Investors should prepare for declining earnings

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Investors seem to be able to prepare for good results in the coming ‘figure season’, financial analysts predict in the FD. But for the rest of the year they have to wet their chests; that can turn out to be a lot less positive.

AMSTERDAM 26-02-23. The Stock Exchange, the Beurs van Berlage and the Bijenkorf are located on the Beursplein.ANP/Hollandse-Hoogte/Nico Garstman (ANP / Holland Height / Nico Garstman)

According to stock market analyst CornĂ© van Zeijl of asset manager Actiam, there was a good kick-off to the earnings season last Friday. For example, banks presented good quarterly figures, thanks to the fact that they did not have to pass on high interest rates to savers. “They could make a lot of money, but that’s over now,” he says.

“They could make a lot of money, but that’s over now”

Corne van Zeijl

According to Van Zeijl, the reason why analysts expect further profit figures is due to a number of financial windfalls. For example, the dollar in Europe is still stronger than a year ago, looking at the first quarter. Where the dollar stood at 1.12 around this time last year, it is now at 1.07. According to Van Zeijl, that is a windfall of five percent, although that plus will also fade over time.


China’s reopening also plays an important role in earnings, he says. All the more so because European companies are sensitive to changes in the global economy. ‘China is a reasonable part of that,’ he says. ‘So these are simply lucky factors.’

The fact that European companies also outperformed American companies comes as no surprise, according to the stock market analyst. For example, Europe lived for a while in fear of a very high gas price in the summer of 2022, which turned out not to be too bad. ‘So the economy did not have to be scaled down,’ continues Van Zeijl. ‘In addition, the United States is somewhat earlier in the economic cycle. So there you see that there is already a slowdown, but also that wages there have risen somewhat earlier. The companies are already suffering from that, while for us it will only come later.’

Short term

That means that the joy of all numbers will be short-lived. While the gains are now being celebrated, the gains will only be lower in the coming quarters. According to Van Zeijl, this is mainly due to the energy companies that have made a lot of profit. ‘That will be less now. Especially with the low oil price, and that will affect the overall picture.’

The US currency is also rising again. The dollar held up well in the first quarter, but Van Zeijl says that the dollar is weak compared to last year. ‘And so you can expect that this will have a negative impact on European companies,’ he says. “And there’s a recession coming, too.”


To top it off, wages are rising while inflation is falling. For example, wages in healthcare rose by 15 percent, as well as in public transport. “All companies have to pay the wage increases, so profits will go down.”

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