March 3, 2020 / 3:05 PM / a month ago

Europe's corporate recession seen spilling over into 2020

FILE PHOTO: Tourists wearing protective masks walk near Duomo square, as a coronavirus outbreak continues to grow in northern Italy, in Milan, Italy, February 27, 2020. REUTERS/Yara Nardi

LONDON (Reuters) - Europe Inc is seen extending its earnings drought into 2020 with the latest Refinitiv data pointing to a fifth straight quarter of profit decline as companies warn about the potential impact from the fast-spreading coronavirus.

Coronavirus has brought some cities in China and Europe to a standstill, disrupting supply chain and denting travel demand, and prompting companies to withdraw their financial outlook while they assess the damage from the virus.

That has reduced expectations for an end to corporate earnings recession in 2020.

Companies listed on the pan-European STOXX 600 index are now expected to report a 1.4% drop in profits in the Jan-March quarter, according to I/B/E/S Refinitiv. That is a sharp reversal from a 5% jump expected in early February.

“Expectation of an inflection in earnings growth are dampened with the likely negative economic impact from the coronavirus,” said Stephane Ekolo, an equity strategist at TFS Derivatives in London.

There were numerous warnings from companies in the ongoing reporting season, Ekolo added.

With the December quarter earnings season nearly over, the data showed profits are set to decline 2.6%, a further deterioration from the 1.2% expected last week.

(Graphic: Europe Inc earnings expectations - here)

Reporting by Thyagaraju Adinarayan; Editing by Julien Ponthus and Mark Heinrich

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