By Alessandro Parodi
(Reuters) -The outlook for European corporate health has deteriorated, the latest forecasts showed on Tuesday, heightening fears that a global trade war ignited by U.S. President Donald Trump’s tariffs will hurt companies’ earnings.
European equities’ impressive start to 2025 has been obliterated by Trump’s announcement of sweeping tariffs last week, as executives tot up their potential impact on supply chains and weigh ditching previous financial predictions.
European companies are expected to report a drop of 2.2% in first-quarter earnings, according to LSEG I/B/E/S data, worse than the 1.5% drop analysts expected a week ago.
Analysts’ expectations for first-quarter results have deteriorated markedly since Trump’s January inauguration when earnings were expected to rise by 3.5%.
Consensus for revenue, however, improved with forecasts of a 4.4% increase, compared with a 4.2% increase expected last week.
This compares with a 3.3% drop in earnings and a 4.6% drop in revenues a year ago, the data showed.
Trump’s tariff offensive has swept up dozens of countries, sent financial markets into a tailspin and fuelled expectations that the global economy may be headed for a recession.
The STOXX 600’s year-to-date performance turned negative on Friday. And, as of Tuesday’s closing, it is down 9.3% since the April 2 close, before the tariff announcement.
Global investors and analysts expect a barrage of corporate profit warnings in the coming weeks as companies model the tariffs into their outlooks.
First-quarter earnings season in Europe kicks off next week, with some of Europe’s biggest companies by market value – Publicis, LVMH, ASML and L’Oreal – due to release quarterly results.
(Reporting by Alessandro Parodi; Editing by Jo Mason and Joe Bavier)
