Food Giants and Carmakers Scrap Guidance: Earnings Wrap
(Bloomberg) -- Predicting the future is an impossible task this quarter as everyone from carmakers to soap sellers said the wide-ranging fallout from the pandemic has clouded their outlooks.
Daimler AG threw out a forecast made two months ago that estimated significantly higher profit this year while Renault SA said it’s still not possible to assess the virus’s impact. Volvo AB said it can no longer give reliable estimates for truck markets after registrations plunged in Europe and North America.
Consumer giant Unilever also withdrew its financial guidance for the year and shares dropped. It said cleaning supply sales were surging, helping to offset lost revenue from its out-of-home ice cream brands.
- European stocks bounced between gains and losses in early trading, with the Stoxx 600 index up 0.2% on gains for oil stocks.
- Daimler Scraps Hope for Higher Profit as Crisis Clouds 2020 View
- Unilever Speeds Launch of Cleaners After Virus Flattens Sales
- VW, Renault Fire Up Factories in Bet That Car Demand Will Follow
- For more on dividends, click here. For the latest company guidance, click here.
- Singapore Cases Rise Again; Europe’s Economy Reels: Virus Update
Here’s the top virus-related earnings news for today by sector.
- Daimler abandoned a forecast it made only two months ago for higher annual profit and said the pandemic makes it difficult to assess how much earnings will fall this year. The Mercedes-Benz maker now expects 2020 earnings will be lower than 2019 after reporting a 78% drop in first-quarter profit. The shares rose 1.1%.
- Renault’s first-quarter sales plunged and the French carmaker said it is impossible to judge the impact the virus will have on its results. Revenue dropped by 19% with unit sales in Europe falling by 36%, worse than the 26% decline for the wider market. The shares rose 1.8%. Acting CEO Clotilde Delbos said the company is seeking several billion euros in state-backed loans, adding there are “no strings attached” to the funds and that just because the company signs on for them, it doesn’t have to use them.
- Swedish truck maker Volvo expects its service sales to take a hit with vehicles standing still as a result of lockdown restrictions. The truckmaker has seen more orders cancelled than received since the end of last month, when it closed down most of its factories, and lower truck usage has led to increased inventories of used trucks. Handelsbanken analysts said the second quarter will be a real challenge for the company. The shares slipped as much as 8.2%.
- The Stoxx 600 Autos sector outperformed the broader market, with analysts highlighting strong points in Daimler and Renault’s numbers.
- Unilever withdrew its 2020 guidance and said underlying sales were flat in the first quarter. It saw a positive impact from customers stockpiling goods in March but said sales in China were hit hard by the Covid-19 lockdown in January and February. It is benefiting from strong sales of cleaning products like the Cif and Domestos brands. That’s being offset by weakness in products such as Ben & Jerry’s ice cream as consumers stay home. RBC said the results are disappointing and food sales were weak. The shares dropped by as much as 5.5%.
- Pernod Ricard SA, the largest seller of international spirits in China, suspended a planned share buyback of 500 million euros after the company reported that sales fell 14.5% on an organic basis during the third quarter of its fiscal year. The distiller reiterated a forecast that organic profit would fall by 20% this year. Jefferies said the performance was “less bad” than expected. The shares were little changed.
- Swedish toilet-roll maker Essity AB said its first-quarter adjusted profit surged by 70%. The group had already flagged the jump in profit this month, boosted by consumers stockpiling its goods as the virus outbreak took hold. The shares fell as much as 4.4%. Liberum said the firm is likely to see long-term benefits from consumers buying more hygiene products.
- Luxury-goods company Hermes International reported a smaller decline in first-quarter sales than analysts expected and said it has reopened all of its mainland Chinese stores, preparing for a bounce-back in demand. Still, sales in the U.S. and Europe have ground to a halt, which will weigh on the second quarter. Bernstein said the sales performance is the strongest in the luxury sector so far. Shares rose 3.2%.
- Italian luxury outerwear firm Moncler SpA scrapped its dividend but reported first-quarter organic sales that were “marginally” ahead of expectations, according to Bernstein analysts. RBC said the firm’s liquidity is strong and there should not be material changes to estimates following the update.
- Credit Suisse Group AG reported first-quarter net income ahead of expectations but its loan-loss provisions were more than double what analysts had expected. Citigroup said the pre-provision results were a beat. Shares opened higher but reversed those gains to fall 2.3%.
- Swedbank AB reported a first-quarter loss owing to a jump in credit impairments and the cost of its money laundering scandal. The Swedish lender said it was participating in both the National Debt Office’s loan-guarantee program and the central bank’s loan facilities. Shares fell as much as 2.6%.
- Bankinter SA opened the Spanish banking earnings season with a 10.1% drop in group net profit “owing to increased provisioning” related to the coronavirus crisis. The banking business on its own, which excludes insurance, recorded an even bigger net profit drop at 17.4% to 101 million euros. The bank said that online customers jumped 21% since March 13, the day before Spain went into a national lockdown. Shares rose as much as 3.1%.
Travel & Leisure
- French hotel operator Accor SA said it expects April and May to be the most difficult months of the year, with “very low” occupancy rates and “strong uncertainty” about when lockdown measures will be loosened and borders reopened. The firm sees initial indications of a recovery in China and expects an improvement in the second half as confinement measures get progressively lifted, Chief Executive Officer Sebastien Bazin said on a call with journalists. Shares rose 2%.
- Swiss duty-free retailer Dufry AG said its first-quarter revenue fell 22%, with sales plunging by around 56% in March as travel restrictions and airport closures began. In the first two weeks of April, sales have fallen 90% year-on-year. Zuercher Kantonalbank said the measures Dufry has taken to mitigate the virus impact, including a capital increase, are “energetic.” The stock rallied as much as 19%.
- Aeroports de Paris reported a decline in quarterly revenue marked by the first effects of the coronavirus pandemic, the scale and effects of which have “continuously amplified,” CEO Augustin de Romanet said. RBC said sales were a beat but the biggest risk for the airport operator is the potential for a second wave of virus lockdowns in the second half.
- Catering giant Compass Group Plc said about 55% of its business is closed due to country lockdowns and it has decided not to recommend an interim or a final dividend for the current financial year. Organic revenue growth for the half year was about 1.6%, with the drop through impact of lost revenues on operating profit between 28%-29% for the period. Shares were little changed as analysts assess the profit shortfall Compass will face.
- Prepaid vouchers firm Edenred said its revenue grew in the first three months but it anticipates a “marked decrease” in activity in the second quarter.
- Atlas Copco AB anticipates demand will drop significantly in most industries and geographies in the near term. It said its first-quarter organic revenue fell 3% and that its outlook is “very uncertain.”
- Schneider Electric SE saw some signs of recovery in China toward the end of the first quarter but it expects a significant impact on the first half from the pandemic. The company also maintained its dividend and Liberum analysts said Schneider has “best-in-class” liquidity and balance sheet strength.
- Not all manufacturers have seen production crushed by the virus. U.K. aerospace supplier Meggitt Plc said most of its factories are still open with demand softening only in the past few weeks after a first quarter that was ahead of last year. The company has tapped furlough programs and now plans to cut its global workforce by about 15%. Shares jumped as much as 9.4% and analysts said the first-quarter was “decent” for the firm.
- French software group Dassault Systemes SE expects broadly stable 2020 earnings year-on-year but said the virus will hit global GDP and has placed restrictions on a number of industries it serves. The group cut its earnings outlook on April 1.
- Payments firm Worldline SA expects its 2020 sales to be flat or lower, with second-quarter revenue to be “severely” hit by virus-related lockdowns. Ingenico Group SA, which Worldline is acquiring, also cut its 2020 revenue forecast on the effects of the pandemic. Citigroup said the deal between the two still looks to be on track.
- German broadcaster ProSiebenSat.1 Media SE withdrew its 2020 earnings outlook on a lack of visibility created by the pandemic effects. It said trading across all its units will be hit in the second quarter, with core TV advertising revenue to fall 40% for April and investment in new programming to be cut.
- U.K. home builder Taylor Wimpey Plc plans to resume construction work in the week beginning May 4 after drafting guidelines on how to maintain social distancing. The company will continue to keep offices and marketing suites closed. It has managed to secure orders for about 200 new homes remotely since the lockdown was implemented, outweighing a slight increase in cancellations, it said. Citigroup said the early restart to construction activity was a positive development and shares rose by as much as 9.2%.
- Peer Vistry Group Plc also said it intends to restart work on a number of housing sites. Its shares bounced as much as 8.5% as the pair helped buoy the whole U.K. homebuilding sector.
- Norwegian oil company Equinor ASA slashed its dividend by two-thirds, the first oil major to cut its payout amid the recent rout in crude markets. The group has already suspended its share buyback and outlined a $3 billion cost-cutting plan as it works to shore up its business against the historic crash in oil prices.
- Energy stocks rallied in Europe as Brent oil extended a rebound from a 21-year low.
- Chemicals firm Croda International Plc said its first-quarter profit was broadly in line with expectations, though it has seen more variable conditions in some markets since the start of the second quarter.
- Sector peer Yara International ASA scrapped plans for an initial public offering of its nitrogen unit following the battering markets have taken amid the virus outbreak. Yara shares fell as much as 3.7%.
Metals & Mining
- Anglo American Plc diamond production for the first quarter dropped 1.3% year-on-year, while copper production fell 8.7% over the same period. Copper and coal guidances remain unchanged, while diamonds, platinum, and Kumba iron ore guidances were cut, mostly on Covid-19 disruption. The miner said the pandemic is likely to result in project delays and it’s implementing cash improvement measures, with cost reductions of at least $500 million, while capital expenditure guidance is reduced by about $1 billion. The stock rose 1.2%.
- The bottom for European stocks appears to be behind us, according to the latest Bloomberg equity index survey. The poll of strategists shows consensus remains relatively bullish, despite big cuts to the average price target for Europe’s benchmark Stoxx 600 index since the previous poll in March.
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