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Novo Reigns, Stellantis Resilient: EMEA Earnings Week Ahead

Chloé Meley and Maggie Shiltagh
·4-min read

(Bloomberg) -- Novo Nordisk A/S’s reign as Europe’s most valuable company “leaves no room to disappoint” with its first-quarter report, said Bloomberg Intelligence’s Michael Shah.

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The Danish drugmaker is set to dominate a week of results that will also show how Europe’s automakers are faring in the face of rising competition from China.

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While appetite for Novo’s weight-loss and diabetes drugs shows no signs of abating, British peer GSK Plc — also due — is seeing less fervor for its biggest sellers as it contends with the potential arrival of new competitors.

Mercedes-Benz Group AG, Volkswagen AG and Maserati-maker Stellantis NV also face a more crowded field. Chinese carmakers BYD Co., Nio Inc. and Li Auto Inc. aren’t just increasing domestic market share, they’re becoming more of a threat on the Europeans’ home turf too.

British oil major Shell Plc also reports this week, when investors will probably look past a weaker first quarter with the energy sector poised to regain momentum following a price rebound, BI said. Italian bank Intesa Sanpaolo SpA completes the lineup.

Highlights to look out for:

Tuesday: Stellantis’ (STLA US) sales update will probably show it’s coping with falling demand in Europe’s electric-vehicle market, for now. Revenue for the Enlarged Europe segment likely grew 1.6% in the first quarter, while North America sales slid 10% and revenue in China, India and Asia Pacific fell 8.3%, consensus shows. Total revenue is estimated to have dropped almost 7% to €43.9 billion ($47 billion). The Jeep maker is cutting jobs — including 8% of its workforce in Italy — as it straddles the shift to EVs, much to the ire of employees. Thousands staged protests earlier this month calling for job security and assurances on the future of the historic Mirafiori plant.

  • Mercedes’ (MBG GY) revenue decline of the prior two quarters likely deepened in the first three months of 2024 as it grappled with supply constraints. The company reported an 8% drop in global car deliveries for the first quarter, with high-margin luxury vehicle sales sliding 27%. That puts pressure on the adjusted Ebit margin for the car unit, which is expected to weaken to 10.1%, toward the bottom of the 10% to 12% forecast range for the year. While pricing remains a risk, Mercedes will probably stick to guidance as the supply issues are fading, BI said. Vans are seen as a bright spot.

  • Volkswagen (VOW3 GY) faces an uphill battle to convince investors it can turn around its business in China, where BYD has leapfrogged it to take the top spot the German carmaker held for years. First-quarter revenue probably slipped 2.3%, while adjusted operating income may have dropped 16%, consensus shows. The company has guided for up to 5% sales growth for 2024, compared with last year’s 15% increase.

Wednesday: Sales of shingles vaccine Shingrix and RSV shot Arexvy should help GSK (GSK LN) meet its full-year goals. A guidance upgrade isn’t in the cards, as the threat of Moderna Inc. entering the RSV market looms, said BI’s John Murphy and Sam Fazeli. While reduced costs should boost the operating margin sequentially, it may not be enough to prevent a slight year-on-year dip.

Thursday: Novo Nordisk (NOVOB DC) probably sold 10.4 billion Danish kroner’s ($1.5 billion) worth of its blockbuster weight-loss drug Wegovy in the first quarter, more than twice the year-earlier figure, consensus shows. A steady ramp-up in starting dose scripts points to even bigger sales in the second half, Barclays said. Don’t be surprised if the company adjusts its full-year outlook as consensus is already close to the top of the forecast range, Citi said. The shares aren’t far off the record reached in March, leaving little room for disappointment, BI notes.

  • Adjusted net income consensus of $6.3 billion for Shell (SHELL NA) looks a little light after the company pointed to “significantly higher” oil trading and still strong gas trading in an April 5 update, BI’s Will Hares said. Both should help offset further weakness in downstream refining margins. Shell’s decision in March to slow the pace of carbon-emissions cuts was “prudent,” given the resilient demand backdrop, Hares said. Expect the company to keep up the pace of buybacks, with another $3.5 billion tranche projected for the second quarter.

Friday: Intesa Sanpaolo (ISP IM) is expected to report an increase in net income to about €2.1 billion, as Italy’s largest domestic lender continued to benefit from higher interest rates. Analysts at Equita SIM also forecast a “good quarter for commission and insurance revenues,” both of which they expect rose 2% compared with the first quarter of 2023.

--With assistance from Valentine Baldassari, Christopher Jungstedt, Laura Malsch and Antonio Vanuzzo.

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