By Javi West Larrañaga
(Reuters) -The outlook for European corporate profitability has worsened, LSEG I/B/E/S forecasts showed on Tuesday, as the uncertainty caused by U.S. President Donald Trump’s tariffs persists.
European companies are expected to report a 3% drop in first-quarter earnings, the forecasts showed, a deeper decline than the 2.2% drop analysts expected a week ago.
Around the time of Trump’s inauguration in January, the forecasts were for a 3.1% increase.
Analysts also lowered their consensus expectations for revenue to a 2.5% increase, compared with a 4.4% rise expected last week.
The expectations compare with a 3.3% drop in earnings and a 4.6% drop in revenue a year earlier, the data showed.
Following an initial wave of market turmoil in response to his “liberation day” announcement on April 2, Trump’s 90-day pause in tariffs, exemptions for Chinese smartphones and electronics, and suggestions of exemptions for carmakers have helped to improve market sentiment.
Companies, however, are still struggling with the uncertainty of Trump’s policy shifts.
Results from this earnings season so far suggest the luxury sector is among those facing difficulties.
LVMH’s first-quarter revenue missed expectations, meaning it briefly lost its place as Europe’s biggest luxury company by market capitalisation on Tuesday.
Further results news follows later this week when European large-caps ASML and L’Oreal are due to release their first-quarter earnings.
Some companies have started to withdraw, or refrain from giving financial forecasts, while investors and analysts expect many to issue profit warnings in the coming weeks.
Still, the Europe-wide STOXX 600 index is on track for a weekly rise after three weeks of losses, and as of Tuesday’s close, it was up 0.1% year-to-date.
(Reporting by Javi West LarrañagaEditing by David Goodman and Barbara Lewis)
