European earnings on course for 30% slump

Two weeks into Europe’s first-quarter earnings season, more companies are cutting jobs and throwing up their hands over future guidance.

Volkswagen forecast a severe drop in earnings this year and IAG will slash the workforce at British Airways by almost 30% as the corporate fallout from the coronavirus pandemic worsens. Airbus SE burned through €8bn of cash last quarter, while advertiser WPP said revenue fell as much as 30% in some regions.

Not all industries are suffering the same fate. Drugmakers AstraZeneca and GlaxoSmithKline both beat earnings estimates while supermarket giant Carrefour benefited from customers stockpiling food and ordering online during lockdowns.

Barclays and Standard Chartered set aside piles of cash for troubled loans, but were boosted by a boom in trading fueled by volatile markets.

Earnings for European companies are headed for a 30% drop in the quarter, according to Morgan Stanley, which said expectations are similar for the second and third quarters as well. Financial, commodity and industrial companies are showing the biggest decline in profit, while healthcare is holding up the best.

That outlook seems to already be reflected in the stock market, with the Stoxx Europe-600 index down 18% this year after plunging from mid-February through mid-March, then recovering almost half the losses.