Earnings at major European companies sank in the second quarter of the year, revealing the impact of the COVID-19 pandemic on the economy and reflecting major uncertainties about the region’s continuing recovery.
BP /zigman2/quotes/202286639/delayed UK:BP -2.20% the oil major, said it would halve dividends this year, the first time it cut payouts since the Gulf of Mexico disaster 10 years ago. The company booked a $17.7 billion loss for the quarter ended in June, capping one of the worst ever quarters for the global industry. The group also outlined its plans to pivot away from fossil fuels.
Diageo /zigman2/quotes/205611832/delayed UK:DGE -0.77% the world’s largest spirits company, said organic net sales fell 8.4% in the year ended in June, with pretax profit down 51.8%, and it took a £1.3 billion ($1.7 billion) write-down on its businesses in Africa and South Korea. The group, however, cheered investors by maintaining its dividend.
Bayer /zigman2/quotes/206842998/delayed XE:BAYN -0.84% the German chemicals and drugs giant, booked a net loss of €9.55 billion ($11.3 billion) in the second quarter of the year, hit by both the coronavirus consequences and provisions for a multibillion settlement in a long-running dispute about allegations that one of its herbicides causes cancer.
In the last few weeks, with rare exceptions, European corporate earnings have regularly proven worse than analysts expected, which tells us more about the uncertainty of forecasts than about the companies’ performances. But looking ahead, the main problem is that few CEOs now venture to predict a swift earnings recovery in the coming months, as economists seem to agree that the recovery will be weaker and slower than originally expected.