEO Bernard Arnault told investors the luxury goods group would return to growth if the conflict gets resolved quickly, but warned that if it spiralled into a "global catastrophe" it was impossible to predict the outcome
Risks and Outlook
(Reporting by Javi West Larrañaga; Editing by Milla Nissi-Prussak and Susan Fenton)
Key Takeaways
- •Non‑energy European blue‑chips’ Q1 earnings are now expected to rise 0.4%, up from 0.3% last week, though revenues are set to fall 0.9%—a sign of successful cost cuts and restructuring (lse.co.uk)
- •Energy sector drives forecasts: STOXX 600 earnings up 3.2% overall, with energy companies delivering ~27% growth, rebounding from a pre‑war Q1 profit forecast of –2.0% (lse.co.uk)
- •Technology profits are robust (+12.8%), while real estate and utilities face sharp declines (–15.4% and –13.6%). Nestlé outperformed in Q1, confirming its annual outlook and noting minimal impact so far from Middle East conflict (lse.co.uk)
References
Frequently Asked Questions about Europe Inc outlook improves, but still points to paltry earnings
1How is the energy sector impacting overall profit growth?
Profits in the STOXX 600 index are forecast to rise 3.2%, skewed by energy majors expected to deliver 27% growth due to higher crude prices.
2Why are European revenues expected to fall despite rising profits?
Companies have focused on cost-cutting and restructuring, which boosts profits even as revenues decline by an average of 0.9%.
3Which sectors are expected to see the biggest profit declines?
Real estate companies and utilities are forecast to see earnings fall by 15.4% and 13.6% respectively.
4How has the Middle East conflict influenced European energy profits?
The war has led to a 45% increase in crude prices, helping energy companies significantly exceed earlier profit forecasts.
