(BFM Bourse) – The CAC 40 giants are in sparkling health despite the outbreak of war in Ukraine and inflation at its zenith. The heavyweights of the Parisian dimension already cumulate nearly 73 billion profits in the first half. That is 24% more than in the first half of 2021. TotalEnergies, ArcelorMittal, Engie or LVMH particularly stood out over the period.
Nothing stops the growth of large French companies: despite the war in Ukraine and record inflation, the CAC 40 has already accumulated nearly 73 billion in profits in the first half according to a count made Thursday by AFP, thanks in particular to luxury and the surge in raw materials.
For the time being, 38 companies in the CAC 40, the index which brings together the largest French market capitalizations from different sectors, have published their results, the railway manufacturer Alstom and the spirits specialist Pernod Ricard having a staggered financial year. They made profits up 24% compared to the first half of 2021, when these same companies had generated 58.8 billion in profits, while Eurofins Scientific was not yet in the CAC 40.
The major French groups have therefore largely recovered from the Covid-19 pandemic and have continued to grow despite the outbreak of war in Ukraine at the end of February, which further accentuated inflation linked to the economic recovery after the confinements. The good health of these groups makes the Minister of the Economy Bruno Le Maire “proud”, unfavorable to a tax on exceptional profits, which was ultimately rejected after a debate in Parliament.
“It’s quite ambivalent because all the ingredients for a crisis were there (…) however the performance is good”, comments to AFP Bénédicte Hautefort, founder of the fintech Scalens, specialized in the digitization of relations between listed companies and investors.
Raw materials and luxury at the party
Inflation has not affected all businesses in the same way. In terms of raw materials and energy, for example, soaring prices have boosted companies in the sector.
The oil and gas giant TotalEnergies more than doubled its profit in the second quarter and achieved the best net result of the CAC 40 over the half, with more than 10.4 billion euros. It is followed by the world number two in the steel industry ArcelorMittal, which took advantage of the rise in steel prices and reached nearly 8 billion euros. Engie, the main gas supplier in France, meanwhile more than doubled its profit, to 5 billion euros.
Another heavyweight in the CAC 40, luxury also stood out despite a slowdown in sales in China, one of its main markets, as brands were able to raise prices without losing their customers.
“They depend on a wealthy clientele who are not bothered by price increases,” Mimoza Bogeska, managing director of asset management company Monocle Asset Management, told AFP. “They have also benefited from the strengthening of the dollar against the euro because their production costs are in euros and they sell a lot in dollars,” she adds.
LVMH, Kering and L’Oréal thus saw their combined profits climb by more than 36% compared to the first half of 2021, with comfortable margins. The luxury group Hermès meanwhile announced at the end of July, a profit of 1.64 billion euros in the first half, up 39.7% over one year thanks to an increase in sales in all regions.
“The hardest part is ahead of us”
For Ms. Hautefort, the good general performance of the CAC 40 is also explained by the cost reduction plans adopted to deal with the Covid-19 pandemic, which continue to bear fruit in 2022.
Some groups have nevertheless suffered the shock wave of the war in Ukraine, such as Renault and Société Générale which withdrew from Russia after the outbreak of the conflict. Renault sold its stake in the manufacturer Avtovaz, which notably manufactures the Lada, and Societe Generale its stake in the Rosbank bank, causing charges of several billion euros.
“The hardest part is ahead of us,” says Ms. Hautefort, who believes that the economic context should weigh on businesses in the second half.
With inflation and the rise in key central bank rates, which increase the cost of credit and therefore make new financing more difficult, some economic players are even expecting a recession in the global economy.
Proof of investor mistrust, the CAC 40 stock market index has lost around 10% since the start of the year, despite a very positive month of July with the publication of results. “For some time all valuations have been rising, but the markets are caught up by the fundamentals. Valuations nevertheless remain high,” says Ms. Bogeska.
(With AFP)
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