Company profit warnings signal coronavirus is already a global crisis

SYDNEY (BLOOMBERG) – For big business, the impact of the new coronavirus epidemic is already being felt worldwide.

Mastercard and United Airlines Holdings 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. United scrapped its 2020 profit forecast altogether, underscoring the unpredictable nature of the two-month-old health emergency.

With the spread of the outbreak raising questions over whether it will be declared a global pandemic, businesses around the world that are exposed to travel are clear targets. Singapore Airlines 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 that are cutting capacity as demand craters.

Increasingly, though, the coronavirus has 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 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.


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 China. Meanwhile swathes of Italy are in lockdown, and total cases worldwide have topped 80,000.

The World Health Organization called the increase in cases outside China “deeply concerning,” though stopped short of labeling the crisis a pandemic.

Either way, US consumer-goods giant P&G late last week said both sales and earnings will be affected amid lower store traffic in China and beyond, with travel retail also getting hurt. HP on Feb 24 flagged a “significant impact” to free cash flow in its second quarter because of production and manufacturing delays.

Even state-owned investment firms aren’t immune. Temasek Holdings in Singapore, where there have been 90 confirmed cases, said on Tuesday it’s implementing a companywide wage freeze and asking senior management to take voluntary pay reductions for as long as a year.

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