- European corporate earnings set to shrink 0.2% in Q3, LSEG I/B/E/S data shows
- STOXX 600 revenue estimates to fall 0.3% compared to last year
- Real estate sector to see highest earnings growth, utilities the lowest
Oct 7 (Reuters) - European corporate earnings are set to shrink in the third quarter, the latest forecasts showed on Tuesday, as companies feel the impact of U.S. President Donald Trump's trade tariffs.
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.
That would be the worst quarterly performance since the first quarter of 2024.
The forecast contrasts starkly with the 12.5% earnings growth expected for the third quarter before U.S. President Donald Trump announced plans for a wide array of tariffs in February.
REVENUE ESTIMATES FALL
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.
According to the report, the real estate sector is expected to see the highest earnings growth rate at 5.6%, while utilities have the lowest earnings growth rate expected of any sector with a 5.6% fall.
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, Alexandra Hudson
Source: Reuters