On Tuesday, Eurostat reported that GDP growth for the third quarter in the “euro area” increased by 0.6% on a sequential basis and 2.5% on a year-over-year basis, the fastest quarterly year-over-year growth in 6.5 years. With the final DJIA components reporting results for Q3 this past week, how did companies in the DJIA perform in the third quarter in Europe in terms of sales?
Overall, 11 of the 30 companies in the DJIA provided revenue growth numbers for Europe for the third quarter. Of these 11 companies, nine reported year-over-year growth in revenues. This number was the highest number of Dow 30 companies (based on the current constituents of the Dow 30) to report revenue growth in Europe on a quarterly basis since Q2 2014 (also nine). Of these nine companies, five reported double-digit revenue growth in Europe for the third quarter.
For NIKE, the third quarter marked the seventh straight quarter of year-over-year revenue growth in Europe for the company. For Apple, the third quarter marked the fifth straight quarter of year-over-year revenue growth in Europe for the company.
What is driving the strong performance of these Dow 30 companies in Europe? A combination of improving economic growth in Europe (as seen in the GDP numbers from Eurostat) and the weakness of the U.S. dollar relative to the euro are both contributing to this revenue growth for Dow 30 companies.
*EMEA (Europe, Middle East, & Africa) ^ Western Europe + Pharmaceutical Sales
What Are Companies Saying?
“Global economic acceleration continues, led by the ongoing strength of the consumer across most major economies. The United States is maintaining its trajectory in line with what we have seen for many quarters. The positive change we see is the greater-than-expected performance in the euro area.” –DowDuPont (November 2) “As we closed the books on a very successful fiscal 2017, I have to say I couldn't be more excited about Apple's future. This was our biggest year ever in most parts of the world with all-time record revenue in the United States, Western Europe, Japan, Korea, the Middle East, Africa, Central and Eastern Europe and Asia.” –Apple (November 2)
“From a geography perspective, we saw particularly strength in Asia Pacific which was up double digits and from Europe, Middle East and Africa driven by the continued ramp-up of the Sadara assets, strength in consumer demand as well as in industrial, semiconductor and consumer electronics markets.” –DowDuPont (November 2)
“EMEA revenue performance improved 3 points from last quarter to down 1% [constant currency] in the third. We had year-to-year growth in Germany, France, Italy, and Spain, mitigated by declines in the UK. We recently signed large services engagements to provide cloud and digital services to clients in the UK, Germany, and Spain.” IBM (October 17)
“I think, in Western Europe, we've had a very good start to the creation of CCEP. Yes, it was a little bouncy in the third quarter with some localized poor weather that offset the better weather that was in Q2. If you look past those blips I think you see momentum in Western Europe coming back in and good growth.” –Coca-Cola (October 25)
John’s weekly research report, Earnings Insight provides analysis and commentary on trends in corporate earnings data for the S&P 500, including revisions to estimates, year-over-year growth, performance relative to expectations, and valuations. He is a widely used source for the media and has appeared on CNBC, Fox Business News, and the Business News Network. In addition, he has been cited by numerous print and online publications such as The Wall Street Journal, Financial Times, The New York Times, MarketWatch, and Yahoo! Finance.