Decline in earnings for CAC 40 companies was substantial, at 28%, yet they still managed to maintain profitability throughout the year
In the first half of 2025, the CAC 40 index, a benchmark for the French stock market, experienced a 2.9% decline due to economic headwinds such as tariff fears, trade tensions, and cautious market conditions affecting global demand.
Christopher Dembik, a financial analyst, predicts that these conditions will lead to a currency risk rather than a tariff risk, and this will materialize much more in the coming results, particularly in investments or imports. He also judges that there is a French and European downturn that is noticeable.
The automotive sector is bearing the brunt of these economic headwinds. Renault, one of the major players in the industry, recorded a heavy loss of over 11.2 billion euros in the first half. The poor results and the accounting evolution of its Japanese partner Nissan contributed to this loss. Stellantis, another automobile company, published a net loss of 2.3 billion euros in the first half.
In an effort to navigate these challenging times, several companies have announced cost reductions. Renault, for instance, has frozen recruitments until December 31, marking a drastic decrease of 28% compared to the first half of 2024.
The luxury sector, exemplified by companies like L'Oréal, shows some resilience with a 3.1% increase in operating profit to 4.74 billion euros, although gross profit margins slightly declined by 10 basis points. However, other luxury brands like Kering (Gucci, Yves Saint Laurent, Balenciaga, etc.) experienced a net profit drop of 46% in the first half.
In contrast, the aerospace and defense sectors are doing well. Airbus's profits soared by 85% and Safran's increased by 11%.
The banking sector is also performing well, with BNP Paribas, Crédit Agricole, and Société Générale together realizing a total of 13.5 billion euros in profits, an increase of 12%. Antonio Filosa, the new CEO of Stellantis, has warned that difficult decisions will have to be made to accelerate by the end of 2025.
Despite these challenges, Lionel Melka, manager at Swann Capital, acknowledges that overall, the results are quite solid, but the semester is disappointing compared to the American situation. The cumulative net profit for 39 out of 40 CAC 40 companies that have published their half-year results is 51.8 billion euros.
The uncertainty remains strong for the third and fourth quarters, notably due to the strength of the euro, which is expected to weigh on French companies. The cumulative turnover is 827.6 billion euros, with a slight decrease of 1%. Pernod Ricard is not included in the count as its fiscal year is offset.
As the second half of 2025 unfolds, companies will continue to navigate these economic headwinds, making tough decisions to maintain profitability and adapt to the changing market conditions.
Below are two sentences that contain the words 'finance', 'business', and follow from the given text:
- The uncertain market conditions, affecting global demand, are causing financial analysts like Christopher Dembik to predict a currency risk that will materialize more in businesses involving imports and investments.
- In an attempt to maintain profitability, several companies, including Renault, have announced cost reduction strategies, such as freezing recruitments, due to the challenging economic conditions in the business sector.
