(News Bulletin 247) – The results season reveals that many listed groups have taken measures to mitigate the impact of these customs surcharges, sometimes reassuring the Stock Exchange. Volvo even says it has gained in efficiency.

US tariffs aren’t that much of a spoiler during the current earnings season. Some of the world’s largest makers of food, consumer goods and automobiles posted better-than-expected third-quarter results, easing investors’ concerns about the impact of tariffs imposed by US President Donald Trump.

Ahead of the third-quarter earnings season, global companies had warned of more than $35 billion (30.01 billion euros) in tariff-related costs, with those in the United States reaching their highest level since the 1930s.

In addition to tariffs, these groups also face disrupted supply chains, declining consumer confidence and rising input costs.

As Donald Trump continues to use trade policy as a bargaining chip, leaders still face regular threats of new tariffs. The latter fear that customs duties will lead to an increase in inflation and harm the purchasing power of households.

Volvo has gained in efficiency

While this week has been busy in terms of third-quarter results, some publications show that companies have found ways to pass on higher tariff-related costs to customers or reduce them, which has helped fuel the stock market gains.

Volvo Cars, for example, reported third-quarter profit last Friday that beat analysts’ expectations.

The extensive cost-cutting program launched by CEO Hakan Samuelsson has started to bear fruit. The title of the Swedish car manufacturer then climbed 40%.

The company is among the European automakers most exposed to Donald Trump’s tariffs because most of its U.S.-bound cars are exported from Europe.

“What we’re seeing now is really ‘wow okay’, this is delivering results faster than we thought and faster than we expected,” Hakan Samuelsson said of the cost reductions.

Volvo Cars’ gross profit margin increased to 24.4% from 17.7% in the previous quarter. To better counter customs duties, the Swedish manufacturer plans to relocate the production of certain hybrid models to America in the coming years.

Dove targets the high end

Britain’s Unilever, another multinational led by a new chief executive, also reported better-than-expected quarterly sales growth on Thursday, driven by demand for beauty products in North America despite cautious consumers.

Like its peers, the maker of Dove soap has streamlined operations to cut costs and Chief Executive Fernando Fernandez is focusing on premium products to boost margins.

German sports equipment maker Adidas raised its operating profit forecast for the full year on Tuesday, saying it had managed to mitigate some additional costs linked to increased US tariffs.

Hasbro raised its full-year outlook on Thursday, banking on holiday sales and demand for its digital games segment, even as macroeconomic uncertainties weigh on U.S. consumer spending.

Data available to date for the United States shows that spending by wealthier consumers is helping to support overall consumption, while lower- and middle-income consumers are becoming more cautious due to ongoing inflation concerns.

Difficulties

After a long period of uncertainty and turbulence, the first financial results releases for this third quarter provide insight into the industries and regions hardest hit and the strategies companies are adopting to mitigate costs.

So far, the European Union, Japan and the United Kingdom have concluded trade agreements with the United States to lower tariffs.

Swedish hygiene product maker Essity, like many consumer goods companies, has raised prices to cover rising costs. The group has unveiled plans to cut jobs and spin off its consumer businesses, which should help cope with a “demanding” market, according to chief executive officer Ulrika Kolsrud.

Restaurant and hotel demand for Essity napkins and paper towels has fallen over the past two quarters.

French tire maker Michelin, also facing difficult markets, lowered its annual outlook on Wednesday due to weakness in the North American market, with President Florent Menegaux citing the difficult economic situation in the United States.

The market knows how to appreciate

The strong recovery of some of the market’s most battered stocks, such as Volvo Cars shares, illustrates the relief of investors when the situation is not as bad as expected.

This reassuring news fuels prolonged gains in U.S. and European stock markets, especially when expectations are low.

According to forecasts, European companies are expected to record an average increase of just 0.2% in their profits in the third quarter, which would constitute the worst quarterly performance since the first quarter of 2024.

Of the 78 companies in the American S&P 500 index which have already published their results, 87% of them announced a profit higher than analysts’ expectations.

(With Reuters)