European corporate earnings set to get a boost from energy windfall

European Corporate Earnings Set for Growth Driven by Energy Profits

European Corporate Earnings Outlook and Sector Performance

Improved Forecasts for European Companies

Oct 22 (Reuters) - The outlook for European companies has slightly improved, the latest LSEG forecasts showed on Thursday, as energy majors are expected to deliver a big jump in third-quarter profit and investors digest a mixed bag of results.

Companies on Europe's benchmark STOXX 600 index are expected to report quarterly earnings ​growth of 21.9% on average, the second-best growth rate in the past four years, the LSEG report showed, based on results from 47 companies and market estimates for those that are yet to report.

That is an improvement compared to last week's 20.7% forecast.

Energy Sector as a Key Driver

Energy majors are outliers as their trading desks profit from the volatility and disruption set off by the US-Iran war and are seen posting earnings 134.1% higher compared to a year earlier.

Performance Excluding Energy Sector

Excluding the energy sector, the rest of the companies in the STOXX 600 index are expected to book considerably more moderate gains, at 8.4%, on average.

Revenue Growth and Investor Sentiment

The outlook for European blue-chip companies' third-quarter revenue has also improved and is now seen growing at 13.3% from a year ago, which would mark the best showing since the third quarter of 2022.

Challenges Facing European Corporations

But despite the exceptional growth forecast, European corporations might struggle to convince investors weary of higher oil prices and soaring government borrowing costs, which are spurring fears of a replay of the euro zone debt crisis.

(Reporting by Javi West Larrañaga in Gdansk; Editing by Arun Koyyur)