Entered by the outbreak of the pandemic in the United States in march, american businesses have borne the brunt of the consequences of the containment in the second quarter.
July 12, 2020 19h52
Updated at 23: 30
In the United States, the results of the businesses at the mercy of the pandemic
NEW YORK — Seized by the outbreak of the pandemic in the United States in march, american businesses have borne the brunt of the consequences of the containment in the second quarter. If the results of some of them promise to be disastrous, a few groups have been able to pull their pin of the game.
The profits of the 500 largest publicly traded companies on Wall Street are expected to decline overall by 44% compared to the same period last year, believes the law firm Factset.
But it is complicated to determine what could be the impact of a health crisis new on the activity of each company. Many of them, in the face of an unpredictable disease, have chosen not to give forecasts.
No sector will probably be spared.
A victim of the collapse in oil prices, the energy companies would see their profits rolled.
Those dependent on discretionary spending, such as those selling clothing, cars or plane tickets, have also been bullied.
The bankruptcies of some big names in these sectors, such as JC Penney, Hertz, or Chesapeake Energy, in testimony.
Conversely, the sectors in vogue, such as those of technology and health “should see their benefits shrink by only 10% or less”, ” advance Nate Thooft, head of investment strategy for Manulife Asset Management.
The groups that have quickly adapted their activity have also been able to limit the damage. Nike, for example, has indicated that the bond of 75% of its online sales from march to may was allowed to offset a portion of the revenue swallowed up by the closing of the stores.
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Several elements, however, can make difficult any prediction.
“In this kind of situation, companies tend to throw the baby out with the bath water and enter a whole bunch of expenses in their accounts”, thus preventing Mr. Thooft.
Their activity has also fluctuated widely during the quarter, between April marked by a containment quasi-generalized and relief progressive restrictions in may and June.
Performance may also be disparate within a same sector of activity, as for companies dependent on consumer spending.
“The platforms of online commerce have flourished, the stores of essential goods (such as toilet paper, editor’s NOTE) and food have seen their sales soar before to maintain a certain growth, the sellers of articles related to home, leisure and play have been better than usual”, highlights in a note the firm Earnest.
At the same time, “signs non-essential, such as restaurants, clothing and department stores have suffered, while the sectors of recreation, risk and the trip was put off”, he recalls.
Difficult to assess the cost of the various measures taken by the businesses to adapt in emergency situations, whether it is a move to teleworking or the installation of bulkheads in plexiglas.
They have in any case sought to reduce some expenses, such as the amount of money paid to their shareholders.
The companies listed on the New York stock Exchange have paid to 42.5 billion dollars less in dividends in the second quarter compared to the same period in 2019, according to S&P Dow Jones Indices. This is the strongest decline since the first quarter of 2009.
The performance of firms are also likely to depend on their own strategy.
For large banks, for example, that will give the kick-off of earnings season this week, analysts are questioning the amount they have funded to deal with the loans which will not be refunded.
“The banks will depend a lot on the health of the economy, therefore, in times of crisis, it is necessary to expect that the activity dedicated to particular suffers”, noted Joshua Mahony of the company IG.
However, some will be able to count on their brokerage activity, taking advantage of movements in financial markets which have been particularly hectic, ” he adds.
If they will study closely the accounts of the companies, the investors will focus on their predictions for the coming months, in order to determine if the recent rally on Wall Street is justified: the index feature, the Dow Jones industrial average has gained nearly 18% in the second quarter, an increase seen from 1987.