Analysts are generally confident on the annual results must publish the major European groups, which should be much better than their American counterparts enjoying the accommodative policies of the European Central Bank (ECB), the strength of the dollar against the euro and declining commodity prices.
Companies in the European index STOXX Europe 600 should record a 39% growth record profits in the fourth quarter, according to Thomson Reuters data, a strong rebound after losing 5% in the third quarter.
The support of the ECB and the induced fall in the euro explain the discrepancy between the expected benefits of the Euro Stoxx 50, composed exclusively of the euro zone and the STOXX 600.
“The margins are now larger in Europe than in the US, and the benefits of a stronger dollar should continue to support the profits of European companies,” analyzes Didier Duret, global chief investment officer at ABN-AMRO Private Banking .
Growth in the eurozone is expected to be around 0.4% per quarter in the euro zone until the first quarter 2017, according to economists polled by Reuters.
THE TELECOMS AND PUSHED BY AUTOMOBILE GROWTH
This recovery of the domestic economy has helped some sectors, like telecoms, whose results are expected to rise 95.2%, and financials (+ 439.9%).
“There is a macroeconomic momentum favorable to them,” analyzed Laurent Denize, Global Co-Chief Investment Officer Meriten Oddo Asset Management, which also think the automobile sector is expected to come out ahead of the earnings season.
However, all sectors should not both get by. The oil companies could see their profits melt over 30%, according to Thomson Reuters data, penalized by the drop in oil prices.
“It is clear that some sectors of the groups will have to cut their dividends,” said Richard Dunbar, Deputy Head of Global Strategy of Aberdeen.
According to him, this earnings season will also probe the private leaders on their perception of the economic environment in these uncertain times.
“I suspect they will have a cautious view of the future, but at the same time, mergers and acquisitions have never been greater,” he recalled.
Oddo MidCap shares the view that the turnover of the Small and Mid Caps will grow by 4.5% in the fourth quarter, less than in the third quarter (+ 6.4%) and in the first half ( + 7.8%). The operating margin should she, set at 10.2% in the second half, against 8.9% in the first and 10.3% in the second half of 2014, pushing Oddo Midcap talking about expected results “with no particular enthusiasm.”