The impact of the coronavirus is being felt globally in industries including travel, leisure, technology, consumer goods, manufacturing, and more
The last few weeks have seen a number of companies estimating the impact of the coronavirus on their businesses, with many updating their first quarter and fiscal year 2020 outlooks. Here is a brief rundown of some notable updates and commentary:
Apple (AAPL) stated: "Our quarterly guidance issued on January 28, 2020 reflected the best information available at the time as well as our best estimates about the pace of return to work following the end of the extended Chinese New Year holiday on February 10. Work is starting to resume around the country, but we are experiencing a slower return to normal conditions than we had anticipated. As a result, we do not expect to meet the revenue guidance we provided for the March quarter due to two main factors. The first is that worldwide iPhone supply will be temporarily constrained. While our iPhone manufacturing partner sites are located outside the Hubei province -- and while all of these facilities have reopened -- they are ramping up more slowly than we had anticipated... These iPhone supply shortages will temporarily affect revenues worldwide. The second is that demand for our products within China has been affected. All of our stores in China and many of our partner stores have been closed. Additionally, stores that are open have been operating at reduced hours and with very low customer traffic."
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Nvidia (NVDA) said that while the ultimate effect of the coronavirus is difficult to estimate, it has reduced its revenue outlook for Q1 by $100M to account for its potential impact. Nvidia CFO Colette Kress added that the normal seasonality in Q1 sequential gaming revenue decline will be more pronounced this year due to coronavirus.
MasterCard (MA) stated: "Cross-border travel, and to a lesser extent cross-border e-commerce growth, is being impacted by the coronavirus. As a result, we now expect that if the trends we have seen recently -- primarily in our cross-border drivers -- continue through the end of the quarter, year-over-year net revenue growth in the first quarter will be approximately 2-3 percentage points lower than discussed on our January 29, 2020 earnings call. Under these circumstances, we would expect year-over-year net revenue growth of 9%-10% in Q1 on a currency-neutral basis, excluding acquisitions. There are many unknowns as to the duration and severity of the situation and we are closely monitoring it. If the impact is limited to Q1 only, we expect that our 2020 annual year-over-year net revenue growth rate would be at the low end of the low-teens range, on a currency-neutral basis, excluding acquisitions."
Procter & Gamble (PG) said its March quarter would be "materially impacted" by coronavirus, stating: "We face the demand and supply challenges associated with the coronavirus outbreak. China is our second largest market-sales and profit. Store traffic is down considerably, with many stores closed or operating with reduced hours. Some of the demand has shifted online but supply of delivery operators and labor is limited. There are also impacts outside of China: travel retail, a significant reduction in department store traffic in many Asian metro areas, and global supply... Results for the January to March quarter in China and for the total company will be materially impacted on both the top and bottom line by these dynamics. We continue to believe, based on what we know today, that our fiscal year top and bottom line guidance ranges -- and I emphasize ranges -- remain the right ones."
Coca-Cola (KO) estimated, for Q1, an approximate 2- to 3-point impact to unit case volume, a 1- to 2-point impact to organic revenue, and a 1c-2c impact to earnings per share due to the coronavirus.
United Airlines (UAL) stated: "As a result of the coronavirus outbreak... United Airlines has suspended flights between the United States and each of Beijing, Chengdu, Shanghai and Hong Kong through April 24, 2020. These routes represented approximately 5% of the company's 2020 planned capacity and the company's other trans-Pacific routes represented an additional 10% of the company's 2020 planned capacity. As a result of COVID-19, we are currently seeing an approximately 100% decline in near-term demand to China and an approximately 75% decline in near-term demand on the rest of our trans-Pacific routes. We are managing our business to minimize the operational and financial disruption. For Q1 of 2020, we currently expect the reduced revenue on our trans-Pacific routes to be partially offset by the related decline in fuel prices and other cost savings... Accordingly, we expect Q1 adjusted diluted earnings per share to remain within our previously provided guidance range of 75c-$1.25. Beyond Q1, we believe the range of possible scenarios is too wide to provide earnings guidance at this time. If COVID-19 were to run its course by mid-May, and normal travel patterns on trans-Pacific routes resume gradually over five months, we would expect to be tracking to deliver 2020 adjusted EPS within our previously provided guidance range of $11.00-$13.00. However, due to the heightened uncertainty surrounding this outbreak, its duration, its impact on overall demand for air travel and the possibility the outbreak spreads to other regions, the company is withdrawing all full-year 2020 guidance issued on January 21, 2020."
Royal Caribbean (RCL) stated: "As a result of the travel restrictions in place and related circumstances, the company has now cancelled a total of 18 sailings in Southeast Asia and has also modified several itineraries. Taken together, these measures have an estimated impact on the company's financial performance for 2020 of approximately 65c per share. While not currently planned, if the company was to cancel all of its remaining sailings in Asia through the end of April, it would impact 2020 financial performance by an additional 55c per share. There are still too many variables and uncertainties to make a reasonable forecast for 2020. While the early impact due to concerns about the coronavirus is mainly related to Asia, recent bookings for the company's broader business have also been softer. If the travel restrictions and concerns over the outbreak continue for an extended period of time, they could materially impact the company's overall financial performance."
Carnival Corporation (CCL) stated: "Carnival Corporation is closely monitoring the evolving situation with respect to coronavirus... Travel restrictions as a result of coronavirus necessitated the suspension of cruise operations from ports in China, as was previously announced, and are now resulting in the cancellation of voyages in other parts of Asia. Significant events affecting travel typically have an impact on booking patterns, with the full extent of the impact generally determined by the length of time the event influences travel decisions. As a result of coronavirus, the company believes the impact on its global bookings and cancelled voyages will have a material impact on its financial results which was not anticipated in the company's previous 2020 earnings guidance. Since the situation continues to evolve, the company is currently unable to determine the full financial impact on its fiscal year 2020. However, while not currently planned, if the company had to suspend all of its operations in Asia through the end of April, this would impact its fiscal 2020 financial performance by 55c-65c per share, which includes guest compensation. In addition, the impact on global bookings will further affect the company's financial performance. The company is currently evaluating contingency plans to mitigate the impact and will provide an update with its Q1 earnings release in late March."
Norwegian Cruise Line (NCLH) stated: "Out of an abundance of caution and as a result of the uncertainty surrounding port entry and berthing availability in various destinations in Asia, the company has made the prudent decision to cancel all voyages in Asia across its three brands. A total of 40 voyages have been canceled, modified or redeployed including 24 voyages on Norwegian Cruise Line, 10 on Oceania Cruises and 6 on Regent Seven Seas Cruises. Following these changes, the company will not have any vessels deployed in Asia through the end of Q3 2020. At this time, the known direct impact to full year 2020 adjusted EPS is expected to be approximately 75c and is excluded from the company's Q1 and FY20 guidance... Due to the fluidity and uncertainty as to the duration and extent of the outbreak, it is too early for the company to fully quantify impacts from broader headwinds to its business resulting from decreased demand for travel and tourism globally. The company's financial performance could be materially impacted if travel restrictions and COVID-19 concerns continue for an extended period of time."
Macy's (M) said that management is "carefully monitoring" coronavirus and noted it could have a small impact on Q1 sales.
Home Depot (HD) said it does not see coronavirus impacting Q1 results, and added that it was implementing procedures to mitigate any impact from coronavirus.
Merit Medical (MMSI) stated: "While it is too early to adequately forecast the potential impact, or duration, of the outbreak on Merit's FY20 performance, Merit currently estimates that a full quarter of a continued coronavirus outbreak at current levels could result in an impact in the range of $14M-$19M in net sales, and 8c-12c in non-GAAP EPS. Merit does not have enough information to estimate any potential impact beyond that point, but intends to disseminate additional information as events unfold. Importantly, Merit has taken the precautions it believes are necessary to encourage the safety of its employees and its business. Adjustments in inventory and logistics are also being made as necessary."
Heidrick & Struggles (HSII) stated: "The company is proactively monitoring the significant level of uncertainty associated with the coronavirus and is keeping in close communication with its team and clients in affected regions. While the situation is still fluid and it is too early to quantify, it is reasonable to assume that along with the reported economic pressure, the coronavirus could have a related impact on first quarter results."
EXFO (EXFO) lowered its Q2 revenue view to approximately $55M from $66M-$71M stated: "EXFO Inc. updated its revenue outlook for Q2 of fiscal 2020 due to the coronavirus impact on its supply chain and manufacturing operations in China as well as an information technology issue. Management expects revenue to accelerate in upcoming quarters as operations return to full capacity. To contain the spread of infection, Chinese public health authorities have imposed preventive measures within affected regions including an extended shutdown of businesses, restrictions on various forms of public transportation and lockdown periods for individuals-all of which are affecting EXFO's factory and supply chain."