{"id":123897,"date":"2025-08-07T09:22:41","date_gmt":"2025-08-07T13:22:41","guid":{"rendered":"https:\/\/www.bloomberg.com\/professional\/insights\/regional-analysis\/midyear-outlook-europe-industrials\/"},"modified":"2025-08-07T09:24:15","modified_gmt":"2025-08-07T13:24:15","slug":"midyear-outlook-europe-industrials","status":"publish","type":[3762],"link":"https:\/\/www.bloomberg.com\/professional\/insights\/regional-analysis\/midyear-outlook-europe-industrials\/","title":{"rendered":"Midyear outlook: Europe industrials"},"content":{"rendered":"<div  class=\"bbg-row-container\">\n    <section class=\"bbg-row  text--black row-padding--top-compact row-padding--bottom-none bbg-row--full-bg-bleed\" data-anchor='row-6a093b0d1ae35'>\n        \n        \n        <div\n            class=\"bbg-row--content\"\n                    >\n            \n            <p><div\n    class=\"bbg-column bbg-column--width-7\"\n    style=\"\"\n    >\n    <p><div\n    class=\"bbg-spacer bbg-spacer--lg\"\n    >\n<\/div><div\n\tclass=\"bb-wysiwyg\"\n\t\t>\n\t<p class=\"small\"><strong><span style=\"font-size: 14px; letter-spacing: 1px; color: #0062dd;\">ARTICLE<\/span><\/strong><\/p>\n\n<\/div>\n<div\n    class=\"bbg-spacer bbg-spacer--sm\"\n    >\n<\/div>    <h1 class=\"bbg-metadata bbg-metadata--title\">Midyear outlook: Europe industrials<\/h1>\n<div\n    class=\"bbg-spacer\"\n        style=\"height: 50px !important\"\n    >\n<\/div>    <ul class=\"bbg-categories_list\">\n                    <li>\n                <a href=\"https:\/\/www.bloomberg.com\/professional\/insights\/category\/markets\/\" rel=\"category tag\">\n                    Markets\n                <\/a>\n            <\/li>\n                    <li>\n                <a href=\"https:\/\/www.bloomberg.com\/professional\/insights\/category\/regional-analysis\/\" rel=\"category tag\">\n                    Regional Analysis\n                <\/a>\n            <\/li>\n            <\/ul>\n<\/p>\n\n<\/div><div\n    class=\"bbg-column bbg-column--width-5\"\n    style=\"\"\n    >\n    <div id=\"\" class=\"wpb_content_element bbg-single-image align-left\">\n    <figure class=\"bbg-single-image__figure\" style=\"max-width:100%\">\n                <img loading=\"lazy\" decoding=\"async\" width=\"4000\" height=\"2667\" src=\"https:\/\/assets.bbhub.io\/image\/v1\/resize?width=auto&amp;type=webp&amp;url=https:\/\/assets.bbhub.io\/professional\/sites\/41\/341275684-1.jpg\" class=\"bbg-single-image__image attachment-full\" alt=\"A commercial plane prepares to land\" title=\"341275684-1\" srcset=\"https:\/\/assets.bbhub.io\/image\/v1\/resize?width=auto&amp;type=webp&amp;url=https:\/\/assets.bbhub.io\/professional\/sites\/41\/341275684-1.jpg 4000w, https:\/\/assets.bbhub.io\/image\/v1\/resize?width=auto&amp;type=webp&amp;url=https:\/\/assets.bbhub.io\/professional\/sites\/41\/341275684-1.jpg 552w, https:\/\/assets.bbhub.io\/image\/v1\/resize?width=auto&amp;type=webp&amp;url=https:\/\/assets.bbhub.io\/professional\/sites\/41\/341275684-1.jpg 800w, https:\/\/assets.bbhub.io\/image\/v1\/resize?width=auto&amp;type=webp&amp;url=https:\/\/assets.bbhub.io\/professional\/sites\/41\/341275684-1.jpg 768w, https:\/\/assets.bbhub.io\/image\/v1\/resize?width=auto&amp;type=webp&amp;url=https:\/\/assets.bbhub.io\/professional\/sites\/41\/341275684-1.jpg 1536w, https:\/\/assets.bbhub.io\/image\/v1\/resize?width=auto&amp;type=webp&amp;url=https:\/\/assets.bbhub.io\/professional\/sites\/41\/341275684-1.jpg 2048w, https:\/\/assets.bbhub.io\/image\/v1\/resize?width=auto&amp;type=webp&amp;url=https:\/\/assets.bbhub.io\/professional\/sites\/41\/341275684-1.jpg 162w\" sizes=\"auto, (max-width: 4000px) 100vw, 4000px\" \/>\n        \n            <\/figure>\n<\/div>\n\n\n\n<\/div>\n\n\n                    <\/div>\n    <\/section>\n<\/div>\n\n<div  class=\"bbg-row-container\">\n    <section class=\"bbg-row  text--black row-padding--top-none row-padding--bottom-none bbg-row--full-bg-bleed\" data-anchor='row-6a093b0d25333'>\n        \n        \n        <div\n            class=\"bbg-row--content\"\n                    >\n            \n            <p><div\n    class=\"bbg-column bbg-column--width-2\"\n    style=\"\"\n    >\n    \n<\/div><div\n    class=\"bbg-column bbg-column--width-6 bbg-column--m-width-6\"\n    style=\"\"\n    >\n    <p>    <p class=\"bbg-metadata bbg-metadata--date\">August 7, 2025<\/p>\n<div\n\tclass=\"bb-wysiwyg\"\n\t\t>\n\t<p><strong>Bloomberg Intelligence<\/strong><\/p>\n\n<\/div>\n\n<\/div><div\n    class=\"bbg-column bbg-column--width-2 bbg-column--valign-middle bbg-column--m-width-2 bbg-column--s-padding-right-2\"\n    style=\"\"\n    >\n    <div class=\"bb-tts\"\n\tdata-selector=\"main\"\n\tdata-label=\"Speak this page\"\n\tdata-custom-play=\"Play\"\n\tdata-custom-pause=\"Pause\"\n\tdata-custom-stop=\"Stop\"\n\tdata-overlay=\"false\"\n\tdata-invert=\"false\"\n\tdata-no-time=\"false\"\n\tdata-no-button-text=\"false\"\n\tdata-one-button=\"true\"\n\tdata-one-style=\"true\"\n\tdata-hide-stop=\"true\"\n\tdata-voice=\"Gordon\"\n\tdata-pitch=\"1\"\n\tdata-speed=\"1\"\n\tdata-align=\"flex-start\"\n>\n<\/div>\n\n\n<\/div><div\n    class=\"bbg-column bbg-column--width-2\"\n    style=\"\"\n    >\n    \n<\/div>\n\n\n                    <\/div>\n    <\/section>\n<\/div>\n\n<div  class=\"bbg-row-container\">\n    <section class=\"bbg-row  text--black row-padding--top-compact row-padding--bottom-compact bbg-row--full-bg-bleed\" data-anchor='row-6a093b0d278c8'>\n        \n        \n        <div\n            class=\"bbg-row--content\"\n                    >\n            \n            <p><div\n    class=\"bbg-column bbg-column--width-2\"\n    style=\"\"\n    >\n    \n<\/div><div\n    class=\"bbg-column bbg-column--width-8\"\n    style=\"\"\n    >\n    <p><div\n\tclass=\"bb-wysiwyg\"\n\t\t>\n\t<p><i><span style=\"font-weight: 400;\">This article was written by Bloomberg Intelligence Senior Equity Strategist Laurent Douillet and Equity Strategist Kaidi Meng. It appeared first on the Bloomberg Terminal.<\/span><\/i><\/p>\n<p class=\"p2\">European industrials are poised for one of the highest EPS expansions among peers, with 2024-26 consensus growth of 12.5% propped up by government defense spending, AI data-center rollouts and Germany&#8217;s investment inpublic infrastructure. Though US tariffs have lifted earnings volatility in the trading and transportation segments, solid cash generation and low debt leverage could spur M&amp;A activity in aerospace and defense, construction and electrical-equipment. Valuation multiples are back to more normalized levels and structural growth drivers could shield the sector from sharper drawdowns.<\/p>\n<p class=\"p2\">Fiscal stimulus pushes aerospace and defense, and machinery, to the top of our industry scorecard, while trading and distributors, and transportation companies ,sit at the bottom as US tariffs weigh on the outlook.<\/p>\n<h2 class=\"p2\">Three keys for European industrials sector<\/h2>\n\n<\/div>\n<div id=\"\" class=\"wpb_content_element bbg-single-image align-center\">\n    <figure class=\"bbg-single-image__figure\" style=\"max-width:100%\">\n                <img loading=\"lazy\" decoding=\"async\" width=\"1748\" height=\"1152\" src=\"https:\/\/assets.bbhub.io\/image\/v1\/resize?width=auto&amp;type=webp&amp;url=https:\/\/assets.bbhub.io\/professional\/sites\/41\/figure-1-Three-Drivers-Europe-Industrials-Midyear-Outlook.png\" class=\"bbg-single-image__image attachment-full\" alt=\"figure 1 - Three Drivers - Europe Industrials Midyear Outlook\" title=\"figure-1-Three-Drivers-Europe-Industrials-Midyear-Outlook\" srcset=\"https:\/\/assets.bbhub.io\/image\/v1\/resize?width=auto&amp;type=webp&amp;url=https:\/\/assets.bbhub.io\/professional\/sites\/41\/figure-1-Three-Drivers-Europe-Industrials-Midyear-Outlook.png 1748w, https:\/\/assets.bbhub.io\/image\/v1\/resize?width=auto&amp;type=webp&amp;url=https:\/\/assets.bbhub.io\/professional\/sites\/41\/figure-1-Three-Drivers-Europe-Industrials-Midyear-Outlook.png 552w, https:\/\/assets.bbhub.io\/image\/v1\/resize?width=auto&amp;type=webp&amp;url=https:\/\/assets.bbhub.io\/professional\/sites\/41\/figure-1-Three-Drivers-Europe-Industrials-Midyear-Outlook.png 800w, https:\/\/assets.bbhub.io\/image\/v1\/resize?width=auto&amp;type=webp&amp;url=https:\/\/assets.bbhub.io\/professional\/sites\/41\/figure-1-Three-Drivers-Europe-Industrials-Midyear-Outlook.png 768w, https:\/\/assets.bbhub.io\/image\/v1\/resize?width=auto&amp;type=webp&amp;url=https:\/\/assets.bbhub.io\/professional\/sites\/41\/figure-1-Three-Drivers-Europe-Industrials-Midyear-Outlook.png 1536w, https:\/\/assets.bbhub.io\/image\/v1\/resize?width=auto&amp;type=webp&amp;url=https:\/\/assets.bbhub.io\/professional\/sites\/41\/figure-1-Three-Drivers-Europe-Industrials-Midyear-Outlook.png 164w\" sizes=\"auto, (max-width: 1748px) 100vw, 1748px\" \/>\n        \n            <\/figure>\n<\/div>\n\n<div\n\tclass=\"bb-wysiwyg\"\n\t\t>\n\t<h2 class=\"p2\"><b>Fiscal Boost Helps EPS Growth<\/b><b><\/b><\/h2>\n<p class=\"p4\">EU industrials EPS to get defense, infrastructure-spending boost<\/p>\n<p class=\"p4\">The European industrials sector is set to deliver 12.5% EPS compound annual growth over the next two years with the game-changing rise in defense spending and Germany&#8217;s public investments, despite US tariff threats and AI data-center build-out concerns. Solid cash flow and low balance-sheet leverage give bolt-on M&amp;A flexibility and growth scope.<\/p>\n\n<\/div>\n\n<\/div>\n\n\n                    <\/div>\n    <\/section>\n<\/div>\n\n<div  class=\"bbg-row-container\">\n    <section class=\"bbg-row  text--black row-padding--top-none row-padding--bottom-none bbg-row--margin-top-compact bbg-row--margin-bottom-compact bbg-row--full-bg-bleed\" data-anchor='row-6a093b0d2a64d'>\n        \n        \n        <div\n            class=\"bbg-row--content\"\n                    >\n            \n            <div\n    class=\"bbg-column\"\n    style=\"\"\n    >\n    <div class=\"bbg-interstitial\" aria-label=\"interstitial\" tabindex=\"0\">\n\t<style>\n\t\t.bbg-interstitial #card_1.bbg-card_hasCta{\n\t\t\tbackground: url(https:\/\/assets.bbhub.io\/image\/v1\/resize?width=auto&amp;type=webp&amp;url=https:\/\/assets.bbhub.io\/professional\/sites\/41\/Interstitial_bg.png);\n\t\t\t\tbackground-repeat: no-repeat;\n\t\t\t\tbackground-position: center center;\n\t\t\t\tbackground-size: cover;\n\t\t\tpadding: 104px;\n\t\t\t\n\t\t\t\n\t\t}\n\t\t.bbg-interstitial #card_1.bbg-card_hasCta .bbg-card__content, .bbg-interstitial #card_1.bbg-card_hasCta .bbg-card__content p{\n\t\t\tcolor:white;\n\t\t}\n\t\t@media (max-width: 768px) {\n\t\t\t.bbg-interstitial #card_1.bbg-card_hasCta{\n\t\t\t\tpadding: 80px 32px;\n\t\t\t}\n\t\t}\n\t\t@media (max-width: 480px) {\n\t\t\t.bbg-interstitial #card_1.bbg-card_hasCta{\n\t\t\t\tpadding: 80px 18px;\n\t\t\t}\n\t\t}\n\t<\/style>\n\t<div class=\"wpb_content_element bbg-card  bbg-card-dark bbg-card_hasCta has_interstitial\" id=\"card_1\" data-card_type=\"no_image\">\n  \n  \n  <div class=\"bbg-card__innerwrapper\">\n    <div class=\"bbg-card__content\">\n      \n      \n                      <h3 class=\"bbg-card__title\">Discover more with Bloomberg newsletters<\/h3>\n      \n              <div class=\"bbg-card__wysiwyg bb-wysiwyg\"><p>Subscribe now<\/p>\n<\/div>\n          <\/div>\n\n          \n<div\n  id=\"cta_3938871299612984325\"\n  class=\"wpb_content_element bbg-cta icon icon-arrow\">\n  <style>\n    \n    \n    \n  <\/style>\n  <div\n    class=\"bbg-cta-link link-holder\"\n    data-links-type=\"cta-links\">\n    <p class=\"bbg-cta-p right\">\n      <a\n        class=\"bbg-cta-link link interstitial_cta\"\n        href=\"https:\/\/www.bloomberg.com\/professional\/insights\/newsletter\/\"\n        target=\"\"\n        rel=\"\"\n        data-section-name=\"\"\n                role=\"button\"\n        aria-label=\"Learn more\"\n        >\n                <\/a>\n    <\/p>\n  <\/div>\n<\/div>\n\n      <\/div>\n\n  <\/div>\n\n<\/div>\n\n\n<\/div>\n\n\n                    <\/div>\n    <\/section>\n<\/div>\n\n<div  class=\"bbg-row-container\">\n    <section class=\"bbg-row  text--black row-padding--top-compact row-padding--bottom-none bbg-row--full-bg-bleed\" data-anchor='row-6a093b0d2e8df'>\n        \n        \n        <div\n            class=\"bbg-row--content\"\n                    >\n            \n            <p><div\n    class=\"bbg-column bbg-column--width-2\"\n    style=\"\"\n    >\n    \n<\/div><div\n    class=\"bbg-column bbg-column--width-8\"\n    style=\"\"\n    >\n    <div\n\tclass=\"bb-wysiwyg\"\n\t\t>\n\t<h2 class=\"p2\">Broad-based EPS growth driven by top-line, margin expansion<\/h2>\n<p class=\"p2\">Industrials&#8217; EPS growth (12.5%) is expected to be the MSCI Europe Index&#8217;s third highest over the next two years, thanks to solid sales growth (6.8% vs. 4% for the benchmark) and 90-bp margin expansion. Greater spending across many segments &#8212; including aerospace and defense, AI infrastructure, renewable energy and German public investment &#8212; point to double-digit EPS gains for five out of eight of the industries (63% of the companies). In contrast, the transportation industry (EPS CAGR of minus 6%) is set to exert a drag, driven mainly by Maersk.<\/p>\n<p class=\"p2\">The sector&#8217;s estimated 2025 EPS has fallen slightly (to minus 0.4%) over the past three months mainly on Airbus, Safran, Vestas and ABB, but with more upgrades than downgrades (revision ratio of 6%) while the MSCI Europe&#8217;s forecast was cut 1.4% with a revision ratio of minus 6%.<\/p>\n\n<\/div>\n<div id=\"\" class=\"wpb_content_element bbg-single-image align-center\">\n    <figure class=\"bbg-single-image__figure\" style=\"max-width:100%\">\n                <img loading=\"lazy\" decoding=\"async\" width=\"1752\" height=\"1044\" src=\"https:\/\/assets.bbhub.io\/image\/v1\/resize?width=auto&amp;type=webp&amp;url=https:\/\/assets.bbhub.io\/professional\/sites\/41\/figure-2-MSCI-Europe-Sectors-EPS-2019-26-Europe-Industrials-Midyear-Outlook.png\" class=\"bbg-single-image__image attachment-full\" alt=\"figure 2 - MSCI Europe Sectors EPS- 2019-26 - Europe Industrials Midyear Outlook\" title=\"figure-2-MSCI-Europe-Sectors-EPS-2019-26-Europe-Industrials-Midyear-Outlook\" srcset=\"https:\/\/assets.bbhub.io\/image\/v1\/resize?width=auto&amp;type=webp&amp;url=https:\/\/assets.bbhub.io\/professional\/sites\/41\/figure-2-MSCI-Europe-Sectors-EPS-2019-26-Europe-Industrials-Midyear-Outlook.png 1752w, https:\/\/assets.bbhub.io\/image\/v1\/resize?width=auto&amp;type=webp&amp;url=https:\/\/assets.bbhub.io\/professional\/sites\/41\/figure-2-MSCI-Europe-Sectors-EPS-2019-26-Europe-Industrials-Midyear-Outlook.png 552w, https:\/\/assets.bbhub.io\/image\/v1\/resize?width=auto&amp;type=webp&amp;url=https:\/\/assets.bbhub.io\/professional\/sites\/41\/figure-2-MSCI-Europe-Sectors-EPS-2019-26-Europe-Industrials-Midyear-Outlook.png 800w, https:\/\/assets.bbhub.io\/image\/v1\/resize?width=auto&amp;type=webp&amp;url=https:\/\/assets.bbhub.io\/professional\/sites\/41\/figure-2-MSCI-Europe-Sectors-EPS-2019-26-Europe-Industrials-Midyear-Outlook.png 100w, https:\/\/assets.bbhub.io\/image\/v1\/resize?width=auto&amp;type=webp&amp;url=https:\/\/assets.bbhub.io\/professional\/sites\/41\/figure-2-MSCI-Europe-Sectors-EPS-2019-26-Europe-Industrials-Midyear-Outlook.png 768w, https:\/\/assets.bbhub.io\/image\/v1\/resize?width=auto&amp;type=webp&amp;url=https:\/\/assets.bbhub.io\/professional\/sites\/41\/figure-2-MSCI-Europe-Sectors-EPS-2019-26-Europe-Industrials-Midyear-Outlook.png 1536w, https:\/\/assets.bbhub.io\/image\/v1\/resize?width=auto&amp;type=webp&amp;url=https:\/\/assets.bbhub.io\/professional\/sites\/41\/figure-2-MSCI-Europe-Sectors-EPS-2019-26-Europe-Industrials-Midyear-Outlook.png 181w\" sizes=\"auto, (max-width: 1752px) 100vw, 1752px\" \/>\n        \n            <\/figure>\n<\/div>\n\n<div\n\tclass=\"bb-wysiwyg\"\n\t\t>\n\t<h2 class=\"p2\">Higher defense spending, air-travel expansion positive<\/h2>\n<p class=\"p2\">Aerospace and defense remains the primary contributor to industrials&#8217; EPS growth, with all peers &#8212; except Thales and Leonardo &#8212; expected to deliver double-digit gains over the next two years.Despite budget constraints in countries like France, Italy and Spain, European defense spending could rise to 2.6% of GDP by 2034 vs. 1.8% in 2024, with more spending on European equipment stimulating economic activity and limiting the debt burden as a percentage of GDP, according toBI economists. Assuming 50% of defense spending is on equipment (vs. 37% currently) and half is supplied by European companies (22% today), the boost to the industry group would be significant, with a roughly sixfold increase in the addressable market.<\/p>\n<p class=\"p2\">Aerospace and defense have a 25% Industrial index weighting, but make up only 17% of earnings.<\/p>\n\n<\/div>\n<div id=\"\" class=\"wpb_content_element bbg-single-image align-center\">\n    <figure class=\"bbg-single-image__figure\" style=\"max-width:100%\">\n                <img loading=\"lazy\" decoding=\"async\" width=\"1756\" height=\"1148\" src=\"https:\/\/assets.bbhub.io\/image\/v1\/resize?width=auto&amp;type=webp&amp;url=https:\/\/assets.bbhub.io\/professional\/sites\/41\/figure-3-MSCI-EU-Aerospace-and-Defense-Price-BEst-EPS-Europe-Industrials-Midyear-Outlook.png\" class=\"bbg-single-image__image attachment-full\" alt=\"figure 3 - MSCI EU Aerospace and Defense- Price, BEst EPS - Europe Industrials Midyear Outlook\" title=\"figure-3-MSCI-EU-Aerospace-and-Defense-Price-BEst-EPS-Europe-Industrials-Midyear-Outlook\" srcset=\"https:\/\/assets.bbhub.io\/image\/v1\/resize?width=auto&amp;type=webp&amp;url=https:\/\/assets.bbhub.io\/professional\/sites\/41\/figure-3-MSCI-EU-Aerospace-and-Defense-Price-BEst-EPS-Europe-Industrials-Midyear-Outlook.png 1756w, https:\/\/assets.bbhub.io\/image\/v1\/resize?width=auto&amp;type=webp&amp;url=https:\/\/assets.bbhub.io\/professional\/sites\/41\/figure-3-MSCI-EU-Aerospace-and-Defense-Price-BEst-EPS-Europe-Industrials-Midyear-Outlook.png 552w, https:\/\/assets.bbhub.io\/image\/v1\/resize?width=auto&amp;type=webp&amp;url=https:\/\/assets.bbhub.io\/professional\/sites\/41\/figure-3-MSCI-EU-Aerospace-and-Defense-Price-BEst-EPS-Europe-Industrials-Midyear-Outlook.png 800w, https:\/\/assets.bbhub.io\/image\/v1\/resize?width=auto&amp;type=webp&amp;url=https:\/\/assets.bbhub.io\/professional\/sites\/41\/figure-3-MSCI-EU-Aerospace-and-Defense-Price-BEst-EPS-Europe-Industrials-Midyear-Outlook.png 768w, https:\/\/assets.bbhub.io\/image\/v1\/resize?width=auto&amp;type=webp&amp;url=https:\/\/assets.bbhub.io\/professional\/sites\/41\/figure-3-MSCI-EU-Aerospace-and-Defense-Price-BEst-EPS-Europe-Industrials-Midyear-Outlook.png 1536w, https:\/\/assets.bbhub.io\/image\/v1\/resize?width=auto&amp;type=webp&amp;url=https:\/\/assets.bbhub.io\/professional\/sites\/41\/figure-3-MSCI-EU-Aerospace-and-Defense-Price-BEst-EPS-Europe-Industrials-Midyear-Outlook.png 165w\" sizes=\"auto, (max-width: 1756px) 100vw, 1756px\" \/>\n        \n            <\/figure>\n<\/div>\n\n<div\n\tclass=\"bb-wysiwyg\"\n\t\t>\n\t<h2 class=\"p2\">AI, energy security drive electrical-equipment segment<\/h2>\n<p class=\"p2\">Earnings within Europe&#8217;s electrical-equipment segment benefit from two strong growth drivers &#8212; the rollout of AI data centers and new energy systems &#8212; with consensus calling for compound annual 19% EPS growth over the next two years. Schneider, ABB and Legrand are positioned fora profit boost, with demand for data-center infrastructure set to increase in the double digits over the next five years, based on US technology analysts. Consensus also expects solid sales growth and a major operating-margin improvement at Siemens Energy, Vestas and Prysmian on sustained renewable-energy project investment.<\/p>\n<p class=\"p2\">The segment has entered a correction phase, down 18% from the highs in January, after which DeepSeek announced its AI model had obtained a similar performance to Open AI&#8217;s at a fraction of the cost.<\/p>\n\n<\/div>\n<div id=\"\" class=\"wpb_content_element bbg-single-image align-center\">\n    <figure class=\"bbg-single-image__figure\" style=\"max-width:100%\">\n                <img loading=\"lazy\" decoding=\"async\" width=\"1754\" height=\"1146\" src=\"https:\/\/assets.bbhub.io\/image\/v1\/resize?width=auto&amp;type=webp&amp;url=https:\/\/assets.bbhub.io\/professional\/sites\/41\/figure-4-MSCI-EU-Electrical-Equipment-Price-BEst-EPS-Europe-Industrials-Midyear-Outlook.png\" class=\"bbg-single-image__image attachment-full\" alt=\"figure 4 - MSCI EU Electrical Equipment- Price- BEst EPS - Europe Industrials Midyear Outlook\" title=\"figure-4-MSCI-EU-Electrical-Equipment-Price-BEst-EPS-Europe-Industrials-Midyear-Outlook\" srcset=\"https:\/\/assets.bbhub.io\/image\/v1\/resize?width=auto&amp;type=webp&amp;url=https:\/\/assets.bbhub.io\/professional\/sites\/41\/figure-4-MSCI-EU-Electrical-Equipment-Price-BEst-EPS-Europe-Industrials-Midyear-Outlook.png 1754w, https:\/\/assets.bbhub.io\/image\/v1\/resize?width=auto&amp;type=webp&amp;url=https:\/\/assets.bbhub.io\/professional\/sites\/41\/figure-4-MSCI-EU-Electrical-Equipment-Price-BEst-EPS-Europe-Industrials-Midyear-Outlook.png 552w, https:\/\/assets.bbhub.io\/image\/v1\/resize?width=auto&amp;type=webp&amp;url=https:\/\/assets.bbhub.io\/professional\/sites\/41\/figure-4-MSCI-EU-Electrical-Equipment-Price-BEst-EPS-Europe-Industrials-Midyear-Outlook.png 800w, https:\/\/assets.bbhub.io\/image\/v1\/resize?width=auto&amp;type=webp&amp;url=https:\/\/assets.bbhub.io\/professional\/sites\/41\/figure-4-MSCI-EU-Electrical-Equipment-Price-BEst-EPS-Europe-Industrials-Midyear-Outlook.png 768w, https:\/\/assets.bbhub.io\/image\/v1\/resize?width=auto&amp;type=webp&amp;url=https:\/\/assets.bbhub.io\/professional\/sites\/41\/figure-4-MSCI-EU-Electrical-Equipment-Price-BEst-EPS-Europe-Industrials-Midyear-Outlook.png 1536w, https:\/\/assets.bbhub.io\/image\/v1\/resize?width=auto&amp;type=webp&amp;url=https:\/\/assets.bbhub.io\/professional\/sites\/41\/figure-4-MSCI-EU-Electrical-Equipment-Price-BEst-EPS-Europe-Industrials-Midyear-Outlook.png 165w\" sizes=\"auto, (max-width: 1754px) 100vw, 1754px\" \/>\n        \n            <\/figure>\n<\/div>\n\n<div\n\tclass=\"bb-wysiwyg\"\n\t\t>\n\t<h2 class=\"p2\">Tariffs appear a manageable threat<\/h2>\n<p class=\"p2\">The European industrials sector is the second most exposed to the US following health care, and slightly ahead of the automobile segment, but it&#8217;s partly insulated due to many companies&#8217; production plants there (Airbus, Siemens, Schneider, Saint Gobain) after numerous acquisitions over the past decade. Schneider, Legrand and Airbus management teams recently commented that their P&amp;Ls could be temporarily affected in the short term, but they don&#8217;t view tariffs as strategic threats. That&#8217;s because they plan to respond to them via a combination of pricing, supply-chain changes and cost cuts.<\/p>\n<p class=\"p2\">Services sales make up an estimated 40% of the sector (with services companies comprising about 25%), while manufacturers&#8217; higher-margin after-sales services account for the rest, mitigating the dent from tariffs imposed on final products.<\/p>\n\n<\/div>\n<div id=\"\" class=\"wpb_content_element bbg-single-image align-center\">\n    <figure class=\"bbg-single-image__figure\" style=\"max-width:100%\">\n                <img loading=\"lazy\" decoding=\"async\" width=\"1404\" height=\"1584\" src=\"https:\/\/assets.bbhub.io\/image\/v1\/resize?width=auto&amp;type=webp&amp;url=https:\/\/assets.bbhub.io\/professional\/sites\/41\/figure-5-Industrial-Product-Categories-Among-Top-EU-Exports-Europe-Industrials-Midyear-Outlook.png\" class=\"bbg-single-image__image attachment-full\" alt=\"figure 5 - Industrial-Product Categories Among Top EU Exports - Europe Industrials Midyear Outlook\" title=\"figure-5-Industrial-Product-Categories-Among-Top-EU-Exports-Europe-Industrials-Midyear-Outlook\" srcset=\"https:\/\/assets.bbhub.io\/image\/v1\/resize?width=auto&amp;type=webp&amp;url=https:\/\/assets.bbhub.io\/professional\/sites\/41\/figure-5-Industrial-Product-Categories-Among-Top-EU-Exports-Europe-Industrials-Midyear-Outlook.png 1404w, https:\/\/assets.bbhub.io\/image\/v1\/resize?width=auto&amp;type=webp&amp;url=https:\/\/assets.bbhub.io\/professional\/sites\/41\/figure-5-Industrial-Product-Categories-Among-Top-EU-Exports-Europe-Industrials-Midyear-Outlook.png 552w, https:\/\/assets.bbhub.io\/image\/v1\/resize?width=auto&amp;type=webp&amp;url=https:\/\/assets.bbhub.io\/professional\/sites\/41\/figure-5-Industrial-Product-Categories-Among-Top-EU-Exports-Europe-Industrials-Midyear-Outlook.png 800w, https:\/\/assets.bbhub.io\/image\/v1\/resize?width=auto&amp;type=webp&amp;url=https:\/\/assets.bbhub.io\/professional\/sites\/41\/figure-5-Industrial-Product-Categories-Among-Top-EU-Exports-Europe-Industrials-Midyear-Outlook.png 768w, https:\/\/assets.bbhub.io\/image\/v1\/resize?width=auto&amp;type=webp&amp;url=https:\/\/assets.bbhub.io\/professional\/sites\/41\/figure-5-Industrial-Product-Categories-Among-Top-EU-Exports-Europe-Industrials-Midyear-Outlook.png 1361w, https:\/\/assets.bbhub.io\/image\/v1\/resize?width=auto&amp;type=webp&amp;url=https:\/\/assets.bbhub.io\/professional\/sites\/41\/figure-5-Industrial-Product-Categories-Among-Top-EU-Exports-Europe-Industrials-Midyear-Outlook.png 96w\" sizes=\"auto, (max-width: 1404px) 100vw, 1404px\" \/>\n        \n            <\/figure>\n<\/div>\n\n<div\n\tclass=\"bb-wysiwyg\"\n\t\t>\n\t<h2 class=\"p2\">Means to facilitate corporate action<\/h2>\n<p class=\"p2\">The industrials&#8217; sector net debt-to-Ebitda ratio is expected to fall to 1x this year, its lowest since 2017, allowing for companies to engage in M&amp;A. Given European companies need to reach a critical mass to compete against US and Asian rivals &#8212; and be able to capitalize on growth opportunities created by the AI and energy transitions &#8212; acquisitions are likely to be the preferred capital-allocation option vs. greater dividend payouts or buybacks.<\/p>\n<p class=\"p2\">Dividends are expected to rise 11% this year despite lower free cash flow, driven mainly by transportation and construction, and engineering segments. As a result, the dividend-to-free-cash-flow payout ratio is set to reach 50% vs. 40% last year, but remain below the 2015-19 average of 53%. Buybacks are seen as falling toward \u20ac15 billion (down 28% vs. 2024) driven by all segments.<\/p>\n\n<\/div>\n<div id=\"\" class=\"wpb_content_element bbg-single-image align-center\">\n    <figure class=\"bbg-single-image__figure\" style=\"max-width:100%\">\n                <img loading=\"lazy\" decoding=\"async\" width=\"1748\" height=\"896\" src=\"https:\/\/assets.bbhub.io\/image\/v1\/resize?width=auto&amp;type=webp&amp;url=https:\/\/assets.bbhub.io\/professional\/sites\/41\/figure-6-EU-Industrial-Segment-Free-Cash-Flow-Dividends-Europe-Industrials-Midyear-Outlook.png\" class=\"bbg-single-image__image attachment-full\" alt=\"figure 6 - EU Industrial-Segment Free Cash Flow- Dividends - Europe Industrials Midyear Outlook\" title=\"figure-6-EU-Industrial-Segment-Free-Cash-Flow-Dividends-Europe-Industrials-Midyear-Outlook\" srcset=\"https:\/\/assets.bbhub.io\/image\/v1\/resize?width=auto&amp;type=webp&amp;url=https:\/\/assets.bbhub.io\/professional\/sites\/41\/figure-6-EU-Industrial-Segment-Free-Cash-Flow-Dividends-Europe-Industrials-Midyear-Outlook.png 1748w, https:\/\/assets.bbhub.io\/image\/v1\/resize?width=auto&amp;type=webp&amp;url=https:\/\/assets.bbhub.io\/professional\/sites\/41\/figure-6-EU-Industrial-Segment-Free-Cash-Flow-Dividends-Europe-Industrials-Midyear-Outlook.png 552w, https:\/\/assets.bbhub.io\/image\/v1\/resize?width=auto&amp;type=webp&amp;url=https:\/\/assets.bbhub.io\/professional\/sites\/41\/figure-6-EU-Industrial-Segment-Free-Cash-Flow-Dividends-Europe-Industrials-Midyear-Outlook.png 800w, https:\/\/assets.bbhub.io\/image\/v1\/resize?width=auto&amp;type=webp&amp;url=https:\/\/assets.bbhub.io\/professional\/sites\/41\/figure-6-EU-Industrial-Segment-Free-Cash-Flow-Dividends-Europe-Industrials-Midyear-Outlook.png 768w, https:\/\/assets.bbhub.io\/image\/v1\/resize?width=auto&amp;type=webp&amp;url=https:\/\/assets.bbhub.io\/professional\/sites\/41\/figure-6-EU-Industrial-Segment-Free-Cash-Flow-Dividends-Europe-Industrials-Midyear-Outlook.png 1536w, https:\/\/assets.bbhub.io\/image\/v1\/resize?width=auto&amp;type=webp&amp;url=https:\/\/assets.bbhub.io\/professional\/sites\/41\/figure-6-EU-Industrial-Segment-Free-Cash-Flow-Dividends-Europe-Industrials-Midyear-Outlook.png 192w\" sizes=\"auto, (max-width: 1748px) 100vw, 1748px\" \/>\n        \n            <\/figure>\n<\/div>\n\n<div\n\tclass=\"bb-wysiwyg\"\n\t\t>\n\t<h2 class=\"p2\">Rally in EU industrials is closing post-covid EPS gap to US<\/h2>\n\n<\/div>\n<div id=\"\" class=\"wpb_content_element bbg-single-image align-center\">\n    <figure class=\"bbg-single-image__figure\" style=\"max-width:100%\">\n                <img loading=\"lazy\" decoding=\"async\" width=\"1754\" height=\"1310\" src=\"https:\/\/assets.bbhub.io\/image\/v1\/resize?width=auto&amp;type=webp&amp;url=https:\/\/assets.bbhub.io\/professional\/sites\/41\/figure-7-MSCI-EU-industrials-Vs-US-Price-BEst-EPS-Europe-Industrials-Midyear-Outlook.png\" class=\"bbg-single-image__image attachment-full\" alt=\"figure 7 - MSCI EU industrials Vs US- Price- BEst EPS - Europe Industrials Midyear Outlook\" title=\"figure-7-MSCI-EU-industrials-Vs-US-Price-BEst-EPS-Europe-Industrials-Midyear-Outlook\" srcset=\"https:\/\/assets.bbhub.io\/image\/v1\/resize?width=auto&amp;type=webp&amp;url=https:\/\/assets.bbhub.io\/professional\/sites\/41\/figure-7-MSCI-EU-industrials-Vs-US-Price-BEst-EPS-Europe-Industrials-Midyear-Outlook.png 1754w, https:\/\/assets.bbhub.io\/image\/v1\/resize?width=auto&amp;type=webp&amp;url=https:\/\/assets.bbhub.io\/professional\/sites\/41\/figure-7-MSCI-EU-industrials-Vs-US-Price-BEst-EPS-Europe-Industrials-Midyear-Outlook.png 552w, https:\/\/assets.bbhub.io\/image\/v1\/resize?width=auto&amp;type=webp&amp;url=https:\/\/assets.bbhub.io\/professional\/sites\/41\/figure-7-MSCI-EU-industrials-Vs-US-Price-BEst-EPS-Europe-Industrials-Midyear-Outlook.png 800w, https:\/\/assets.bbhub.io\/image\/v1\/resize?width=auto&amp;type=webp&amp;url=https:\/\/assets.bbhub.io\/professional\/sites\/41\/figure-7-MSCI-EU-industrials-Vs-US-Price-BEst-EPS-Europe-Industrials-Midyear-Outlook.png 768w, https:\/\/assets.bbhub.io\/image\/v1\/resize?width=auto&amp;type=webp&amp;url=https:\/\/assets.bbhub.io\/professional\/sites\/41\/figure-7-MSCI-EU-industrials-Vs-US-Price-BEst-EPS-Europe-Industrials-Midyear-Outlook.png 1536w, https:\/\/assets.bbhub.io\/image\/v1\/resize?width=auto&amp;type=webp&amp;url=https:\/\/assets.bbhub.io\/professional\/sites\/41\/figure-7-MSCI-EU-industrials-Vs-US-Price-BEst-EPS-Europe-Industrials-Midyear-Outlook.png 145w\" sizes=\"auto, (max-width: 1754px) 100vw, 1754px\" \/>\n        \n            <\/figure>\n<\/div>\n\n<div\n\tclass=\"bb-wysiwyg\"\n\t\t>\n\t<h2 class=\"p1\"><b>Valuation: Growth vs. tariffs<\/b><b><\/b><\/h2>\n<p class=\"p3\">European industrials&#8217; 12% EPS growth upholds premium valuation<\/p>\n<p class=\"p3\">US tariffs have brought European industrials&#8217; valuation back toward the historical average, yet the stronger sector growth and profitability prospects still justify a premium to the broader market. Both growth and value companies in the sector trade at moderate valuation vs. other industries while lower growth, ROE and higher earnings volatility justify lower valuation vs. US peers.<\/p>\n\n<\/div>\n\n<\/div>\n\n\n                    <\/div>\n    <\/section>\n<\/div>\n\n<div  class=\"bbg-row-container\">\n    <section class=\"bbg-row  text--black row-padding--top-none bbg-row--full-bg-bleed\" data-anchor='row-6a093b0d380aa'>\n        \n        \n        <div\n            class=\"bbg-row--content\"\n                    >\n            \n            <p><div\n    class=\"bbg-column bbg-column--width-2\"\n    style=\"\"\n    >\n    \n<\/div><div\n    class=\"bbg-column bbg-column--width-8\"\n    style=\"\"\n    >\n    <div class=\"bbg-accordion transparent\">\n\t<input type=\"checkbox\"  id=\"bbg-accordion-toggle-6a093b0d39071\">\n\t<div class=\"bbg-accordion-parent\" data-accordion-toggle aria-expanded=\"false\">\n\t\t<label class=\"bbg-accordion-label\" for=\"bbg-accordion-toggle-6a093b0d39071\">\n\t\t\t\t<h5 class=\"bbg-accordion-title\" data-label=\"Disclaimer\">\n\t\tDisclaimer\n\t<\/h5>\n\n\t\t\t\t\t<\/label>\n\t<\/div>\n\t<div class=\"bbg-accordion-content\">\n\t\t<div class=\"bb-wysiwyg\">\n\t<p style=\"font-size: 16px !important; line-height: 24px;\">The data included in these materials are for illustrative purposes only. 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