Historic Record for US Group Profits

Dion Weisler: “ Very proud, Hewlett-Packard has completed a “strong quarter” to close off  an exceptional year,” said Thursday, November 29,who leads the world number two computers,  in a hardware sector where competition is slicing the margins, the manufacturer in Palo Alto, California, has more than doubled its quarterly net profit in one year. Even with the exception of exceptional items, profits increased by 15%. And the group has generated enough cash to pamper its shareholders, transferring them $ 3.5 billion in one year

“Strong quarter”, “exceptional year”, “success”: Dion Weisler‘s words could be taken up by the majority of American bosses. Only a few weeks ago, many analysts expected the big names on Wall Street to experience a decline in their profit margins in the third quarter. Missed. Now that almost all the S & P 500 champions have released their numbers, we must face the facts: their profits have not only continued to rise, but they have done so very dramatically.

On average, their quarterly net profit jumped 26% over year, according to Factset scores. This is the largest increase since the fall of 2010. Three out of four groups have, like HP, made higher profits than expected.

On average, Apple, General Motors, Pfizer, Visa, ExxonMobil and others posted a net margin representing 12% of their turnover. Never seen ! Since the great economic crisis of 2008-2009, which had reduced the average margin to 6% of sales, the American tenors have not stopped improving their accounts. By 2015, margins returned to their pre-crisis level. Since then, they continue to climb,after quarter, signing record,breaking record in disregard of forecasts.

“This season of results has been exceptional, even more than we had anticipated,” said the experts at LPL Financial, a leading US broker. Earlier claims that earnings growth had peaked were premature. ”

What does this prolonged improvement mean? American benefits from an alignment of the stars which remains quite perfect. Although the IMF has slightly revised its outlook downward, global growth is expected to reach 3.7% in both 2018 and 2019. The US economy, which has been rising steadily for nine years, is about the same pace, notably  increased public spending by the Trump administration. So many opportunities for American multinationals to sell more software, cars, plastics, loans, etc. Year-over-year, sales grew 9% in the third quarter, the strongest increase in seven years.

Hülya Karahan: The Founder

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