This Is What Australian Businesses Are Saying About Virus Hit
This Is What Australian Businesses Are Saying About Virus Hit
(Bloomberg) -- The rapid spread of the coronavirus is forcing Australian companies to reassess the impact on earnings from supply chain disruptions, as optimistic forecasts of a quick resolution to the crisis less than a month ago are replaced with gloomier expectations.
Almost one in three companies have directly addressed the virus and its impact on their business, according to transcripts of conference calls in February compiled by Bloomberg. Among the nearly 150 companies that have spoken during the current earnings season, mining giants Rio Tinto Group and BHP Group Ltd. warned about the impact on the global economy, while airline Qantas Airways Ltd. has slashed capacity and stopped flying some routes.
Concerns about the spread of the virus are weighing on equity markets, with Australia’s benchmark index slumping since reaching a record close on Feb. 20. Global investors are reassessing the impact of the public health issue with the MSCI All-World Index falling to its lowest level since October, while the ASX 200 joined the Stoxx Europe 600 and S&P 500 in entering a correction after falling 10%.
The virus, which originated in China’s Hubei province, has almost 90,000 confirmed cases in over 30 countries, with more infections reported in nations other than China for the first time on Feb. 27. The World Health Organization said Thursday the outbreak has the potential to become a pandemic and is at a decisive stage.
Below are comments from businesses during their earnings results:
BHP (Feb. 18)
“If the epidemic is contained by the end of this quarter, then we do expect the economic impact to be muted, with some catch-up on lost demand for most of our commodities by the financial year-end,” CEO Mike Henry said. “If it extends beyond that, of course, then we’d be back and looking at what the implications are.”
Qantas (Feb. 21)
“We look back to the SARS event in 2003 we saw from beginning to end that, that was a six to eight-month period,” Chief Financial Offer Vanessa Hudson said. “We’ve actually got to see that the recovery starts in northern summer, so I think we’re very optimistic that we will actually start to see that.”
| Here’s how concerns about the virus have evolved during earnings season: |
|---|
| Australia Sees Coronavirus Impact on Economy Bigger Than Fires |
| More Misses Than Beats Muddle Outlook for Australian Equities |
| The Virus Is Interrupting Supply Chains From Watches to Lobsters |
| Airlines Warn of First Global Traffic Drop Since 2009 on Virus |
| Australia’s Visitor-Reliant Firms Face Minimal Impact From Virus |
Treasury Wine (Jan. 29/Feb. 25)
Jan. 29:
“We haven’t built in any impact of the current coronavirus,” Chief Operating Officer Tim Ford said. “We haven’t done so, because it’s just too early to tell.”
“With a potential virus, people may not be able to travel, that’s going to affect food, water and wine, we just have to keep an eye on it,” CEO Michael Clarke said.
Feb. 25:
“TWE now has sufficient information in its possession that would indicate consumption across discretionary categories in China has been significantly impacted through February, and that this impact on consumption is expected to be sustained to at least through March,” the company said.
Blackmores (Feb. 24)
“In the second half, though, you should expect that the combination of coronavirus and the label transition will cause in-country sales in China to be down somewhat,” Chief Financial Officer Gunther Burghardt said.
“We’ve obviously got a short-term challenge on our hands, everybody has, not just our company, but I think the entire world,” CEO Alastair Symington said.
Flight Centre (Feb. 7/Feb. 27)
Feb. 7:
“While it was too early to predict the virus’s overall impact, it had already adversely affected FLT’s small corporate travel operations in China, Singapore and Malaysia, which together generated about $625million in TTV during FY19,” Managing Director Graham Turner said.
Feb. 27:
“The Greater China and Singapore corporate businesses have been significantly impacted by the Chinese inbound and outbound travel shutdowns, which have been key elements in the containment efforts to date,” The company said.
“FLT’s corporate businesses elsewhere in the world have also been significantly impacted,” the company said. “It is impossible to predict the virus’s impact at this time, but FLT expects it will lead to subdued activity through to the end of FY20.”
To contact the reporter on this story: Tim Smith in Sydney at tsmith58@bloomberg.net
To contact the editors responsible for this story: Lianting Tu at ltu4@bloomberg.net, Naoto Hosoda, Rebecca Jones
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