It has been a big week for the Ibex, because 35 companies will present first semester results on Friday. This number represents 68% of companies that comprise the main Spanish economic indicator, but if we focus on weights within this index, then they equal nearly 75%.
Save some exceptions, results will probably be negative. Analysts from FactSet predict that mid-year results have fallen 16% with respect to the same data publicized during the first half of 2010. This highlights a current unstable situation, because if we heed 2010 results, then profits from Q1 and Q2 are increasing by 9.5% with respect to the first half of 2009.
According to Unicorp analyst Miguel Paz, the main reason is "business in Spain, because in Europe and the United States the predictions are high," meaning that "the Spanish economy has not grown and the first quarter was a disappointment, which lead to sharp cutbacks in profits predictions." Perhaps there have been too many pessimists".
There is another fact to take into account: markets are showing higher than normal levels of demand, i.e., asking that companies not only perform as expected, but that they succeed in surpassing profit estimations.
The big ones disappoint
Banco Santander's results will be a main focal point. The lender, led by Emilio Botín, could show mid-year profits of over 2 billion euros, or 10% less than in 2010. It will not be the only lender with shrinking profits. Telefónica and BBVA should also post losses, since they are calculating mid-year profits of 3.1 and 2.4 billion euros, respectively. In the telecom's case, in 2010 they earned 3.8 billion euros or 18% more than the year prior.
