Outlook for European corporate profits worsens further

LONDON (Reuters) – Expectations for second- and third-quarter corporate profits are deteriorating further in Europe, despite a gradual easing across the continent of lockdowns aimed at curbing the coronavirus pandemic, Refinitiv data showed on Wednesday.

Companies listed on the pan-European STOXX 600 are now expected to report a decline of 48.4% in second-quarter earnings, down from a drop of 46.7% forecast the week before.

For the third quarter, analyst expectations are now set for a 35.3% fall in earnings, versus 35.1% a week ago.

Analysts believe the expected recovery from the recession will be gradual and the economy will not bounce back, let alone return to normal, before the first quarters of 2021.

The last three months of 2020 are expected to see STOXX 600 earnings fall by 16.5%, before bouncing back respectively to 27.2% and 53.1% for the first two quarters of next year.

Before the pandemic, analysts had expected the first quarter of 2020 to bring an end to Europe’s corporate recession that had lasted through 2019.

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