LONDON — Fears of a disappointing earnings season among European corporations have eased, with new forecasts showing stronger-than-expected results and a more optimistic outlook for the region’s corporate health.

According to the latest LSEG I/B/E/S data, European firms are now projected to post an average 4.3% increase in third-quarter earnings, significantly higher than the 0.4% growth forecast just a week earlier.

However, the picture for revenues remains more subdued. Analysts now expect a 0.9% decline, compared with a smaller 0.1% drop anticipated previously. This continues a recent trend—seen in five of the past six quarters—where companies have managed to grow profits even as sales weaken, largely by tightening costs and restructuring operations.

---

Cost Controls Keep Profits Intact

Many firms have turned to aggressive cost-cutting to maintain profitability as consumers rein in spending.

Anheuser-Busch InBev (ABI.BR), the world’s largest brewer, said efficiency measures helped it beat profit expectations despite a steeper-than-expected decline in sales volumes. Similarly, Campari (CPRI.MI), maker of Aperol, reported stronger-than-forecast earnings thanks to cost discipline.

Carlsberg missed slightly on third-quarter sales but emphasized ongoing austerity efforts.

“We’ve been adjusting, especially discretionary spending. We’ve gone very hard at travel, entertainment, conferences, and consultants,”
said CEO Jacob Aarup-Andersen in an interview with Reuters.

Meanwhile, Dutch retailer Ahold Delhaize (AD.AS), which owns the U.S.-based Food Lion chain, outperformed expectations, posting a quarterly profit of €933 million, well above analyst estimates of €866 million.

Luxury carmaker Ferrari also exceeded profit forecasts after raising its full-year guidance earlier in October.

---

Europe Lags Behind U.S. Performance

Despite the improving European picture, a growing gap has emerged between European and U.S. corporate results.

For the S&P 500, earnings are expected to rise 13.8%, with 83.2% of companies beating analyst estimates—the highest beat rate in four years. By contrast, only 55.3% of firms in the STOXX 600 have exceeded earnings expectations so far.

The variation across Europe is notable: companies in Poland and Ireland are forecast to post earnings growth of 65% and 28.3%, respectively, while Denmark and Norway are expected to see declines of 20.8% and 14.9%.