Its growth has stalled, its banks are sickly, and it is flirting with deflation. This isn’t necessarily a new feeling for many parts of Europe, but the region’s latest bout of weakness has plenty of people worried. It’s not for nothing that the European Central Bank is finally opening the taps and pumping hundreds of billions of euros into the euro zone economy to prop it up.
As the third-quarter earnings season gets going, company executives are confirming the continent’s lousy prospects. CEOs’ fear of speaking too candidly—part natural optimism, part media training—can make it hard to get a clear picture, but what they describe as “soft,” “challenging,” or “mixed” in public can often mean something much worse in private.
For example, earlier this week Coca-Cola boss Muhtar Kent noted the “continued challenging macroeconomic environment and also aggressive competitive pricing” in Europe. This is pretty thinly-veiled code for recession and deflation.
Here are 10 other statements from earnings conference calls that perked up our ears over the past week. When “moving sideways” or “from worse to bad” is the best way a CEO can put a spin on things, times must be tough indeed.
Martin Lundstedt, CEO of Swedish truckmaker Scania, Oct. 22:
I think really it’s positive to see that we have a bigger growth outside Europe than in Europe… if anything, we feel now that the European market is moving sideways.
Peter Lennart Nilsson, CEO of Swedish industrial tools group Trelleborg, Oct. 22:
Geographically, we have Europe going down. And, basically, in this quarter, at least, we have the rest of the world going up.
Rakesh Kapoor, CEO of British consumer goods group Reckitt Benckiser, Oct. 21:
The fact of the matter is that Europe has performed strongly this year versus the trends of the last many years. And I think I would attribute that to… markets moving from worse to bad.
John Wren, CEO of US-based advertising group Omnicom, Oct. 21:
We’re not expecting much growth to come out of the big countries in Europe, as to distinguish it from the rest of the world.
Silvio Napoli, CEO of Swiss elevator maker Schindler, Oct. 21:
We started the year with kind of a gloomy year on Europe. I must say that has been reconfirmed for southern Europe, but we will see this kind of decoupling of the market in Europe whereby northern Europe is actually nothing stellar.
Keith McLoughlin, CEO of Swedish appliance manufacturer Electrolux, Oct. 20:
The market in Europe in total is weak. It’s weaker than we would have anticipated at the beginning of the year. So kind of going sideways, Eastern Europe decidedly down, Western Europe kind of flat up to 1%.
David Cote, CEO of American manufacturing group Honeywell, Oct. 17:
As you know, we’ve been conservative over the years in our planning assumptions for Europe and I think that’s been a good call.
Jeffrey Immelt, CEO of American industrial group GE, Oct. 17:
Europe is slower, for sure. But I think most companies, industrial companies, haven’t counted on Europe and Japan for much incremental growth.
Pierre-André Terisse, CFO of French food company Danone, Oct. 15:
Europe, you see… the evolution of sales is pretty much in line with the one we had in the second quarter. So we were negative 5%. We are negative 5%. The easy way is to say that nothing is moving.
But it isn’t all bad news—if you happen to run a debt-collection agency, like Lars Wollung of Stockholm-based Intrum Justitia, business is booming (Oct. 22):
There is a lot of credit in default in Europe, so we believe that the growth rate there will be really good in the coming five years.