Our analysts take a look at the data from the 3Q24 earnings cycle and identify more interesting observations across European markets and sectors.
After each earnings cycle, we take some time to analyze the enormous amount of data we process with our Comparables feature - a powerful tool to view markets and sectors top down and in their entirety - to see what sector trends jump out at us across our current coverage universes.
Each quarter, we publish some of those insights in this blog as a representation of the depth of information available in our datasets, and the ease with which it can be analyzed from a top-down vantage.
Without further delay, here's our Quarterly Earnings Breakdown for 3Q24 - European Edition.
The integrated oil and gas sector experienced a poor quarter, with an average revenue decline of 12.2% year-over-year, led by Puma Energy's 19.2% drop. Even major players like BP saw a 10.5% YoY revenue decrease.
All integrated oil and gas companies, except Puma Energy, reported steeper YoY declines in EBITDA than in revenue, averaging a 32.0% drop, indicating shrinking margins and lower prices.
BP's revenue decline was primarily driven by its Customers and Products segment, reflecting weaker refining margins and a poor oil trading performance (3Q24_P, p.10).
This trend is echoed across the sector. Orlen attributed its revenue drop to lower refining product quotations and reduced natural gas sales prices (3Q24_P, p.3). Similarly, Repsol cited weaker product demand and heightened geopolitical instability as key challenges in the market (3Q24_P, p.7).
The performance of the European pharma segment in 3Q24 presents a mixed picture. While average revenue increased by 6.2% YoY, EBITDA growth declined by 4.0% on average YoY.
AstraZeneca and Teva Pharma reported strong revenue growth of 18.0% and 12.5% YoY, respectively. AstraZeneca translated this into a 21.2% YoY EBITDA increase, while Teva Pharma suffered a 66.9% YoY EBITDA loss.
Teva's EBITDA decline was due to a goodwill impairment of its API reporting unit, excluded from reported EBITDA (3Q24, p.23). Adjusted for this impairment, Teva's EBITDA showed a 17.0% YoY increase.
GlaxoSmithKline’s 54.9% YoY EBITDA decrease was driven by a 65.5% rise in Selling, General, and Administrative expenses, primarily due to a one-off £1.7 billion legal settlement with the U.S. government over Zantac (3Q24, p.10). Excluding this charge, GlaxoSmithKline's EBITDA showed a more favorable 12.3% YoY increase.
Accounting for these adjustments, the sector's average EBITDA increased by 6.8% YoY, painting a healthier picture for the European pharma segment.
At first glance, the European Metal and Glass Packaging subsegment appears to have had a stagnant quarter, with average revenue growth of just 0.9% YoY. However, adjusted EBITDA tells a different story, showing an impressive average growth of 17.8% YoY, with every company reporting gains.
Frigoglass led this growth with a remarkable 61.9% YoY increase in adjusted EBITDA. This was driven by a 52.7% rise in adjusted EBITDA from its commercial refrigeration business, attributed to reduced material costs and improved cost absorption from higher volumes (3Q24, p.32).
Similarly, CANPACK achieved a 34.8% YoY growth in adjusted EBITDA, fueled by a 14% YoY increase in beverage can body volume, reflecting strong market demand (3Q24_P, p.4).
Even Kloeckner Pentaplast, despite a 5.8% YoY revenue decline, managed an 10.9% YoY increase in EBITDA and a 8.4% YoY increase in adjusted EBITDA. This marks the first quarter in over a year with YoY growth in adjusted EBITDA, driven by foreign exchange losses and other unspecified adjustments. In contrast, reported EBITDA saw its weakest YoY growth in three quarters, primarily due to a $24.8 million swing in financing gains/losses.
While both its operating segments reported sales declines, the Pharma, Health & Protection, and Durables segment experienced volume growth. These gains, along with favorable material costs, offset pricing challenges and volume losses in the Food Packaging segment (3Q24_MDA, p.11), improving the company's overall performance.
The European airline sector had a strong summer season, with all carriers reporting year-over-year revenue growth, averaging 8.4%.
Finnair had the weakest performance, posting just a 0.1% YoY revenue increase and an 8.6% YoY EBITDA loss, despite lower jet fuel prices (3Q24_P, p.14).
While passenger numbers rose, revenue per available seat kilometer (RASK) fell 8.2% YoY due to lower ticket prices driven by increased industry capacity. Passenger load factor also declined slightly, from 80.9% to 79.5%, further highlighting that the additional capacity Finnair provided has yet to generate matching demand.
In contrast, Air Baltic demonstrated strong performance, with a 35.7% YoY increase in adjusted EBITDA. Its passenger load factor rose significantly, from 81.8% to 87.8%, reflecting successful capacity utilization.
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