already more than 73 billion euros in profits in the first half of 2022

Nothing stops the growth of large French companies: despite the war in Ukraine and record inflation, the CAC 40 has already accumulated nearly 73 billion in profits in the first half according to a count made Thursday by AFP, thanks in particular to luxury and the surge in raw materials. For the time being, 38 companies in the CAC 40, the index which brings together the largest French market capitalizations from different sectors, have published their results, the railway manufacturer Alstom and the spirits specialist Pernod Ricard having a staggered financial year.

+24% compared to the first half of 2021

This represents an increase of 24% compared to the first half of 2021, when these same companies had made 58.8 billion in profits, while Eurofins Scientific was not yet in the CAC 40. The major French groups have therefore largely recovered from the Covid-19 pandemic and continued to grow despite the outbreak of war in Ukraine at the end of February, which further accentuated inflation linked to the economic recovery after the confinements.

Something to make the Minister of the Economy Bruno Le Maire “proud”, handed over to a tax on exceptional profits, which was ultimately rejected after a debate in Parliament. “It’s quite ambivalent because all the ingredients for a crisis were there (…) however the performance is good”, comments to AFP Bénédicte Hautefort, founder of the fintech Scalens, specialized in the digitization of relations between listed companies and investors.

Raw materials and luxury in mind

Inflation has not affected everyone in the same way. In terms of raw materials and energy, for example, soaring prices have boosted companies in the sector. The oil and gas giant TotalEnergies more than doubled its profit in the second quarter and achieved the best net result of the CAC 40 over the half, with more than 10.4 billion euros. It is followed by the world number two in the steel industry ArcelorMittal, which took advantage of the rise in steel prices and reached nearly eight billion euros.

Engie, the main gas supplier in France, meanwhile more than doubled its profit, to five billion euros. Another heavyweight in the CAC 40, luxury also stood out despite a slowdown in sales in China, one of its main markets, as brands were able to raise prices without losing their customers. “They depend on a wealthy clientele who are not bothered by price increases,” Mimoza Bogeska, managing director of asset management company Monocle Asset Management, told AFP.

“They have also benefited from the strengthening of the dollar against the euro because their production costs are in euros and they sell a lot in dollars,” she adds. LVMH, Kering and L’Oréal thus saw their combined profits climb by more than 36% compared to the first half of 2021, with comfortable margins.

Good performance partly due to cost reduction

For Bénédicte Hautefort, the good general performance of the CAC 40 is also explained by the cost reduction plans adopted to deal with the Covid-19 pandemic, which will continue to bear fruit in 2022. Some groups have nevertheless suffered the shock wave of the war in Ukraine, like Renault and Société Générale which withdrew from Russia after the outbreak of the conflict. Renault sold its stake in the manufacturer Avtovaz, which notably manufactures the Lada, and Societe Generale its stake in the Rosbank bank, causing charges of several billion euros.

“The hardest part is ahead of us,” says Bénédicte Hautefort, who believes that the economic context should weigh on companies in the second half. With inflation and the rise in the rates charged by central bank directors, which increase the cost of credit and therefore make new financing more difficult, certain economic players are even expecting a regression in the world economy.

Proof of investor mistrust, the CAC 40 stock market index has lost around 10% since the start of the year, despite a very positive month of July with the publication of the results. “For some time all valuations have been rising, but the markets are caught up by the fundamentals. Valuations nevertheless remain high,” says Ms. Bogeska.

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