BlackRock says European companies are showing ‘surprise resilience’ — and better value than the U.S.
A trader works as a screen displays the trading information for BlackRock on the floor of the New York Stock Exchange (NYSE) in New York City, October 14, 2022.
Brendan McDermid | Reuters
LONDON — European corporate earnings were surprisingly resilient in the fourth quarter of 2022, and the continent’s stock outperformance of the U.S. looks set to continue, according to BlackRock.
With earnings season winding down, the Wall Street giant highlighted in a note Tuesday that European fourth-quarter earnings showed corporate health extended beyond the region’s bedrock sectors of banking and energy.
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“Companies in Europe surprised analysts with their recent earnings performance. Regional stock markets have been on a good run year-to-date but remain at a discount both on a historical basis and versus U.S. peers,” said Helen Jewell, EMEA deputy chief investment officer at BlackRock Fundamental Equities.
Banks and energy enjoyed a bumper fourth-quarter, BlackRock noted that earnings on the pan-European Stoxx 600 index were up by around 8% annually by the end of February, even without the energy sector.
“Europe is the only region globally where 2024 earnings revisions are just back in positive territory,” Jewell said.
“Earnings in the U.K. have also been a positive surprise, even when adjusted for the size of the financial and energy sectors.”
Jewell suggested that the momentum for European banks, which have been buoyed by positive interest rates, is likely to continue, as valuations remain attractive.
The Euro Stoxx Banks index was up almost 24% year-to-date as of Tuesday morning, but Jewell noted that earnings strength means price-to-earnings ratios remain below long-term averages for the sector.
Price-to-earnings ratio determines whether a company is overvalued or undervalued by measuring its current share price relative to its earnings per share.
“We turned favourable on financials in the middle of last year, and believe the sector is capable of further outperformance in 2023 as the European Central Bank remains committed to inflation control and higher rates may put more banks in a position to return cash to shareholders,” Jewell said.
Energy majors in the U.K. and Europe posted record earnings in the fourth quarter on the back of soaring oil and gas prices, but a warmer winter has since led to lower-than-expected physical demand.
Over the medium term, BlackRock still anticipates supply tightness and sees European oil majors continuing to generate massive cash flows.
“These companies trade at a discount to U.S. peers and continue to allocate substantial investment toward renewable forms of energy,” Jewell added.
Despite the resilience thus far, she highlighted the importance of profit margins in 2023, as central banks continue to tighten monetary policy and bring to an end an era of cheap money.
Around 60% of European companies beat fourth-quarter sales expectations, while only around 50% beat on profits, according to MSCI data compiled at the end of February. A similar picture is emerging in the U.K.
“This tallies with what companies across sectors have told us about the growing impact of wage inflation at a time when slowing economic growth has made it harder to pass on costs. We believe that companies with a higher exposure to wage costs may continue to struggle in 2023,” Jewell said.
“We see many opportunities for investors in the region, although it’s important to be selective as profit-margin pressure may bring dispersion across sectors and within industries.”
Thanks to a clever, fully electric swing system and “boom up” power assist features, the big PC365-11 hybrid excavator from Komatsu promises better performance and serious fuel savings compared to conventional diesel machines.
Komatsu says its PC365-11 hybrid excavator uses a “boom-up” power assist feature that captures and stores kinetic energy during different operation cycles, then taps into that power to provide an extra energy boost when needed. The result is 15% more productivity and a 20% improvement in fuel efficiency when compared to non-hybrid excavators in ~40 ton class.
“The PC365LC-11 was engineered for excellence in multifunction applications by leveraging its innovative electric powertrain system to boost job site productivity while reducing fuel consumption,” says Matthew Moen, Komatsu’s product manager. “To highlight these performance enhancements, we’re emphasizing the concept of ‘multifunction plus’ as the defining feature of this machine.”
How it works
Komatsu’s hybrid system replaces the conventional hydraulic swing function with a fully electric swing motor that draws power from an ultracapacitor (as opposed to a battery) energy storage unit. As excavator slows or stops swinging, something like a regenerative braking system captures the kinetic energy that would normally be lost as heat and stores it in the capacitor. Once there, the stored energy can be quickly released to power the swing motor or assist the engine, delivering up to an extra 70 hp when needed to support heavy lifting or digging cycles.
And, thanks to Komatsu’s proprietary software, all of this energy capture and reuse happens automagically during normal work, without the need for external charging. The fuel savings happen because removing the hydraulic load from the ICE engine allows it to run at an ultra-low idle, while the productivity comes from the greater power and overall speed of the electric operations vs. conventional hydraulics.
Electrek’s Take
Trust me when I tell you that Komatsu didn’t wake up one day and decide to build a capacitor-based hybrid crane. One of their customers had the idea and came to them, promising orders. That’s what Komatsu does – from undersea remote control dozers to lunar mining rigs (above), if you bring Komatsu an order, they will absolutely find a way to fill it.
As for PC365-11 hybrid excavator, it’s packed with clever tech, overall – offering significant fuel, emissions, and TCO reductions without dramatically changing the operational logistics of an existing fleet’s operations. That’s all the sales pitch it needs.
SOURCE: Komatsu, via Equipment World.
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For serious fleet buyers, safety isn’t a “nice-to-have,” it’s an absolute must – and Kia’s new PV5 electric van meets that need with a positively stellar, five-star safety rating on the tough European NCAP safety test.
The new “do-it-all” Kia PV5 showed strong performance across a number of key safety categories, including Occupant Protection, Safety Assist/Crash Avoidance, and Post-Crash Safety. The PV5’s robust suite of standard ADAS technologies that includes AEB, Lane Support System, and Speed Assistance System also helped the new electric work van to deliver top marks in the NCAP’s “real world” test scenarios.
“The PV5 opens a new chapter in practical, electrified mobility, offering generous space and modular versatility for everyday use,” explains Sangdae Kim, Executive Vice President and Head of the (relatively) new PBV Business Division at Kia. “Achieving the top Euro NCAP five-star rating is clear validation of its safety performance and will serve as strong momentum as Kia expands its PBV lineup across Europe.”
The Euro NCAP tests highlighted the strong performance of a number of the PV5’s ADAS features, specifically calling out the following:
- Demonstrated strong responsiveness in vehicle-to-vehicle scenarios
- Provides additional protection for pedestrians behind the vehicle
- Avoided collisions in most pedestrian and cyclist test cases
The Kia PV5 slots into familiar territory for US buyers, landing roughly in the same size class as the Ford Transit Connect or Ram ProMaster City, with ~180 cubic feet of interior cargo space available, which is plenty to make it attractive for last-mile delivery and trade work in tight urban markets.
Globally, the PV5 is offered with a number of battery options, including a smaller 43.3 kWh Lithium-Iron-Phosphate (LFP) pack, as well as larger Nickel-Cobalt-Manganese (NCM) packs at 51.5 kWh and 71.2 kWh. The longest-range versions are good for about 250 miles of estimated range – more than enough for Kia to make a case for it as a practical, city-focused alternative to much larger (and pricier) electric vans.
Larger vans, by the way, that may not have that 5 star Euro NCAP rating.
Kia PV5
SOURCE | IMAGES: Kia; photo by Scooter Doll.
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