CAC 40: Profits Plummet, Stock Market Soars
EY has published the 20th edition of its CAC 40 Financial Profile, which provides an in-depth analysis of the 2025 financial statements of France’s 40 largest companies by market capitalization. The picture is paradoxical: combined net income fell by nearly a quarter, yet market capitalization reached a record high and dividends remained unchanged. An analysis of a year in which strong balance sheets served as a guiding compass.
There is one figure that sums up the year 2025 for France’s corporate giants. While their combined net income fell by 23.9% to 100 billion euros, their market capitalization rose by 8.1% to reach 2,567 billion euros. In other words, the markets continued to buy into companies whose profits were shrinking. That is the key takeaway from the latest EY study, which annually analyzes the consolidated financial statements of companies in the Paris stock exchange’s flagship index based on the figures they publish.
In terms of business activity, the picture is one of stabilization. After two years of slowdown, the combined revenue of the top 40 companies remained flat at 1,684 billion euros, a very slight increase of 0.3 percent. Organic growth, meanwhile, returned to positive territory at 1.9%, driven almost entirely by manufacturing and construction—and particularly by the aerospace and defense sectors. In contrast, the energy sector declined by 7.1%, technology, media, and telecommunications by 8.8%, and consumer goods by 3.2%. The luxury goods sector, for its part, posted a second consecutive year of decline, weighed down by sluggishness in the Chinese market and global trade tensions. “Business activity among CAC 40 companies is holding up. We are seeing a stabilization in revenue, which reflects the difficulty in finding new sources of growth in an economic environment that remains uncertain,” summarizes Nicolas Klapisz, a partner at EY-Parthenon and author of the study.
Profits Under Pressure, Confident Markets
Profitability, meanwhile, is returning to normal following the post-pandemic upswing. Recurring operating income came in at 159 billion euros, down 8%, and the recurring operating margin fell to 10.9%, compared with 11.8% a year earlier. However, the average masks widely divergent trends: eighteen out of forty companies saw their profit margins increase in 2025. In terms of net income, the variation is even more pronounced, with sharp increases for banks, insurance companies, and real estate firms, and steep declines in the energy and industrial sectors.
Against this backdrop of declining profits, companies have opted to maintain shareholder returns. Dividends paid for fiscal year 2025 totaled 72 billion euros, a level in line with previous fiscal years. This continued generosity, however, contrasts with the performance of the CAC 40 (with dividends reinvested), which lagged behind several European markets over the year. For investors, the message is clear: income is preserved, but the Paris market failed to outperform. This relative underperformance serves as a reminder that an index can post robust fundamentals while delivering a lower stock market return than its European counterparts when sector momentum and market sentiment are focused elsewhere in Europe.
Investment Stalls
The flip side of this resilience is a business sector that is scaling back its spending. Investment remains at a high level—92 billion euros—but is down 6% year-over-year, whereas it had been growing by an average of 8.2% annually since 2020. This slowdown is primarily attributable to the luxury goods and industrial sectors. At the same time, the net debt of the top 40 companies jumped by 21%, a sign that these groups have used financial leverage to support their dividend policies and acquisitions; external growth, in fact, contributed positively to revenue after a historically low year for mergers and acquisitions in 2024.
This remains the least visible asset on balance sheets—and perhaps the most decisive one. With nearly 2,000 billion euros in cumulative intangible assets (brands, patents, technologies, market share), CAC 40 companies possess barriers to entry that neither a mediocre quarter nor a price war can erode. It is this intangible capital—more so than a company’s annual earnings—that the markets valued in 2025. The gradual recovery in mergers and acquisitions, following a historic low in 2024, and the resilience of banks and insurance companies further confirm that the value of these groups lies less in any given fiscal year than in their ability to weather economic cycles. This serves as a lesson for investors tempted to judge an index solely by its earnings: on the Paris Stock Exchange, robustness is also measured by assets that do not appear on the income statement.
