Coming into the Q3 earnings season, there were concerns in the market regarding the impact of Brexit on U.S. corporate earnings for the third quarter. With the final DJIA components reporting results for Q3 this week, how did companies in the DJIA perform in the third quarter in Europe in terms of sales? How did the revenue numbers for Q3 2016 compare to prior quarters?

Overall, 11 of the 30 companies in the DJIA provided revenue growth numbers for Europe for the third quarter. Of these 11 companies, seven reported a year-over-year decline in revenues. This number is slightly above the number of Dow 30 companies that reported a year-over-year sales decrease in the second quarter (6). However, it is below the number of Dow 30 companies that reported a year-over-year sales decrease in the first quarter of 2016 (8) and the fourth quarter of 2015 (9). For four of these seven DJIA companies, the third quarter marked (at least) the third consecutive quarter of year-over-year declines in revenues from Europe.

It is also interesting to note that only six companies in the entire Dow 30 specifically discussed the term “Brexit” during their earnings calls for Q3. Thus, it appears Brexit was not a topic of concern for most companies in the DJIA during their earnings calls for Q3. The list of the six companies that discussed Brexit and some of their comments are provided below.

Brexit DJIA

What are Companies Saying about Brexit?

“Economic growth in Europe, it’s been kind of okay, but we’re still concerned about Brexit. And as that draws nearer, the concerns that we have are does it impact economic growth and business confidence and investment.” –Caterpillar (October 25)

“In Europe, we have seen a slowdown in construction activity in the U.K., we think as a result of the Brexit vote, but the rest of Europe appears to be improving slowly, more than compensating for the slowdown in the U.K.” –United Technologies (October 25)

“Only Europe slowed due to general economic weakness as well as the impact of the Brexit vote on the euro and the pound.” –Visa (October 24)

“Within the EMEA region, our U.K. business continues to perform very well with FX-adjusted growth of 16% during the third quarter. The weakening of the British pound that has occurred since the Brexit vote at the end of June has been a drag on our reported billings and revenues. But from an earnings perspective, as you’ll recall, we are relatively hedged naturally against the pound as the U.K. serves as the headquarters for many of our international operations.” –American Express (October 19)

“Currencies was essentially unchanged compared to the second quarter with lower client activity, particularly post the Brexit vote….I would say that Brexit potentially is something that could drive share to the U.S. I think what we’ve witnessed over the last several years is U.S. firms like ourselves with really strong markets share and leading business positions, whether you look at FICC, investment banking, equities, asset management. If you’re a leader in a franchise throughout this cycle, particularly as activity picks up, I think there is share to gain. I think our European clients need us, but in terms of Brexit I think it’s unclear whether that’s having any impact at this stage. It feels like early days.” –Goldman Sachs (October 18)

“As we think back to the discussion 90 days ago, it was around Brexit and its impact on Europe, global spending and sectors like banking, and the attractiveness of investment in the emerging markets. All of these topics have the capacity to drive some volatility in results. But what you see in our third quarter results is stability in our revenue, with continued strong growth in strategic imperatives and a top and bottom line consistent with what we expected.” –IBM (October 17)

Article by John Butters, FactSet