By Javi West Larrañaga and Marleen Kaesebier
(Reuters) -The outlook for European corporate health has improved slightly, the latest earnings forecasts showed on Tuesday, though the expected results would still be the worst quarterly performance since the first quarter of 2024.
European companies are expected to report a drop of 0.2% in third-quarter earnings, on average, according to LSEG I/B/E/S data, below the 0.6% fall analysts expected a week ago.
The forecast contrasts starkly with the 12.5% earnings growth expected before U.S. President Donald Trump announced plans for a wide array of tariffs in February.
Revenue estimates for Europe-wide STOXX 600 companies have also taken a hit and are now expected to shrink 0.3% compared to last year, according to the data.
A year ago, STOXX 600 companies delivered on average a 7.8% increase in third-quarter earnings and a 1.1% drop in revenues. In the second quarter of 2025, earnings increased 4.0% year-on-year.
This earnings season could show how European companies are navigating a rocky trade environment and whether they will benefit from increased clarity since a U.S.-EU framework deal in July.
Shares in France’s SEB and Britain’s Aston Martin plunged on Monday after the former cut its profit forecast and the latter warned of a bigger-than-expected annual loss as a result of lower demand and U.S. tariffs.
Euro zone earnings have disappointed this year, but they are set to improve in 2026 on the back of a number of catalysts, J.P. Morgan analysts said in a note on Monday, upgrading the single currency area to “overweight” from “neutral”.
(Reporting by Javi West Larrañaga and Marleen Kaesebier. Editing by Mark Potter)
