European companies have started to see an increase in sales in the last quarter, providing a tentative boost to corporate confidence. Members of the Stoxx Europe 600 index of leading companies have so far recorded a 0.9 per cent rise in sales in the fourth quarter compared with the same period a year earlier, according to data from ING and Factset. That was below the 5.7 per cent increase attained by US companies in the S&P 500. But the return to positive sales growth will be a relief to investors concerned that businesses benefited last year from cost-cutting that boosted profitability but had yet to see a return in real demand.
Quarterly earnings per share data were too volatile for meaningful comparisons after the credit crisis affected the results of the fourth quarter of 2008. But last year European companies saw profits fall by 19 per cent. US competitors saw their earnings rise 12 per cent. Business leaders still ex-pressed caution over the outlook in interviews with the Financial Times.
Leif Johansson, chief executive of Volvo, the truckmaker, said: "We are seeing a gradual increase, but we are comparing with very weak quarters. How quickly it will come back to former levels is difficult to say."
Luca di Montezemolo, head of Ferrari and chairman of Fiat, said: "I have the feeling that the European economy is close to starting to invert the trend." The fourth-quarter numbers mask deep divisions, with some companies starting to feel confident again while others remain uncertain about the future.
Benoît Potier, chief executive of Air Liquide, the French industrial gases group, said: "The reality is that sales are improving. We are confident for that reason. It wasn't just about slashing costs blindly but about making a structural improvement."
But Hans Wijers, chief executive of Akzo Nobel and a former Dutch economics minister, said: "Overall, our expectations are that in the years to come in Europe and the US, growth will be sluggish."
The best-performing sectors in terms of revenue growth in Europe were banks, healthcare and property, while those with the biggest drops were basic resources, chemicals and industrial goods.