3rd Quarter 2022 results of Italian listed companies
The 3Q22 results were reassuring, with Above results at 53% and in Line at 43%, in our forecast sample (86 companies); the data are in line with the EuroStoxx, which has so far recorded Above results at 54% (source: Bloomberg).
Financials performed well this past season. Banks were driven by growth in net interest income and trading revenues, with a better cost of risk. Assets under management benefited from the higher interest margin and management fees. Insurance products saw an improvement in the Life business, with the Non-life business in line.
Among Non-Financials, 48% exceeded our expectations, thanks to solid pricing and volumes, but with an increase in net borrowing. Luxury Goods were supported by the price mix, with the improvement in the EMEA area offsetting the weakness in China, due to the lockdown; Consumer Goods balanced inflation with the price mix. The Automotive sector was resilient, with its pricing more than offsetting the cost increase. Construction recorded rising prices, but falling volumes. Industrials (goods and services) benefited from high prices and solid volumes; the Pharmaceutical sector achieved good organic growth. Oil & Gas was among the winners this quarter, thanks to high oil prices and better refining margins. Utilities recorded an increase in debt and balanced the negative WACC review and the weakness in the hydroelectric sector with higher gas and electricity prices, and the contribution of renewables. TLCs recorded a weak domestic demand; Media posted better book sales, but also higher paper costs and a decline in circulation.
The 2022 year-end guidance was overall positive; however, we believe that now the main driver for investors is 2023 risk-to-earnings. Non-Financials could find themselves caught up between slowing consumer demand and consistently high production costs. Financials should still benefit from the improved interest margin, albeit in a less favourable macro environment, particularly at the beginning of 2023.
SOURCE: Intesa Sanpaolo Research elaborations on Company data