European corporate profits set to grow at fastest rate since 2022
Strong earnings growth driven by energy and materials sectors
By Javi West Larrañaga
Latest earnings projections for European blue-chip companies
Aug 7 (Reuters) - European blue-chip companies are set to deliver their strongest earnings growth since the third quarter of 2022, latest LSEG I/B/E/S data showed on Thursday, thanks to soaring profits of energy majors and a good showing by miners, steelmakers and chemical firms.
Companies on Europe's benchmark STOXX 600 index are now expected to report earnings growth of 22.4% for the second quarter, based on results from 236 firms and market estimates for those that are yet to report.
Impact of sector performance on overall growth
Although early estimates were greatly buoyed by oil and gas companies' strong expectations, other sectors in the index have also slowly improved their year-on-year forecasts as the earnings season has gathered steam.
Excluding energy sector results
Excluding the energy sector, STOXX 600 companies are seen reporting earnings 11.5% higher than a year ago, on aggregate, which is considerably stronger than the 5.5% rate forecast in early July, before the beginning of the season.
Revenue growth and sector leaders
The estimate for European blue-chips' second-quarter revenues has also improved and is now expected to grow by 12.6%, compared to the 11.7% rate seen last week. That would be the fastest growth rate in the past 16 quarters.
Energy company profits are estimated to have the highest growth rate of all sectors, at 135.8%, followed by those of basic materials — including chemical firms, steelmakers and miners — seen growing 57.6%.
Market reaction and outlook
European shares closed at a record high for a third straight session on Thursday as investors digested a largely positive slate of corporate earnings and assessed prospects for a U.S.-Iran peace deal and a potential reopening of the Strait of Hormuz.
(Reporting by Javi West Larrañaga in Gdansk; Editing by Milla Nissi-Prussak)