European corporate outlook improves, but earnings forecast to fall

By Javi West Larrañaga

Feb 12 (Reuters) - The outlook for European corporate health has improved, the latest LSEG I/B/E/S forecasts showed on Thursday, as European blue-chip indices hit highs on the back of a better-than-anticipated earnings season so far.

European companies are expected to report a 1.1% drop in 2025 fourth-quarter earnings, on average, according to LSEG data, a substantial improvement from ‌the 3.1% decrease analysts expected a week ago.

That would be still be the worst earnings performance in the ‍past seven quarters, based on the LSEG data.

OUTLOOK REBOUNDS

Market forecasts for fourth-quarter earnings sharply deteriorated after U.S. President Donald Trump announced plans for a wide array of tariffs on trading partners in February last year.

Expectations for STOXX 600 company earnings worsened from around 11% growth expected before the announcement to a contraction of as much as 4.2% estimated in January.

Despite that, forecasts have slightly rebounded in past weeks, as 60% of companies have posted better-than-expected results so far this season. In a typical quarter, 54% beat analyst estimates, according to LSEG data.

The outlook for revenue, however, deteriorated, and revenues of STOXX 600 .STOXX companies are now expected to be 3.4% lower than in the same period last year, compared to a forecast of a 3.2% decrease last week.

Better-than-expected results of luxury group Hermes HRMS.PA and Ray-Ban maker EssilorLuxottica ESLX.PA coupled with positive guidance for 2026 from the world's largest brewer Anheuser-Busch Inbev ABI.BR and Siemens SIEGn.DE were helping sentiment in Europe.