COVID-19, the disease caused by the new coronavirus that was first identified late last year in Wuhan, China, was a dominant theme in the earnings releases and conference calls of S&P 500 companies in the recent earnings season as investors press for answers on how it will impact their financials.
There are now more than 101,000 cases of the coronavirus and more than 3,400 deaths, according to a tally of cases published by the Johns Hopkins Whiting School of Engineering’s Centers for Systems Science and Engineering.
With the December earnings season now all but over, many companies are having to review their guidance to incorporate the effect the virus is having on supply chains in Asia, as well as on consumer behavior across the globe. While most companies are still saying it’s too early to assess the full impact, many are attempting to offer some evaluation of lost sales or hits to earnings.
This is what companies have been saying:
• 3M Co. /zigman2/quotes/205029460/composite MMM +0.48% said demand for respirators is currently outpacing supply, and that increased demand for respirators during the H1N1 influenza outbreak in 2009 generated $250 million in revenue for the company. “That’s maybe the best frame to think about it for coronavirus at this point,” CEO Mike Roman said at an investor conference.
• Abercrombie & Fitch Co. /zigman2/quotes/206677024/composite ANF +7.16% expects an adverse impact of $60 million to $80 million on sales this year as a result of the outbreak. It has also lost $4 million “primarily from store closures in mainland China due to the coronavirus.” Abercrombie’s Asia-Pacific region made up less than 10% of 2019 sales, and its total manufacturing exposure to China was 22% in fiscal 2019. “We’ve given ourselves some provision I guess I would say on the European tourism business to continue to suffer a little bit as the travel restrictions get more and more intense,” CFO Scott Lipesky said during an earnings call, according to a FactSet transcript.
• Agilent Techonologies Inc. /zigman2/quotes/207081878/composite A +0.87% expects earnings of 72 cents to 76 cents a share on revenue of $1.28 billion to $1.32 billion “after factoring in the potential impact” of the coronavirus. The lab instruments maker anticipates a $25 million to $50 million hit in the first half as a result of the virus; a $10 million loss in revenue in the first quarter and an estimated $15 million to $40 million impact in the second quarter. “Our performance was impacted by the extension of the Lunar New Year holiday due to the coronavirus,” CFO Robert McMahon said. “This reduced the number of shipping days in China.”
• Alcoa Corp. /zigman2/quotes/200686102/composite AA +1.46% , which makes aluminum products, said it is seeing supply chain bottlenecks in China for bauxite, caustic and coal gas that are lowering production. “It’s driving a shortage of alumina inside of China, which is then starting to see the Chinese alumina price increase and you see the knock-on impact in the rest of the world with prices also increasing, pricing up by about $20 per ton over these last few weeks,” CEO Roy Harvey told investors.
• American Airlines Group Inc. /zigman2/quotes/209207041/composite AAL +5.61% is reducing international and domestic capacity through the summer peak season as a result of the COVID-19 outbreak. The airline is cutting international capacity by 10%, including a 55% reduction in trans-Pacific capacity. In the U.S., the airline is cutting capacity by 7.5% in April.
• Analog Devices Inc. /zigman2/quotes/201631938/composite ADI +2.03% updated its guidance for second-quarter revenue of $1.35 billion, plus or minus $50 million. “While the effects of the coronavirus are difficult to estimate and the situation remains dynamic, we have reduced our revenue guidance by $70 million to account for its potential impact,” the company said in a statement.
• Apple Inc. /zigman2/quotes/202934861/composite AAPL +1.98% is not expecting to meet second-quarter financial guidance because production has slowed or been halted in China due to the COVID-19 outbreak. “Work is starting to resume around the country, but we are experiencing a slower return to normal conditions than we had anticipated,” the company said in a statement on Monday. Apple generates about 15% of its revenue from China, and many of its products are manufactured there.
• Best Buy Inc. /zigman2/quotes/205918291/composite BBY +1.17% , which sources a lot of its consumer electronics products from China, said it assumes that most of the impact from the coronavirus will happen during the first half of the year. “Therefore, we view this as a relatively short-term disruption that does not impact our long-term strategy and initiatives,” Chief Financial Officer Matt Bilunas said in a statement. “Our guidance ranges for both Q1 and the full year reflect our best estimates of the impacts at this time.” On the company’s earnings call, executives stressed that it was still a fluid situation and they are attempting to gauge when factories will be fully back up and running and whether global vendors have sufficient inventory.
• Boston Scientific Corp. /zigman2/quotes/203726728/composite BSX -0.14% , which has a $600 million business in China, is expecting a “negative first-half impact” on expectations that Chinese patients will push back elective medical procedures during the outbreak. The company lowered its quarterly sales guidance for the first quarter of 2020. The device maker now anticipates a “preliminary negative sales impact estimate of $10 million to $40 million.”
• Brown-Forman Corp. /zigman2/quotes/209253695/composite BF.B +0.98% , the parent company of the Jack Daniel’s whiskey brand, lowered guidance to reflect global uncertainty and the effect of the coronavirus. The company is now expecting full-year earnings per share of $1.75 to $1.80, below the $1.82 FactSet consensus.
• Capri Holdings Ltd. /zigman2/quotes/206301876/composite CPRI +5.92% , which owns luxury brands Jimmy Choo and Versace, said it now expects annual revenue of $5.65 billion and adjusted earnings per share of $4.45 to $4.50 as the virus eats into sales. That’s below the FactSet consensus for revenue of $5.78 billion and per-share earnings of $4.87.
• Carnival Corp. /zigman2/quotes/202325446/composite CCL +8.28% said there could be a fiscal 2020 earnings-per-share impact of 55 cents to 65 cents if all operations are suspended in Asia through the end of April. If that comes to pass, according to Carnival, there would be a material impact on the business from suspended cruises in Chinese ports; cancellations in other parts of Asia; and the impact on bookings, which is determined by the length of time that an event influences travel.
• The Coca-Cola Company /zigman2/quotes/209159848/composite KO +0.40% said it is still expecting to reach its full-year guidance though COVID-19 will likely weigh on first-quarter results. Coca-Cola said it currently estimates an approximate 2- to 3-point impact to unit case volume, 1- to 2-point impact to organic revenue, and 1- to 2-penny impact to earnings per share for the first quarter. The Chinese market makes up 10% of Coca-Cola’s global volume, the company said in January. “China’s economy was in a different place when SARS happened,” CEO James Quincey said in January. “It’s worth noting that China’s economy is [now] much bigger, and this could become more connected to the rest of the world.” In its 10-K filing with the SEC, the company also said it has seen delays in the production and export of ingredients used in nonnutritive sweeteners. It doesn’t expect a hit to its full-year results for now.
• Crocs Inc. /zigman2/quotes/201458716/composite CROX +1.69% expects first-quarter revenue to be hurt by $20 million to $30 million due to disruptions in Asia from the coronavirus. The casual shoe maker said many of its sellers in China remain closed, with those that are open seeing reduced operating hours and traffic, with traffic declines expanding throughout Asia.
• Delta Air Lines Inc. /zigman2/quotes/200327741/composite DAL +5.32% is reducing capacity by 15 points, implementing a hiring freeze, offering voluntary leave, and deferring spending as it struggles with the fallout from the coronavirus. The airline said it is cutting international capacity by 20% to 25% and domestic capacity by 10% to 15%.
• Dollar General Inc. /zigman2/quotes/200691429/composite DG +0.21% is “strongly encouraging” that the first hour of store operations be dedicated solely for senior shoppers, who are the most vulnerable to infection. “Dollar General wants to provide these at-risk customers with the ability to purchase the items they need and want at the beginning of each day to avoid busier and more crowded shopping periods,” the company said in a statement.
• Domino’s Pizza Inc. /zigman2/quotes/201587798/composite DPZ +1.16% said that fewer than 20 of its stores are closed in China and the outbreak is slowing down the openings of new stores in that market. Last year, Domino’s opened 80 net new stores in China.
• Dow Inc. /zigman2/quotes/203121064/composite DOW +2.57% expects the coronavirus to shave about $400 million off first-quarter sales, after business in China saw a 20% to 30% dip in sales. CFO Howard Ungerleider told an industrials conference that the chemicals company expects some additional sales impact, but that it is difficult to quantify for now. “However, if I had to size the total impact of COVID on our first quarter based on what I know today, both the impact in China and the knock-on impacts around the world, I would arrange the total impact to the Dow in the first quarter in the $200 million range on Ebitda,” the executive told attendees, according to a FactSet transcript.
• Dunkin’ Brands Group Inc. has limited service to drive-through, carryout and delivery, as a result of the COVID-19 pandemic. The coffee and doughnut seller will remove tables and chairs from all its restaurants and outdoor patios to prevent the congregation of customers.
• Ecolab Inc. /zigman2/quotes/202628210/composite ECL +1.16% , a water technology company, said it anticipates a 5 cents hit to EPS as a result of the outbreak. CEO Douglas Baker told investors that if COVID-19 becomes seasonal, like the flu, it may change some behaviors. “If you think if you go back to H1N1, that was really the advent of all the hand sanitizers you see in lobbies of all commercial buildings,” he said, on an earnings call. “Before that, it didn’t exist. So it clearly changed the demand permanently for hand sanitizing products, etc. You may well see that kind of outcome as a consequence of the coronavirus, too.”
• Eli Lilly and Co. /zigman2/quotes/200106384/composite LLY +0.65% doesn’t expect any shortages of medicine, including insulin, as a result of the coronavirus. The company has been monitoring its supply chain for potential impact, and doesn’t source active pharmaceutical ingredients from China and insulin manufacturing sites in the U.S. and Europe have not been affected.
• The Estée Lauder Cos. /zigman2/quotes/200740220/composite EL +1.88% said the third quarter will be most impacted by the sales decline of luxury beauty products in China. The company updated its sales outlook for the second half of the year, saying it now predicts an increase of up to 1%, compared with the same period a year ago.
• Expedia Group Inc. /zigman2/quotes/202291990/composite EXPE +2.43% is expecting a $30 million to $40 million impact on adjusted EBITDA in the first quarter as a result of the outbreak. It also expects “some impact beyond [the first quarter] in 2020 as well,” CEO Barry Diller told investors. “But the exact amount will depend on how long it takes for travel trends to normalize.”
• Exxon Mobil Corp. /zigman2/quotes/204455864/composite XOM +2.48% is “looking to significantly reduce spending” in the near-term as a result of market conditions caused by the pandemic and commodity price decreases. “We will outline plans when they are finalized,” CEO Darren Woods said in a statement.
• Foot Locker Inc. /zigman2/quotes/204092533/composite FL +4.67% has closed stores across North America, Europe, Middle East and Asia and Malaysia through March 31. The athletic retailer has also withdrawn its full-year outlook and plans to provide an update with its first-quarter earnings announcement on May 22.
• Fresh Del Monte Produce Inc. /zigman2/quotes/204256055/composite FDP +1.02% CEO Mohammad Abu-Ghazaleh said port closures in China led to a slowdown in trucking and goods were left stacked up at ports over the extended Lunar New Year shutdown. He doesn’t expect the outbreak to fade away before April. “Usually these viruses, they don’t subside until the weather starts warming up, and then we will see the situation getting improved,” Abu-Ghazaleh told investors.
• General Electric Co. /zigman2/quotes/208495069/composite GE +2.24% expects first-quarter adjusted earnings per share of 10 cents, below the FactSet consensus of 13 cents, and negative free cash flow of about $2 billion. GE said while COVID-19 is an “evolving variable,” it currently expects a negative impact on first-quarter free cash flow of about $300 million to $500 million, and on operating income of $200 million to $300 million. The impacts are included in GE’s 2020 outlook.
• General Mills Inc. /zigman2/quotes/206659526/composite GIS -0.91% said half of its Häagen-Dazs shops in greater China are closed, and the shops that remain open have “severely restricted hours.” Greater China makes up 4% of General Mills’ net sales, 40% of its sales in the region are at Häagen-Dazs shops and other restaurants. The company told investors it can’t yet share how the closures will affect its numbers for fiscal 2020.
• Gilead Sciences Inc. /zigman2/quotes/210293917/composite GILD -0.55% is working with Chinese authorities to test its investigational antiviral remdesivir as a treatment for people with the new coronavirus. The drug maker plans to conduct a randomized, controlled trial in China as part of those plans, saying that remdesivir has shown “in vitro and in vivo activity in animal models against the viral pathogens” Middle East respiratory syndrome (MERS) and SARS, both of which are also coronaviruses.
• Hasbro Inc. /zigman2/quotes/201249319/composite HAS -0.01% continues “to have office and third-party factory closures” in China as a result of the outbreak. The company said that China is responsible for about two-thirds of its global sourcing. “The biggest unknown right now is how quickly the manufacturing factories can get their production ramp back up,” said Hasbro CFO Deborah Thomas. “Travel is limited, [and] places are still closed.”
• Hewlett Packard Enterprise Co. /zigman2/quotes/201998588/composite HPE +1.18% told investors it no longer expects revenue to grow in fiscal 2020, with one executive telling MarketWatch that he blames a 16% year-over-year decline in compute revenue ($3 billion) and 9% decline in total revenue on “microenvironment” issues such as supply-chain disruption and the coronavirus.
• Hilton Worldwide Holdings Inc. /zigman2/quotes/202780307/composite HLT +2.87% said about 150 hotels, totaling approximately 33,000 rooms, are closed in China as a result of the coronavirus outbreak.
• Hormel Foods Corp. /zigman2/quotes/209170265/composite HRL -1.77% expects its international business to have a “very difficult” second quarter as a result of COVID-19. The company said Thursday there has been a slowdown in sales in China, with many restaurants closed, but sales of pantry items like Skippy peanut butter and canned pork Spam have increased. “Similar to other companies in China, all aspects of our in-country supply chain are operating more slowly and at higher cost than normal,” CEO James Snee told investors.
• HP Inc. /zigman2/quotes/203461582/composite HPQ +1.64% said it expects a “negative impact to our top line, bottom line and [free cash flow],” citing delayed production and manufacturing timelines. The technology giant said when taking into account the outbreak, it now anticipates earnings per share of 46 cents to 50 cents and adjusted EPS of 49 cents to 53 cents.
• HSBC Holdings PLC /zigman2/quotes/208272822/composite HSBC +1.83% expects a weaker first-half performance in 2020, due to the downturn in Hong Kong and virus-related credit losses in the first quarter, it said. “The most extreme downside scenario in there I would say makes an assumption that the coronavirus is still continuing in the second half of this year,” an executive said on an earnings call. “If you look at that and that was to become the central scenario, there would be about $600 million of additional loan losses provisions required.”
• InterContinental Hotels Group PLC /zigman2/quotes/204459500/composite IHG +3.70% said 160 hotels are closed in China or closed to new guests. The company’s fee business is expected to take a $5 million hit in February in China, as a result of the outbreak. Its Chinese operations make up less than 10% of group operating profit. CEO Keith Barr told investors that the postponement and cancellation of conferences will have an impact on its operations, too. “What I saw during H1N1 and other times in China, the key thing to remember is the Chinese government’s ability to stimulate economic growth and activity is unlike any other country,” he said, on an earnings call.
• Interpublic Group of Companies Inc. /zigman2/quotes/203101491/composite IPG +0.59% and Meredith Corp. /zigman2/quotes/201770619/composite MDP +3.60% separately told investors that the advertising is seeing a small slowdown. “We’ve seen a slight pullback in luxury advertising related to the travel category, a couple of airlines, not domestic airlines, but actually international airlines pulled back a little bit,” Meredith’s CEO Thomas Harty said at an investor conference. IPG’s Michael Roth said at the same event that the ad giant has “seen cutbacks before on the project side of the business.” He also noted that the temporary move to a work-from-home culture may lead to additional business. “Clients are going to need our expertise in allocating media dollars where the clients are, whether they’re working at home or whether the consumers are working at home, and how you address the marketplace that’s different,” he said.
• IQVIA Inc. /zigman2/quotes/208640480/composite IQV +1.91% , which runs clinical trials, including in China, said it expects a $25 million impact in the first quarter as a result of the outbreak. “The patients who are enrolled in a trial are simply not going to visit the hospitals where all the sites are in China because that’s kind of the more dangerous spot right now,” CEO Ari Bousbib told investors.
• ITT Inc. /zigman2/quotes/203522138/composite ITT +0.76% updated its 2020 guidance, providing a downbeat outlook that included an estimated impact from the outbreak. For 2020, the manufacturer currently expects adjusted EPS of $3.87, and offered a wider range of $3.72 to $4.02, compared with the FactSet consensus of $3.99.