Major European companies expect higher third-quarter earnings, according to LSEG data from Thursday. While growth should slightly temper from the previous quarter, profits remain strong. A Deutsche Bank report said, "Demand is strong enough to allow companies to pass on higher prices." Meanwhile, energy majors saw massive gains, unlike real estate.
Oct 9 (Reuters) - Major European companies are expected to report substantially higher third-quarter earnings, the latest LSEG I/B/E/S data showed on Thursday, although the year-on-year growth should slightly temper from the previous quarter.
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That is an improvement compared to last week's forecast for 19.4% growth and would mark the second-best quarterly profit growth in the past 14 quarters. Excluding the energy sector, the expected growth rate for STOXX 600 companies is a more modest 9.7%.
European blue-chip companies' revenues are seen increasing by 10.6% from a year ago, also above the average of the past couple of years.
"Demand is strong enough to allow companies to pass on higher prices which leads to higher sales. At the same time, energy costs make up a smaller share of sales than headlines would suggest," a Deutsche Bank report said earlier this week.
European energy majors have been benefiting from the consequences of the US-Israeli war with Iran and from Ukrainian drone attacks on Russian refineries, which have sharply cut exports from some of the world's biggest producers of fossil fuels.
They are now expected to post profit growth of 115.9% for the third quarter, according to the LSEG report.
Meanwhile, companies in the European real estate sector are seen delivering earnings 71.5% smaller than in the same period last year.