Show resilience! European companies are "immune" to US tariffs, and are expected to achieve double-digit profit growth next year.

Noted, the performance of European companies in response to US tariffs has been much better than expected - a good sign for next year, with the market expecting double-digit profit growth for them next year. A basket of European stocks most affected by tariffs, compiled by Goldman Sachs Group, Inc., outperformed the market in October, after lagging behind for most of the year. As earnings season unfolds, this basket of stocks, including companies like L'Oreal, BMW, and Adidas, has risen by about 6%, double the increase of the STOXX 600 index in Europe and triple the increase of domestic stocks. Nicolas Domen, fund manager at Optigestion in Paris, said: "In fact, with a few rare exceptions, the impact of tariffs on European companies has been minimal so far." Regardless of tariffs, the US has driven sales growth for a large number of companies in the region, from luxury goods like Hermes International and Unilever PLC Sponsored ADR, to technology companies like Adecco, ABB, and Hexion. This sets a foundation for next year. Compiled data shows that the market generally expects earnings per share for companies in the STOXX 600 index to grow by 12% next year. In the latest quarter - also the first cycle of Trump's tariff policy implementation - several companies attributed growth in their American business to outperforming analyst expectations and improving outlooks. Luxury goods manufacturer Hermes (HESAY.US) saw a significant 14.1% growth in sales in the Americas, while Unilever PLC Sponsored ADR (UL.US) attributed better-than-expected sales to strong demand in North America. Swiss skincare giant Galderma also raised its full-year performance expectations, citing strong sales in the US market. Stock strategist Gillian Wolff wrote, "Tariffs are testing the profit elasticity of global companies - so far, companies have been adapting well." "European exporters have cut costs to offset the impact of rising energy prices and tariffs." The gap between US and European earnings growth is expected to narrow. Unilever PLC Sponsored ADR is an example. The company, which produces Hellmann's mayonnaise, saw growth in its North American business thanks to demand for personal care products like Dove soap, as well as high-end products like K18 hair care and Nutrafol supplements. Unilever PLC Sponsored ADR stated that the company is reducing costs to avoid raising prices and forcing consumers to choose cheaper brands. "Our business volume in the US continues to achieve significant growth," said CEO Fernando Fernandez. The Trump administration has announced a 15% tariff on goods imported from the EU, a 10% tariff on goods from the UK, and a 39% tariff on goods from Switzerland, as well as sectoral taxes on industries like steel. European pharmaceutical companies like Novartis AG Sponsored ADR, GlaxoSmithKline plc Sponsored ADR, and Roche have been negotiating with the US government to lower drug prices and have pledged to invest billions of dollars to alleviate the upcoming sectoral tariffs. The UK's Astrazeneca PLC Sponsored ADR (AZN.US) reached an agreement in October. Efforts by companies to mitigate the impact of tariffs have forced investors to cover short positions or reinvest in exporters. Analysis indicates that the issue of tariffs has disappeared from the radar and is less likely to be mentioned in financial report conference calls. A report by Barclays on Friday stated that written records show that EU companies are optimistic about the future, less concerned about tariffs, and positive about the efficiency gains of artificial intelligence. "In April, when Trump announced tariffs far exceeding expectations, uncertainty peaked," said Ariana Hayat, fund manager at Edmond de Rothschild Asset Management. "What is truly reassuring is how quickly companies have adapted to tariffs, announcing moves to shift production to other countries or the US, such as pharmaceutical companies, as well as smaller consumer goods manufacturers." The number of mentions of tariffs in European financial report conference calls continues to decline. Skincare manufacturer Galderma raised its full-year growth target due to optimism about the US market, with the company committing to invest over $650 million in production in the US by 2030. Automaker Stellantis (STLA.US) reported a 13% increase in net income in the third quarter, benefiting from the recovery of its North American business, updating its product supply and reducing inventory. The company has committed to investing $13 billion in the US in the next four years. Reports from luxury brands like LVMH and Gucci show growth in their North American businesses, indicating that the downward spiral in demand for high-end goods may be ending. In other regions, UK-based Hexion unexpectedly achieved sales growth in North America due to products like Sensodyne toothpaste and Tums antacid. Swiss automation technology provider ABB saw a surge in orders due to demand for artificial intelligence and stated that there has been no significant impact on demand or profitability from US tariffs. Of course, not all companies have been immune to challenges. Liquor producers like Pernod Ricard and Diageo have been forced to produce cognac in the Cognac region due to weaker-than-expected recovery in the US. Tire manufacturer Michelin warned that the challenges in its North American business will continue into next year, while French cosmetics manufacturer L'Oreal reported weak performance in its US business. "There is an increasing belief that tariffs are manageable and will not cause significant damage, but I think it's too early to draw conclusions," said Gilles Givet, European stock director at AXA IM. "For example, the pharmaceutical industry has brought very positive surprises, but the dust has not yet settled. The implementation and effectiveness of these measures will take time. Let's not forget that exchange rate effects will gradually come into play."