Profits of CAC 40 companies have fallen by 28% in one year, but they remain largely profitable

After the post-Covid years, when many large companies posted stellar results, which last year resulted in record dividends for CAC 40 companies , the euphoria has – in part – subsided. For the 39 out of 40 companies that have published their half-year results, cumulative net profit is still €51.8 billion. But this is a drastic drop compared to the first half of 2024, as it has fallen by 28%. Cumulative revenue, meanwhile, is €827.6 billion, a slight decrease of 1%.

Customs duties, the euro's strength against the dollar, economic uncertainties, and the return to earth after even greater superprofits are cited to explain this development. But there are significant disparities across sectors: automotive and luxury goods are down; aviation, defense, banking, and manufacturing are up. Only Pernod Ricard is not included in this tally because its accounting year is delayed.

Aviation and defense companies are doing well, buoyed by geopolitical tensions. Airbus saw its profits jump 85% , Safran 11%. The same mood applies to banks, which "have been on a good run for two or three years now," noted Christopher Dembik, investment advisor for Pictet AM. Together, BNP Paribas, Crédit Agricole, and Société Générale generated a total of €13.5 billion in profits. A 12% increase.

Its rival Stellantis reported a hefty net loss of €2.3 billion in the first half of the year. Its new CEO, Italian Antonio Filosa, warned that "difficult decisions" would have to be made to "accelerate" by the end of 2025. Luxury goods also suffered, with net profits falling 46% for Kering (Gucci, Yves Saint Laurent, Balenciaga, etc.) and 22% for LVMH (Louis Vuitton, Dior, Celine, etc.). The biggest profit, however, went to BNP Paribas, which stole the show from TotalEnergies and LVMH, the leading duo in the first half of 2024.

"Overall, […] the results are rather solid," acknowledges Lionel Melka, manager at Swann Capital, with, on the one hand, "sectors where expectations were low," such as luxury goods and consumer goods, and, on the other, "sectors that are doing well—defense, banking—they are doing well, as expected," he said. This half-year "remains disappointing," particularly in comparison with the American situation, judges Christopher Dembik: "There is this French and European drop-off that is noticeable." Furthermore, "at the beginning of the year, you had an enthusiasm that was undeniably exaggerated about European stocks. […] The reality is that we are not in a period of dazzling results," he notes.

Uncertainty remains high for the third and fourth quarters, particularly due to the strength of the euro, which is expected to weigh on French companies. Christopher Dembik predicts "an exchange rate risk" rather than "a risk of customs duties," and this "will materialize much more in future results," in investments or imports. Several companies have already announced "cost reductions" to weather this storm, which is relative, since they are, on average, largely profitable. This is a euphemism for not talking about job cuts.