Why is the strengthening euro hurting European companies? - Analysts predict a decline in sales and profits during 2025
The strong rise of the Euro currency in 2025 is putting pressure on the profits of European corporations. Second-quarter reports are expected to show weaker earnings as a stronger currency and softening demand negatively affect sales in key sectors.
According to a recent analysis by Bank of America, a stronger euro, coupled with declining sales, could reduce earnings for the STOXX 600 index, marking its weakest performance in five quarters.
The euro-dollar exchange rate has increased by 9 percent over the last quarter, reaching its highest level in four years and marking the strongest quarterly performance since the end of 2022. Meanwhile, the value of the euro against other currencies has increased by 4.6 percent over the last quarter, reaching its highest value on July 1.
As the second-quarter earnings season in Europe begins, Wall Street analysts are forecasting a 3 percent decline in earnings per share (EPS) compared to the same period last year. This decline, supported by a 3 percent contraction in sales, reflects both weakening demand and negative currency dynamics.
The energy and non-core sectors are expected to have the most negative impact on market returns, further dampening the continued resilience of the healthcare sector. After two quarters of positive growth, returns from cyclical sectors are expected to turn to contraction.
"Positive macro surprises in the eurozone imply strong earnings per share (EPS) expectations, but the strength of the euro is a risk," he added.
While financial sectors have supported earnings in previous quarters, their contribution is expected to be weaker this time. Analysts have already reduced their forecasts for European earnings in 2025, citing currency appreciation and rising trade barriers as the main risks.
Since the beginning of April, earnings per share growth expectations have been cut by about 5 percent for 2025 and 2026. 17 of the 20 major sectors have suffered declines, with automotive leading the way.
Bank of America predicts a 4 percent decline in earnings per share in 2025 compared to the previous year, as disruptions to global trade, the effects of tariffs and a slowdown in US investment weigh on European exporters and multinational companies.
Albania will produce ammunition - Government approves criteria. "KAYO", agreement with private companies for production
The Council of Ministers approved the terms of negotiation of the state-owned company "KAYO", jsc, with private companies for the production and trade of......
Excellent students "dream" of medicine - Applications for higher education. The rest choose economics
At a time when technology and healthcare are setting the pace of the modern world, the dreams of young Albanians seem to be moving in the same......
Dollar and Franc Recover - How did this week end for the major currencies?
The US dollar, although with a slight increase in value this morning, has closed the week positively as it was bought today compared to yesterday at 83 lek......
Investment in the new Viro bridge/BB: Over 200 thousand drivers and 150 thousand pedestrians benefit!
Work continues on the construction of the new Viro bridge, the first of 30 bridges to be built or improved throughout Albania, thanks to government......
Statement, American Chamber raises concerns about tourism - Challenges that need to be addressed: From summer construction to labor shortages
The American Chamber of Commerce in Albania has reacted through a press statement, highlighting the positive developments in the tourism sector in recent......
Vengu: Municipalities are the front line in emergencies, we are improving the vehicle fleet
Minister of Defense, Pirro Vengu, inspected the Civil Emergency Support Base today, where he announced the improvement of the fleet of intervention vehicles......
Germany and France "clash" over military project - Merz demands respect for previous pact on division of labor
Germany and France are facing difficulties in organizing work on the new fighter jet project. German Chancellor Friedrich Merz is calling for the previous......
Checks in the tourist season/PHI: Fines and suspension of activity for serious violations of the law!
The State Labor Inspectorate is conducting daily inspections throughout the country, within the framework of a special measures plan for entities that......
