The first earnings season of 2026 carries unusual weight.
European companies will report their quarterly results this month against a backdrop that has shifted dramatically since their last guidance: a conflict in the Middle East that erupted in late February, a surge in energy prices that pushed eurozone inflation to 2.5% in March and an ECB now expected to raise interest rates for the first time in years.
The numbers landing from mid-April will do more than tell investors how the first quarter went.
They will set the tone for how European executives are pricing the crisis — and how much worse it could still get.
4% earnings bounce — but with a big caveat
The headline figure looks reassuring.
STOXX 600 companies are expected to report growth of 4% in first-quarter earnings on average, according to LSEG I/B/E/S data — a meaningful swing from the 2% year-on-year decline recorded the previous quarter.
Revenues are also seen to be growing at 1.7% compared to the same period last year, continuing a trend where earnings have outpaced revenues in seven of the past eight quarters, as companies’ efforts to cut costs and restructure businesses pay off.
But the aggregate number conceals a stark internal division. Almost the entire earnings improvement is being driven by a single sector.
Earnings of energy companies are expected to rise by 24.9%, according to LSEG’s data, as crude prices surged 50% to 70% following the conflict’s disruption to Strait of Hormuz flows.
Strip that windfall out, and all other STOXX 600 sectors are set to deliver just 1.5% earnings growth on average — barely above stagnation.
The war did not rescue European corporate profits — it redistributed them.
That persistent gap between earnings and revenue growth is a structural story. European companies have been cutting costs, restructuring balance sheets and squeezing margins in a way that allows earnings to outpace top-line growth.
The war has amplified that gap further.
The macro context: growth cut, inflation rising
The conflict has arrived at a difficult moment for Europe’s macroeconomic trajectory.
The ECB’s own economic bulletin has warned that the war will cost the eurozone roughly 0.3 percentage points of GDP by end-2026, projecting real growth of just 0.9% for the year — down from earlier forecasts of 1.3%.
Goldman Sachs’s European economics team has gone further, downgrading euro area GDP growth by approximately 0.7 percentage points since the onset of hostilities, while raising its end-2026 inflation forecast by around 1.4 percentage points.
Inflation, meanwhile, is accelerating. Eurozone annual inflation jumped to 2.5% in March from 1.9% in February, driven primarily by a surge in energy prices that swung energy inflation from a drag of 3.1% in February to a 4.9% rise in March.
Bill Diviney, head of macro research at ABN AMRO, is now projecting a further jump to 2.9% in April and above 3% in May, warning of upward spillovers into food prices through fertiliser costs.
ABN Amro’s base case is that the ECB will raise rates pre-emptively at both its April and June Governing Council meetings, taking the deposit rate to 2.50%, to prevent a second wage-price spiral of the kind seen after the 2022 energy crisis.
Week one: Luxury’s reckoning
The season’s first major test arrives on 13 April when LVMH Moët Hennessy – Louis Vuitton opens proceedings, followed by BMW AG and Kering on 14 April, ASML Holding and Hermès International on 15 April.
For the luxury sector, the macro backdrop has turned hostile on multiple fronts at once.
LVMH’s CFO Cécile Cabanis had specifically flagged the Middle East as a “significant growth” driver during January’s earnings call — a thesis that is now clearly invalidated.
Bank of America has cut its organic revenue growth assumption for LVMH’s core fashion and leather division to just +2% for the full year, down from +5% before the conflict began.
The Middle East represents around 6% of sector revenues and was growing at 17% in 2025.
The bank now models March revenues in the region falling 50%, with a further 20% decline in the second quarter — a sequential impact of roughly 2 percentage points on sector revenue growth given the prior year’s growth rate.
At the same time, Planet VAT refunds — which track tourist spending in Europe — fell 25% in February and 20% across the first quarter as a whole, a 12-point deceleration versus the fourth quarter.
For Kering, which owns Gucci, the outlook was already deteriorating before the war. BofA now expects Gucci to post negative revenue growth for the full year.
BMW AG faces a different set of pressures. Earnings-per-share consensus stands at €2.90, implying a 14.2% year-on-year decline, with revenue consensus of €33.02 billion against a prior €33.76 billion, down 2.2%.
The Munich-based automotive group has guided for a 10%–15% decline in group pre-tax profit for 2026, with automotive EBIT margins of 4%–6%, reflecting the combined pressure of tariffs, currency headwinds and the transition to the Neue Klasse electric platform.
The iX3 launch has, however, beaten internal order expectations in Europe.
Semiconductors resistant to market headwinds
Not every name in the first week tells the same cautionary story.
ASML — the Dutch company that makes the ultra-precise lithography machines without which advanced semiconductors cannot be manufactured — guided Q1 2026 net revenue of €8.2–8.9 billion, with a gross margin of 51–53% and expects full-year 2026 revenue of €34–39 billion, implying roughly 12% growth after 16% growth in 2025.
In late March, South Korean memory chipmaker SK Hynix disclosed a $7.9 billion multi-year EUV equipment purchase extending through 2027 — described as the largest single disclosed order in ASML’s history, underlining the structural durability of AI-driven semiconductor demand.
The key question for ASML’s 15 April print will be whether that demand continues to translate into firm bookings or whether macro uncertainty and tightening export controls on China begin to erode the order book.
Weeks two and three: industrials and the first energy clue
The second and third weeks bring a broader industrial sweep: L’Oréal, EssilorLuxottica, SAP, Safran and Sanofi all report, alongside the first meaningful clue from the energy sector when Italy’s ENI publishes its quarterly results on 24 April.
ENI’s upstream division will be watched closely for confirmation of the LSEG data’s energy-sector earnings boom — and for any commentary on whether Middle East disruption has affected its own operational exposure to the region.
With Brent trading above $100 a barrel, Eni’s shares have already risen 41% year-to-date.
Week four: Banks, industrials and energy draw the map
The final week of April is the institutional reckoning.
Airbus opens on 28 April with a results set that will be watched closely for any supply chain commentary related to titanium and composite materials sourcing.
The group’s backlog of more than 8,700 aircraft provides meaningful insulation against near-term airline demand weakness, and management’s 2026 delivery target of approximately 820 aircraft remains formally intact.
The question is whether the cost of executing that ramp has increased.
Energy majors arrive on 29 April, with BP and TotalEnergies SE both reporting the same session.
At current energy prices, both groups are on track for one of their strongest quarterly cash generations since the Russian invasion of Ukraine.
European banks: Windfall or warning sign?
The market question is how much of that windfall goes to buybacks, how much to additional capital expenditure and whether either company provides forward guidance on Gulf production logistics.
The season closes with its most systemically significant data point. Nearly all major European banks — including BNP Paribas, Société Générale, Deutsche Bank, ING, Banco Santander and CaixaBank — report between Wednesday 29 and Thursday 30 April.
In Q4 2025, European banks were the clear standout of the reporting season, posting a 69% beat rate and aggregate EPS growth roughly 18% above expectations, with consensus return on equity for the sector now projected at 13.1% for 2026.
The war complicates that picture.
A rate hike in April would nominally support net interest margins — higher rates increase the spread banks earn between deposits and loans.
But an ECB tightening cycle driven by an energy shock rather than strong domestic demand raises the spectre of stagflation: rising rates that compress economic activity rather than reflect it.
Credit losses could rise as heavily indebted consumers and energy-intensive businesses come under pressure.
That is a materially different backdrop for net interest income than the one banks guided against three months ago.
The verdict the market is waiting for
In aggregate, the first-quarter season will function as the first hard stress-test of European corporate resilience under conflict conditions.
The broader analyst consensus still offers a structurally important reassurance: aggregate earnings are growing, and cost discipline has been durable enough to keep margins positive even as revenues remain muted.
But the energy windfall is masking a much more fragile underlying picture.
The deeper question this season will raise — but probably not answer — is whether the war’s damage to European growth and confidence is temporary or structural.