European Capital Goods: What we like and don‘t like ahead of Q2

Research evidence excerpt

European Capital Goods: What we like and don‘t like ahead of Q2

Deutsche Bank

Research

Europe Industry Date

6 July 2026

Capital Goods European Capital

Industry Update

Goods

What we like and don't like ahead of Q2

Gael de-Bray, CFA

The Q2 Cap goods earnings season will kick off on July 16 with ABB and Atlas

Research Analyst

Copco. Demand from data centers, grid, electrification and mining remains very +33-1-4495-6562

strong, while buildings, autos and broader short-cycle industrial demand are still

subdued. Pricing should be a more positive theme this quarter, with earlier price John Kim

increases now coming through P&Ls and price/cost momentum improving, even

+44-20-754-18699

as input cost indicators remain elevated. US PPI for finished goods rose by 9%

YoY in May, while the ISM prices index remained high at 73.0 in June despite Nabil Najeeb

easing from May. There's also room for positive margin surprises due to potential Research Analyst

refunds from tariffs, as recently flagged by a few names (e.g. Acuity, KION). We +44-20-754-17410

expect most electrical companies to upgrade their full-year guidance, including Lars Vom-Cleff

ABB, Schneider, Legrand, Siemens, Prysmian and Nexans. Knorr-Bremse will Research Analyst

also communicate new mid-term objectives, with the margin target seen at least +49-69-910-13526

2pts above current levels. Our preferred stocks into the quarter are Prysmian,

KION, Schneider, Siemens Energy, Nexans and Nordex.

1/ Sector remains down 5% since the war in Iran began

The EU Capgoods sector is up 9% over the past the 3 months but remains down 5%

since the war in Iran began, underperforming the STOXX 600 by 7%. The best

performers over the past 3 months have been power and electrical names (ABB,