A compact European earnings season picks up momentum this week, as companies spanning Nordic banking, Dutch chipmaking technology, UK retail and Swiss scents and pharmaceuticals publish their latest quarterly results.
(Bloomberg) — A compact European earnings season picks up momentum this week, as companies spanning Nordic banking, Dutch chipmaking technology, UK retail and Swiss scents and pharmaceuticals publish their latest quarterly results.
Better than expected earnings from Nordea Bank Abp on Monday bode well for regional peers reporting in the coming days. The Nordic region’s biggest lender said net interest income rose 40% to €1.83 billion ($2.1 billion) in the three months through June. That exceeded the €1.81 billion average analyst estimate. Net income at €1.34 billion also topped estimates averaging at €1.26 billion.
Nordea’s results echo a strong performance by DNB Bank ASA last week, which helped dispel fears of contagion from Sweden’s commercial real estate rout.
A more resilient banking system means the property crisis is unlikely to trigger a repeat of the 1990s financial meltdown, BNP Paribas SA’s Nordic head, Eirik Winter, said last week. At the same time, the scope for more net interest income upgrades is diminishing as rates near their peak and the pressure to pass interest rate hikes on to savers increases, Bloomberg Intelligence’s Mar’Yana Vartsaba said before Nordea’s statement.
Aside from banks, Dutch chipmaking equipment supplier ASML Holding NV will offer more insight into electronics demand, while African telecoms giant Vodacom Group Ltd. will reveal how sales fared in the eight countries it serves. Swiss drugmaker Novartis AG also reports.
Highlights to look for this week:
Tuesday: Novartis AG’s (NOVN SW) results before the Swiss open should echo a solid first quarter, led by strong momentum from its new prostate cancer therapy Pluvicto and established breast cancer treatment Kisqali. But psoriasis drug Consentyx may have had another difficult quarter in the US, as it continues to feel the impact of a Medicaid revenue deduction. The recent invalidation of a patent for heart drug Entresto may see its bestseller face generic competition as soon as 2025, according to Citi and Stifel. Analysts are also keen for more details on the timing of the Sandoz spinoff.
- Ocado Group Plc’s (OCDO LN) first-half retail sales probably grew, albeit at a low single-digit percentage rate as consumers returned to physical stores. Higher wage costs and its price-matching strategy with Tesco Plc may have led to a bigger adjusted Ebitda loss. Takeover speculation has fueled a recent rally in the stock, offering a reprieve as a funding crunch exposes potential M&A targets in the sector, BI’s Tatiana Lisitsina said.
Wednesday: ASML’s (ASML NA) second-quarter report at 7 a.m. CET will give clues about how chip-gear makers are faring amid a prolonged slump for global electronics. While sales were probably little changed quarter on quarter, signs of a stabilization in order bookings would be viewed positively after a 46% slump in the first three months of 2023, according to BI. Watch for potential fallout from restrictions on exports of chipmaking machines to China.
Thursday: Givaudan SA’s (GIVN SW) first-half results are due at 7 a.m. in Zurich. Watch for signs of volume recovery, after a flood of profit warnings from chemical industry peers pointed to demand weakness in China and sticky destocking trends. Just how much destocking occurred in the second quarter will be key to gauging Givaudan’s sales volume in the second half, BI’s Duncan Fox said. While the company has guided for 4% to 5% organic growth in 2023, consensus is shy of that mark. Any improvement in R&D spending would be a sign of confidence after last year’s slump.
- The performance of SAP SE’s (SAP GY) cloud segment in its second-quarter report should offer insight into the progress the German business software giant has made in its transition away from on-premise applications. SAP slightly reduced some mid-term targets for the segment in May, while upgrading other 2025 goals. Cloud revenue probably rose 12% to €3.4 billion in the quarter, with full-year estimates pointing to the lower end of SAP’s forecast range, consensus shows.
Friday: Vodacom Group Ltd. (VOD SJ) may have seen first-quarter sales growth underpinned by data traffic and financial services, as well as inflation-driven gains in Egypt, according to BI’s John Davies. Looking ahead, revenue from the Egypt unit should climb in local currency, while price changes in its home market of South Africa may boost sales despite high unemployment and electricity outages.
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–With assistance from Laura Malsch, April Roach, Chloé Meley, Helen Nyambura, Maggie Shiltagh and Love Liman.
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