For big business, the effects of an outbreak of COVID-19 in China are exacting a growing toll worldwide.
Mastercard Inc and United Airlines Holdings Inc emerged as the latest companies to warn that sales and profit are getting hurt as the epidemic spreads meaningfully beyond its center in China’s Hubei Province. Growing outbreaks are emerging in other parts of Asia and in Europe.
The US credit card network cut its revenue growth forecast as the spread of infections puts off travelers. Chicago-based United scrapped its profit forecast for this year altogether, underscoring the unpredictable nature of the two-month-old health emergency.
With the spread of the coronavirus raising questions over whether it would be declared a global pandemic, businesses worldwide that are exposed to travel are clear targets.
Singapore Airlines Ltd on Tuesday pulled more flights from its schedule through the end of May, adding to a long list of airlines led by Cathay Pacific Airways Ltd (國泰航空) that are cutting capacity as demand craters. Air New Zealand Ltd warned that its earnings would be hit, too.
However, the coronavirus has increasingly become a concern for any industry fed by a global supply chain.
In China, the biggest consumer market and a factory for the world, manufacturing facilities have closed and even some of the biggest cities have been put in lockdown.
That has disrupted production, logistics and sales for businesses that churn out modern-day essentials, from Procter & Gamble Co in the US to Germany’s Adidas AG and Australian vitamins maker Blackmores Ltd.
Royal Philips NV yesterday said that it expects a hit in the first quarter as it sells fewer consumer appliances in China and its supply chain gets snarled.
Nestle SA pushed back its target for sales growth as revenue from China, the Nescafe maker’s second-largest market, slows.
Pernod Ricard SA cut its forecast for full-year profit growth by about half, citing the effects of the coronavirus on sales of drinks, including Jameson whiskey in the key Chinese market.
Adidas last week said that business slumped 85 percent in China since the end of the Lunar New Year holiday.
One of the first warnings came from Burberry Group PLC, which scrapped its forecast for the year, warning that the coronavirus epidemic is cutting sales by three-fourths or more at stores in China.
Anxiety over a US-China trade war already made investors question if supply chains should be more localized and the virus outbreak has strengthened the argument for keeping operations close to home, Nikko Asset Management Europe Ltd global equities head William Low said.
The number of coronavirus cases in South Korea soared over the past week, rising from just dozens to more than 800, making it the most-infected country outside of China. Meanwhile, swathes of Italy are in lockdown.
The WHO called the increase in coronavirus cases outside of China “deeply concerning,” although stopped short of labeling the crisis a pandemic.
Either way, US consumer-goods giant Procter & Gamble late last week said that sales and earnings would be affected amid lower store traffic in China and beyond, with travel retail also getting hurt.
HP Inc on Monday flagged a “significant impact” to free cash flow in its second quarter because of production and manufacturing delays.
Even state-owned investment firms are not immune.
Singapore’s Temasek Holdings Pte yesterday said that it was implementing a company-wide wage freeze and asking senior management to take voluntary pay reductions for as long as a year.
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