Supply chain chaos, surging costs set to plague Europe’s profits

The chip situation doesn’t look set to ease any time soon, judging by the early warning signs from the automotive sector. Parts supplier Faurecia SA and truck manufacturer Traton SE cut forecasts last month, while Volkswagen AG said that it faces a large order backlog due to a lack of chips. (File pic shows chip worker shws a 300mm silicon wafer at a German semiconductor plant. - Reuters)

LONDON: Cost pressures, supply-chain chaos and a reopening letdown are set to plague Europe’s third-quarter earnings season, setting investors up for more disappointment than elation.

While strong numbers from behemoths like LVMH and SAP SE reassured European stock investors last week, further good news may be needed to keep the rally alive. Rising inflation and a stalling global recovery pose a challenge to further market gains.