Large U.S. companies have managed to avoid the troubles related to the European crisis, but they have yet to face a number of problems in this key market. Analysts' forecasts on Europe are not very favorable as the situation continues to deteriorate. However, so far the American companies are doing quite well.
In the fourth quarter of 2011, as shown by the stock index of Standard & Poor's, the earnings of the U.S. companies in the European sector grew by 11.4 percent compared with the indicators a year ago. The total increase in revenues for the quarter was 13.1 percent - and this is despite the suspended status of the euro and the plight of a number of European countries.
The Americans were surprised with the strength of Europe. There is an impression that 10 percent unemployment in 17 eurozone countries is something from a parallel reality. The manufacturer of heavy equipment Caterpillar Inc., for example, grew its European revenues by nearly a third. Harley-Davidson Inc. cheerfully reported that the proportion of the total market sales reached a "record high". McDonald's Corp. made 9 percent more in Europe than in the previous year (the number in the rest of the world is 10 percent). Big Macs were most in demand in Germany, France, Britain and Russia. This year the company plans to open 150 more restaurants in Europe, and refurbish the existing ones.
However, if some American ships continue to plow the spaces of Europe, others have been nailed to the shore by the financial storm in Europe. Ford Motor Co. reported an operating loss for the fourth quarter, and predicted a decline in sales this year. The earnings of DuPont Co. in the fourth quarter were at 18 percent, but the company noted a reduced demand for the chemicals used for automotive coatings. "Our hopes for Europe are not high," admitted CEO of DuPont Co. Ellen Kullman at a meeting with investors.
Generally, stable sales were observed only in Germany. The countries of the Mediterranean - Spain, Italy and Portugal - have failed to please the American entrepreneurs with their purchasing power. "Southern Europe, in fact, is on its knees, and northern Europe is doing well," told Caterpillar CEO Doug Oberhelman to investors. He is one of those who believe that Europe has slipped or will soon slip into a recession. This view is shared by the CEO of General Electric Co.: "We are preparing for a recession - that's what we expect."
Citigroup analyst Deane Dray said that the average "European" profits of industrial enterprises he observes was 19 percent. At this point, he said, the expensive items such as aircraft engines sell best, while with small items such as test equipment customers prefer to wait. Sales depending on budgetary expenditure have also suffered as the budget deficit has had an effect. For example, GE and Johnson & Johnson reported a reduction of the volume of European sales of medical equipment.
Difficulties in Europe can easily be traced on the example of one particular company or even one unit. At United Technologies Corp., the sales of industrial air conditioners grew 8 percent, which executives attributed to the desire of customers to improve energy efficiency. At the same time, the demand for industrial refrigerators fell by 10 percent. "In 2012 we do not expect much growth, but neither do we expect big surprises," said Chief Financial Officer of United Technologies Corp. Greg Hayes. "We have a long, slow recovery of our position in Europe ahead."
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