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It still seems to be the middle of winter for the profits made by companies in Europe, but in some sectors and geographical areas the first signs of a recovery are already appearing which could consolidate during 2024. The quarterly reporting season, now upon us also in the Old Continent, in fact, it is starting to be characterized by a minus sign, for the fourth consecutive quarter. This is demonstrated by the average consensus estimates collected among analysts by Lseg I/B/E/S, which in the first three months of the year signal a 12.1% reduction in the profits of the companies that make up the pan-European Stoxx600 index compared to what was totaled 12 months earlier.
However, Italy shows substantial stability (+0.2% on average estimates for the quarter for those listed on Piazza Affari), unique among the main countries in the euro area, and with a result that is surprising up to a certain point . As is known, the Milanese stock market is highly exposed to that banking sector whose balance sheets continue to benefit, in many cases even beyond the most reasonable expectations, from the growth in the interest margin linked to the rise in rates. In any case, the financial sector proves to be the most resistant (-1.2% profits, again on an annual basis) even at a continental level, where the slowdown hits mainly industrials (-19.6%), energy (-28 %) and basic materials (-31.1%).
The issue of the sustainability of the results obtained in the last 12 months by the banks is also fundamental to understand how the dynamics are oriented for the rest of 2024 and the managers’ indications during the next press conferences will probably be followed with greater attention than the financial statement data themselves . «The first quarter seems to have started off at the right pace, perhaps even better than we could have expected, but I believe that we will prefer to maintain an attitude of caution and we are unlikely to see profit estimates increase for the moment», maintains Alberto in this regard Villa, head of the Intermonte research office, who postpones the possible revision of what is called guidance to subsequent occasions.
It is no coincidence that the estimates developed by the Milanese investment bank for Il Sole 24 Ore project a “profit base” for the main Italian listed companies (around 120, for a capitalization exceeding 90% of the entire list) at 86.1 for the whole of 2024. billion euros, 4.4% less than the record levels reached last year. Contrary to what currently seems to be looming on a European scale, where the past quarter could really represent the turning point. The indications collected by Lseg I/B/E/S speak of a foreseeable rebound in continental profits of 2.9% starting from the second quarter, thanks also to an increasingly less unfavorable comparison with last year’s data, and increase the annual aggregate profit figure to 776 billion, 4.3% more than in 2023.
Returning to Italy, and to the data that the big companies are preparing to release (on Tuesday it will be Eni’s turn, on Thursday StMicroelectronics will follow, while for the banks it will be necessary to wait until the following week) Intermonte points out how, banks aside, we can generally expect perhaps better-than-forecast performances for the companies most exposed to the United States economy, which is progressing brilliantly. «In announcing the maxi acquisition on US soil a few days ago – he cites Villa as an example – Prysmian implied that its quarterly results will be good, despite operating in a cyclical sector such as that of cables for applications in the energy and telecommunications”.
Tags: European stock markets profits banks save Piazza Affari
