Italian Market: 4Q22 results above expectations, but substantial stop to earnings’ growth in 2023

The 4Q22 results season was again positive, with 'Above expectations' results at 48%, In Line at 36%, and Below at 16% in our preview sample of 100 listed companies; however, the figures are lower than those of 3Q22 in terms of positive surprises (they were 53% on the last quarter), and lower than the EuroStoxx 600, which reported Above results at 54% (Source: Bloomberg).

Financials had a good reporting season, led by net interest income and lower cost of risk, with solid capitalization.

Among Non-financials, 47% beat our expectations mainly due to price effect, while sales volumes saw differentiated trends from sector to sector.

Guidance on 2023 was generally confirmed, amid a lights and shadows business scenario. However, 2023 earnings forecasts appear fragile (2023 earnings growth Italy: +4%; FTSE MIB: -1%. Source: Refinitiv). After +30% in 2022, earnings growth is slowing sharply, and the outlook is expected to remain weak (2023-25 EPS CAGR FTSE MIB: +2%).

In the forthcoming reporting season for 1Q23, Non-Financials are expected to be impacted by weaker consumer demand and rising y/y operating costs amid tighter monetary conditions; Financials, on the other hand, are expected to continue to benefit from improved net interest income, despite increased volatility in financial markets.

SOURCE Intesa Sanpaolo Research elaborations on Company data