Nearly one in five S&P 500 companies have said China’s virulent coronavirus will impact their revenues or profits, underscoring the far-reaching toll the disease is expected to take on businesses around the world. More than 180 earnings transcripts and other corporate releases since the beginning of 2020 showed a high level of concern.
While most management teams that have warned of a revenue hit said they don’t expect any impact to full-year figures, many expect a drag in the first quarter. Estee Lauder CEO Fabrizio Freda said that, although it is difficult to anticipate the full impact of the coronavirus on our business, they expect the next couple of months will be very difficult. Chinese consumers in many big cities are staying home and retailers are closing stores or limiting hours in an effort to help contains the spread of the virus.
Royal Caribbean Cruises said earlier this month that precautionary cancellations are expected to cost the company 65 cents in full-year earnings per share. Richard Fain, the company’s chairman and CEO, said that, unfortunately, no one knows how this outbreak will play out and we don’t know how it will ultimately impact them. They also expect that there will be an impact on future bookings in China, especially in the immediate aftermath of the illness. But again, they just don’t know.
In the case of Apple, they said that they’ve issued broader-than-usual revenue ranges for the first quarter to account for the potential impact. CEO Tim Cook said that many of the stores that remain open have also reduced operating hours. They are taking additional precautions and frequently deep cleaning the stores as well as conducting temperature checks for employees. Their sales within the Wuhan area itself are small; retail traffic has also been affected outside of this area across the country in the last few days.
Another sizable number of S&P executives said at the time of their earnings release that it was too early to tell if the coronavirus would hit current-quarter finances but promised to keep stakeholders aware of the outlook changes in the weeks to come. Some, such as McDonald’s, have confirmed location closures in China. Three hundred ninety-two of the 500 S&P components have reported fourth-quarter earnings as of Friday.