After years of economic tumult there are finally hints of improvement coming out of Europe. According to a new report from Factset, eight Dow Jones Industrial Average companies reported sales growth on the continent in the most recent round of quarterly earnings reports. Of the 11 DJIA components that provided European revenue numbers only two reported declines.
For years, many Dow Jones companies have reported slowing European growth quarter after quarter with some even taking losses. Thanks to the global scope of the 30 companies listed on the Dow the report indicates that while Europe is hardly back, there are notable signs of life. The number of companies reporting growth in the region is the highest it has been since the fourth quarter of 2011, when nine DJIA companies reported European sales growth. Like this round, that quarter two DJIA components reported declines in sales growth rates.
With 12% sales growth, Johnson & Johnson JNJ +0.4%reported the largest percentage gains in Europe. The company took in $4.5 billion in revenue from the region and $17.6 billion overall. The pharmaceutical giant hiked its full year forecast after delivering a third quarter earnings beat last month. In Johnson & Johnson’s quarterly earnings call Chief Financial Officer Dominic Caruso said that European growth was largely driven by the company’s pharmaceutical segment, but he also noted progress in surgical care and diabetes divisions. In medical devices and diagnostics, however, he said “we continue to see government austerity pressures and, quite frankly, a reduction of overall volumes in those businesses.” So even companies that are doing better overall on the continent continue to feel constraints.
NIKE NKE +0.33% reported 11% revenue growth, taking in $1.4 billion from the region. Total revenue was $7 billion. The sneaker maker credits its European growth to its adoption of a more centralized strategy in Western Europe, similar to the way it operates in the United States. But Nike was quick to blame lagging growth in Southern Europe on “macroeconomic challenges.” Whatever the reason, the company sees Western Europe as a growth leader going forward.
Coca-Cola KO -0.15%, EI du Pont de Nemours DD -0.19%and 3M MMM +0.16% each reported 10% sales growth in the region. Costco Wholesale COST -0.02% andMerck & Co MRK +1.47%reported 3%, and IBM IBM -1.3%reported 1%.
As emerging market sales declined, Coca-Cola’s quarter was salvaged by better than expected results in Europe. Sales there accounted for $1.4 billion of the company’s $12 billion in revenue. CEO Muhtar Kent, however, noted that national economies were performing at different paces. “Not everywhere is really bad; not everywhere is really good.” Poor consumer sentiment in Spain, Italy, Greece and Portugal, as well as the Southeast continent, he says, made these challenging locals. Lead by Germany, Western Europe was more of a bright spot.
Of course, not all European sales were positive. McDonald's MCD +0.66% came out even, Pfizer PFE +0.06% was down 1% and Caterpillar CAT +1.83% was down a whooping 14%.
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