First half results season – Italian Equity Market

Listed companies maintain positive results in Q2 / H1 2022, despite difficulties in the economy and geopolitical tensions. Results exceeded expectations in 56% of cases (the second best figure in the past 10 years) and those in line were 36%, in our forecast sample (75 companies).

Among the different sectors, Financials still stood out with solid results and an increase in positive surprises compared to the previous quarter. Banks were backed by growth in net interest income and trading income and a lower cost of risk. Asset Management benefited from rising management fees, and increased net interest income. Insurers reported an improvement in Life Business, and a solid capital position.

Among Non financials, about half beat expectations, thanks mainly to effective pricing policies. Luxury Goods benefited from price-mix and improved demand in EMEA; Consumer Goods faced inflationary pressures with sales-mix and cost reductions. In Auto, companies managed to pass cost increases downstream; Construction and Real Estate were in line with expectations. Industrial Goods & Services absorbed cost-inflation with price increases and efficiencies. Oil & Gas did very well, supported by hydrocarbon prices and high refining margins. Utilities benefited from higher gas and electricity prices and from the contribution of renewable energy. TLC coped with still weak domestic demand with higher efficiencies; finally, Media saw an increase in revenues related to sporting events. Forecasts for the end of 2022 remain mostly positive. The greatest risk on earnings, particularly for Non-Financials, is focused on 2023, in our view.

SOURCE: Intesa Sanpaolo Research elaborations on Company data