First quarter 2022 Reporting season – Business trends and outlook

In an economic situation influenced by a major factor such as the war in Ukraine, the first quarter 2022 reporting season was offset by a series of positive surprises compared to the previous three months. The results above expectations were 47% (against 43% in the fourth quarter of 2021) and those in line with expectations were stable at 48% (out of a sample of 83 companies).

Looking at the macro segments, the quarter was positive for Financials starting with banks driven by trading revenues and a lower cost of risk, net of exposure to Russia. Assets under management recorded resilient performance fees and profits from treasury management, while insurance companies achieved good technical profitability in the Non-Life business.

Among Non-Financials, Luxury and Consumer Goods posted good results, with an improvement in demand. The Automotive sector recorded a positive performance thanks to price and volume increases, as well as the exchange rate effect.

Favourable surprises came from Real Estate and Construction. Pharma performed well. The Oil & Gas sector benefited from higher hydrocarbon prices; Utilities offset the negative effect of the regulatory WACC review with higher electricity prices, renewables and services related to energy efficiency. The Media sector has been boosted by the growth of digital services, while Telecommunications have suffered from a still weak domestic demand.

For the coming quarters, the focal point will be the sustainability of current profitability levels: the restrictive policies of central banks, committed to combating inflation; high energy prices and risks from the prolonged conflict in Ukraine are casting shadows on expected earnings growth.