By Javi West Larrañaga and Marleen Kaesebier
(Reuters) -The outlook for European corporate health has deteriorated, the latest earnings forecasts showed on Tuesday, as uncertainties over U.S. tariffs continue to complicate business planning.
European companies are expected to report a drop of 0.2% year-on-year in second-quarter earnings, on average, according to LSEG I/B/E/S data, below the 0.6% increase analysts had expected a week ago.
Before U.S. President Donald Trump announced plans for “reciprocal” tariffs on February 14, the forecast was for a 9.1% increase in second-quarter earnings, according to LSEG data, but months of trade war talks have led to an erosion of company prospects.
The consensus for revenue forecasts has also worsened, with analysts now expecting a 3.0% decrease, compared with a 2.2% drop projected last week.
The latest estimates compare with expectations for a 3.0% increase in earnings and a 0.8% drop in revenues a year ago, the data showed.
The European Union is close to a trade deal with the Trump administration and is eyeing possible exemptions from the U.S. baseline levy of 10%, some EU sources told Reuters.
Second-quarter deliveries of Milan-listed Stellantis, expected later this week, could shed more light on how European automakers are steering through the uncertainty.
The biggest second-quarter earnings winners are expected to be the Irish and Polish companies in the Europe-wide STOXX 600 stock index, with average growth of 85.4% and 67.4%, respectively. Norwegian and German companies, meanwhile, are expected to see earnings fall 9.7% and 7.8%, respectively.
As of Monday’s close, the STOXX 600 was up about 7.1% year to date.
(Reporting by Javi West Larrañaga and Marleen Kaesebier. Editing by Louise Heavens)
