Global supply chain was under the influence of the outbreak of coronavirus, and some of the largest companies in the world warn investors about the possibility of reducing profits in the future.
the Epidemic of coronavirus, has killed over 560 people, while the number of cases exceeded 28 000. Asian markets reacted negatively to the situation with the virus. China’s Central Bank has already responded by lowering interest rates and measures aimed at reducing the impact of reduced economic growth.
the outbreak of the virus happened in a period when most large companies publish their accounts for the year 2019. Some companies mentioned the virus in their documents and forecasts.
Below we will discuss 5 major companies that have signalled the impact of coronavirus on possible reduction of incomes of the company.
Apple in China 26 vendors and 4 large corporate client, according to Bloomberg.
Thus, the company is very vulnerable to the situation on the market. Factories manufacturing iPhones and other devices were forced to close for several weeks as part of measures to combat the spread of the virus. Further measures can lead to reduced availability of Apple devices this year. CEO Tim cook said that the virus outbreak has forced Apple to extend the boundaries of the possible profit in the second quarter, from $63 billion to $67 billion.
Analysts predict $62.33 billion, despite the fact that expectations may change if the epidemic would soon be contained.
Tesla CEO Elon Musk on 7 January announced the first deliveries of Model 3 with the Shanghai factory. A month later the head of the company said that deliveries may be delayed in early February, as government regulation forced the plant to remain closed until, until the epidemic starts to decline.
it was Planned that the new production in China is a significant market share, however, investors may have to wait longer until their investments will pay off, thatto like an epidemic inhibits the manufacture of new vehicles and, consequently, delivery. Coronavirus may adversely affect the company’s profit in the very near future.
Disney’s Theme parks in Hong Kong and Shanghai were forced to close as the spread of the virus. And this closure happened at a bad moment for the company.
Closing theme parks happened at a time when, as a rule, observed the highest frequency of visits, in particular, due to the Chinese New year, notes the company.
Analysts note that the financial effect of the virus on the company will depend on the duration of the closure of the parks.
Nike February 4 issued a statement to investors, saying the impact of the virus on the company’s operations in China. About half of the company’s stores in China will work on a reduced schedule. In addition, it is projected that in those shops that remain open, there will be a decline in attendance.
In the short term, the company expects declining profits in China.
Nike has not provided updates for the next quarter and announced that it will update the information with the development of the situation with the virus.
Starbucks has expanded its operations in China over the last twenty years, and the coronavirus has become a significant obstacle for further expansion of the company in the country.
the Company was forced to close more than half of the points in China and to change the work schedule of the remaining points, stated in the announcement of the company dated 28 January.
the Company gave no forecasts about future earnings of the company, noting that the development of the situation with coronavirus makes it impossible to give accurate predictions.