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Europe Earnings Growth Expected To Slow Ahead Of Peak Reporting Season
Companies listed on Europe’s STOXX 600 index are expected to record a 19.4% increase in third-quarter earnings compared with a year earlier, with the energy industry accounting for a significant share of the growth, according to LSEG I/B/E/S data released Thursday.
The projected increase represents a slowdown from the second quarter, when earnings received stronger support from several major sectors.
When energy companies are excluded, earnings across the STOXX 600 are expected to grow 9.9%. Cyclical consumer goods firms are projected to lead the gains, while expectations for the technology sector have also improved.
Technology earnings are now forecast to climb 23.8%, significantly above the 13.1% estimate issued in July.
The energy sector is expected to post a 98.6% rise in earnings, compared with 138.6% growth recorded in the second quarter. Higher fuel prices have helped support the sector, with Brent crude gaining about 14% in September and diesel refining margins climbing to a record level.
Real estate is projected to suffer the sharpest decline among the sectors, with earnings expected to drop 71.4% compared with the same period a year earlier.
STOXX 600 companies are also expected to report a 10.6% increase in revenue. Without energy companies, however, revenue growth is projected at 4.3%, while sales are expected to weaken in four sectors.
H&M, the first company in the benchmark to release its results, reported profit above analysts’ expectations after receiving one-off refunds related to US tariffs. Its sales, however, were largely unchanged.
For the fourth quarter, analysts are forecasting earnings growth of 35.1%. Despite the stronger outlook, the STOXX 600 fell 1.3% at the start of the quarter as higher bond yields put pressure on the market ahead of the busiest period of the earnings season.
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