Europe's manufacturing industry: earnings during recession 2020| ��ƽ��

Earnings of European manufacturing firms in different types of recessions caused by COVID-19, as of 2020

Types of recessions	EBIT** margin
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Release date

2020

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Region

Europe

Survey time period

2020

Supplementary notes

* Recession types:
V-shaped recession: Successful implementation of measures to curb the spread of the virus and COVID-19 lasts for three to four months. Revenue streams decline in the second quarter, before recovering quickly in the third and fourth quarters.
U-shaped recession: COVID-19 will last for 6-12 months due to mutations of the virus and seasonal outbreaks. Revenue streams drop in the second and third quarters, but recover in the fourth quarter.
L-shaped recession: in this most severe scenario, COVID-19 will last for more than 12 months due to mutations of the virus, its seasonality, and unsuccessful curtailment measures. As a result, declining revenue streams persist throughout the fourth quarter.

** Earnings before interest and taxes.

Citation formats

In a V-shpaed recession, it is projected that European manufacturing companies will have a positive EBIT margin of **** percent, already a significant decline from the pre-pandemic EBIT margin of percent. The V-shaped recession is the least severe type of recession. Different types of hypothetical economic scenarios paint a mixed picture of the effects of the COVID-19 pandemic on earnings produced by European manufacturing companies. Depending on the severity of the recession, the amount of profit a company would generate differs. A U-shaped recession would result in an EBIT margin contraction of *** percent, while the most severe type of recession, the L-shaped recession, would result in an EBIT margin slump of ** percent. Thus, in the last two scenarios, companies would face significant losses in profit compared to the pre-pandemic status.