In This Article:
* Euro up 16 pct year-on-year against dollar
* Currency strength hits Euro zone exporters
* U.S. sales beat ratio charges ahead of Europe
* Q1 earnings season likely turning point
By Alasdair Pal and Helen Reid
LONDON, May 1 (Reuters) - A strong euro has helped U.S. companies extend their sales outperformance over Europe to multi-year highs in the first quarter, according to Reuters data - though experts expect the trend to begin to reverse later this year.
Renewed confidence in the European economy and persistent weakness in the dollar have driven the euro up 16 percent against the U.S. currency from the first quarter last year to the end of March 2018.
That means euro zone companies reporting first-quarter earnings for 2018 have seen dollar revenues shrink by roughly a sixth in a year.
Some 74 percent of companies on the U.S. S&P 500 that have reported in first quarter have beaten analysts' estimates for sales, compared with just 22 percent on Europe's Stoxx 600, according to data from Thomson Reuters I/B/E/S/.
The spread between the two is the highest since I/B/E/S/ began collating comparable data in the first quarter of 2011.
Exporting heavyweights Daimler, Renault , Continental and Sanofi have all reported hits to their results from the strong euro in the last week.
Euro zone exporters suffer from a strong currency as they make large chunks of their sales and revenues in foreign currencies, which are then worth less when translated back into euros.
The rising euro also results in higher costs and a pressure to raise prices, potentially making exporters less competitive.
Daimler said the strong euro would dampen revenue growth this year, while Sanofi said a stronger euro had a negative effect of 8.3 percent on sales in the first quarter.
Euro zone industrials, and consumer cyclicals, sectors dominated by exporters, have been delivering weaker than expected first-quarter revenues, Reuters data shows, with some of the biggest negative earnings surprises.
Goldman Sachs analysts said currency effects were to blame for a disconnect between earnings growth beats and stocks' performance.
"We believe this has been a direct consequence of investors' concerns about FX downgrades causing further downside risks to earnings," they said.
Some of the region's biggest drinks makers all said the strong euro would crimp profits.
Heineken said the strong euro would wipe 200 million euros ($247 million) off operating profit this year based on current exchange rates. In mid-February, it had put the figure at 190 million euros.
Pernod Ricard also increased its estimate of the euro's negative impact, to 200 million from its previous estimate of 180 million, and Remy Cointreau said foreign exchange movements would knock 17 to 18 million euros off full-year operating profit.