Profits of European manufacturing companies during recessions in 2020

In a V-shpaed recession, it is projected that European manufacturing companies will have a positive EBIT margin of four percent, already a significant decline from the pre-pandemic EBIT margin of seven 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 two percent, while the most severe type of recession, the L-shaped recession, would result in an EBIT margin slump of 19 percent. Thus, in the last two scenarios, companies would face significant losses in profit compared to the pre-pandemic status.