European blue chip companies are on track to post their strongest quarterly earnings growth in more than three years, driven largely by surging profits in the energy sector, according to the latest LSEG I/B/E/S data released on Thursday.
Earnings for companies listed on Europe’s benchmark STOXX 600 are now expected to rise 10.2% year on year in the first quarter. The estimate is based on reported results from 211 companies and projections for firms yet to announce earnings, News.az reports, citing Reuters.
The energy sector has been the biggest contributor to the increase, with profits expected to surge 48.4% compared with the same period last year. Excluding energy companies, earnings growth for the remaining firms is forecast at 5.7%.
Revenue growth, however, remains weak. STOXX 600 companies are now expected to report just 0.2% growth in revenues, down from forecasts of a 0.7% increase last week.
Analysts say the combination of modest revenue growth and stronger profits suggests companies’ cost cutting measures and restructuring efforts may be improving margins despite a challenging economic environment.
According to the report, 60.2% of companies exceeded analysts’ earnings expectations.
European energy giants have benefited from elevated oil prices linked to the war in the Middle East. Although crude prices have retreated amid hopes for a peace agreement, they remain roughly 35% above pre war levels.
In contrast, the real estate sector is expected to report earnings 14.3% lower than a year earlier.
The STOXX 600 index lost most of its gains for 2026 after the United States and Israel launched strikes on Iran in February. The benchmark has since partially recovered but remains around 2% below levels seen before the conflict.
Despite the rebound in European corporate earnings, growth projections still lag behind those of U.S. companies. Earnings for firms in the S&P 500 are expected to climb 27.8%, largely driven by a 51.9% increase in profits from technology companies, according to a separate LSEG I/B/E/S report released last week.
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