LONDON (Reuters) - Expectations for European companies' profits in the last quarter of 2020 are improving as the reporting season gets underway, driven by optimism car markers will recover faster than expected from the COVID-19 crisis, according to Refinitiv I/B/E/S data.
Companies listed on the pan-European STOXX 600 benchmark index are expected to see a 24.3% fall in fourth-quarter earnings, an improvement compared to last week's prediction of a 26.2% retreat.
Refinitiv added that out of the 14 companies which had already reported earnings when it compiled the data, 78.6% had exceeded analyst estimates.
Germany's Volkswagen's notably reported on Friday a rebound in premium car sales in China and stronger deliveries which pushed its operating profit to 10 billion euros, well above the 4.8 billion euros awaited by analysts.
"We expect Q4 earnings season to deliver many beats across the sector", UBS analysts commented separately in a note, warning however that some of the improvement had already been priced in the stock market.
More broadly, Germany's auto industry association said on Tuesday it was optimistic for a recovery in the second half of 2021 despite the closure of stores and showrooms and a global shortage of semiconductors that has shut assembly lines.
Estimates for the first quarter also slightly increased compared to last week. Profits are seen rising 44% versus 43.5% in last week's data.
(Julien Ponthus in Lodnon and Danilo Masoni in Milan, editing by Louise Heavens)