(Bloomberg) -- Evidence of the impact of Covid-19 on European companies is flowing through their first-quarter earnings reports, with warnings from eyewear makers, semiconductor manufacturers and banks, and yet another upbeat report from the food delivery industry.
Ray-Ban maker EssilorLuxottica SA said business is getting worse in the second quarter because customers are putting off buying sunglasses and prescription lenses, while Germany's Beiersdorf AG said sales of its high-end moisturizers and rejuvenation creams slumped as airports were closed.
German chipmaker Infineon Technologies AG said its outlook for the second half is significantly weaker and BNP Paribas SA became the latest bank to see equities income wiped out amid the turmoil.
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A bright spot once again came from the food-delivery sector, with meal-kit firm HelloFresh AG raising its guidance as people confined to their homes ordered more of its products.
First-quarter earnings for European companies are to fall 30% based on results so far, Morgan Stanley strategists said in a note Monday, and the second quarter is likely to be worse. Yet European stocks, despite a rocky start to March, are still holding relatively strong and on Monday the Stoxx Europe 600 Index closed 17% above the lows hit in March.
This may have been helped by European companies having delivered a relative beat so far, albeit against lowered expectations, the Morgan Stanley strategists said.
Key Developments:
- European stocks rose, with the Stoxx 600 up 1.4%, led by a bounce for the oil and gas, real estate and financial services sectors.
- BNP Paribas Warns on Profit Slump After $1.2 Billion Virus Hit
- Total Targets Carbon Neutrality in 2050 as Profit Plunges 35%
- For more on dividends, click here. For the latest company guidance, click here.
- Hong Kong Eases; Russia Adds 10,000 Cases Again: Virus Update
Here's the top virus-related earnings news for today by sector.
Energy
- French oil major Total SA's adjusted net fell 35%, hit by the plunge in oil prices, and it reduced spending for production and investment. As energy firms retrench, Total's CEO is taking a pay cut and the company is offering shareholders the option of stock rather than cash for the final dividend. The shares surged as much as 8.1%. Bloomberg Intelligence said the company is the most resilient among its peers and analysts said its balance sheet is one of the strongest in the sector.
- Spanish refiner Repsol SA reported a 28% drop in adjusted net income, as earnings from crude exploration and production plummeted. The company maintained its dividend and said net debt will remain at the same level by the end of 2020 as it was a year earlier. The shares surged as much as 9.4%, however, as the results topped expectations.
- Turbine maker Vestas Wind Systems A/S said meeting its initial guidance for 2020 is “still possible” as it reported first-quarter revenue that beat expectations but a surprise loss. It said that margins have been hit by the delivery of less-profitable products and it has incurred costs from logisitics disruptions and supply chain bottlenecks that have been exacerbated by the pandemic. The shares fell as much as 2.5% but reversed this to rise as much as 4.8%.
Autos
- Fiat Chrysler Automobiles NV withdrew its 2020 guidance and swung to a net loss in the first quarter. It said net car deliveries fell by 21% in the quarter and that it is prepared to restart production when conditions allow. The group also committed to closing the merger with Peugeot-owner PSA Group by the end of the year or early 2021.
- READ: European Car Sector Rebound Is Running Out of Gas: Taking Stock
Consumer
- Davide Campari-Milano SpA reported first-quarter adjusted earnings well below consensus expectations due to the initial impact of the novel coronavirus pandemic. The maker of the popular Aperol drink said it expects to be more impacted during the second quarter and the beginning of the third. It was a “big” margin miss in what is typically a “small” quarter for Campari, RBC said in a note. Shares fell initially but are now flat.
- Nivea manufacturer Beiersdorf said sales of its La Prairie skin-care range, including high-end moisturizers and rejuvenation creams, were hit by the plunge in international travel. The company otherwise stuck to an April 2 earnings update where it joined other retailers in warning it was no longer possible to issue 2020 guidance due to coronavirus uncertainty. The shares fell by as much as 3.6%, with Bryan Garnier saying the La Prairie sales were particularly weak.
TMT
- Infineon said it sees a significantly weaker outlook for the second half of the fiscal year because of the pandemic. However, analysts at New Street were positive on the chipmaker's second-quarter results, saying they were better than feared. New Street added that Infineon's guidance for 2020 and its segment commentary implied that its autos business will be down around 30% in its third quarter, in line with New Street's expectations. The group already pulled its guidance back on March 26. The shares bounced as much as 6.5%.
- Meal kit delivery firm HelloFresh reported higher first-quarter revenue and active customer numbers. The number of meals delivered increased by 70% to 111 million, partly supported by additional demand because of the pandemic from mid-March, the company said. HelloFresh raised its outlook for full-year revenue growth, now seeing an increase of 40% to 55% versus 22% to 27% before. Morgan Stanley said the raised guidance should be welcome and shares surged as much as 11% to touch a record high.
- READ: May 4, After Binging on Delivery, Investors See the Bill: Taking Stock
- READ: April 28, Delivery Hero Orders Jump 92% as Lockdown Boosts Food Delivery
Retail
- Eyewear maker EssilorLuxottica warned that business is going to get worse before any improvement is seen as customers delay buying prescription lenses and sunglasses amid the pandemic. It said first-quarter revenue fell by 10% but that the more severe hit will come in the second quarter. The shares rose as much as 2.2%, erasing an initial decline. Analysts said that while the first quarter was resilient, a worse period looms.
- German suitmaker Hugo Boss AG said sales at constant exchange rates fell 17% in the first quarter and forecast an even more pronounced decline in the second quarter. Although a reliable outlook for the year isn't possible given the pandemic, the company sees the retail environment gradually improving from the third quarter onwards. The shares rose as much as 4% but reversed to fall as much as 5.3% with Citigroup saying the first-quarter loss was worse than expected.
- Charm-bracelet maker Pandora A/S said it will sell shares and open a new credit line to shore up its finances. First-quarter organic revenue fell by 14% and the company said it has secured the funding for a stress-test scenario. Handelsbanken said the update was not as bad as expected and the shares bounced as much as 8.3%.
Banks
- BNP Paribas said its full-year profit will drop by as much as 20% due to lockdown measures, as it also booked more than $1 billion in charges and writedowns for the first quarter. Similar to rival Societe Generale SA, BNP saw its equities trading income wiped out as complex products floundered when the virus sent markets into a tailspin. Analysts said the numbers look resilient and the shares surged as much as 6.8%, giving the Stoxx 600 Banks index a boost.
- Intesa Sanpaolo SpA set aside less money than expected to cover future bad loans, taking a more optimistic stance than its main Italian rival against the impact of the coronavirus outbreak. Profit beat estimates thanks to an unexpected rise in trading income and the bank said it will have about 1.5 billion euros available to absorb virus related losses this year. Shares in the Italian lender rose as much as 3.6%, with the stock bouncing after the results.
Real Estate
- German landlord Vonovia AG reported growth in earnings and rental income for the first quarter and confirmed its 2020 guidance. The firm said it is offering payment options to tenants suffering difficulties driven by the virus outbreak and that just over 1% of its tenants have reported financial hardship. Shares bounced as much as 7.3% with Bloomberg Intelligence saying Vonovia retaining its dividend is “testament to its resilience.”
Health Care
- Siemens Healthineers AG scrapped its forecast, saying the effects of the Covid-19 pandemic were not quantifiable. Fiscal second-quarter profit beat expectations and the group expects the current quarter to be the trough. Siemens Healthineers is working on a coronavirus antibody test, production of which is expected to ramp up by the end of May. The stock rose as much as 8.5%. Berenberg said the second-quarter results were strong and the company is performing well in the face of the challenges the virus has created.
- Hearing aid maker Demant A/S said its revenue run rate for hearing aids and implants is around 20% of the normal level, with the pandemic hitting its sales significantly since mid-March. It anticipates a significant negative impact on cash flow and has taken steps to cut production. The shares initially fell but reversed those losses to gain as much as 3.8%.
- Danish medical equipment maker Ambu A/S maintained its guidance as it reported second-quarter earnings below expectations, but reported growth in the sale of its single-use endoscopes in the quarter driven by the outbreak. Berenberg said Ambu's outlook is “underwhelming” and shares fell as much as 8.3%.
Business Services
- Swiss staffing firm Adecco Group AG said its first-quarter earnings dropped and that it entered the second quarter with revenue slumping as lockdown measures intensified. It said its weekly temporary staffing trends show that countries that entered lockdown earlier are starting to stabilize, while those that shut down later are continuing to decline. RBC said the results were not as bad as feared and the shares rose as much as 3.4%.
- Catering company Elior Group SA said it expects the virus to hit its full-year earnings by around 30%. First-quarter organic revenue declined by 6.2% and the group said it is in talks with its lenders to secure covenant holidays. The shares rose as much as 5% and Bernstein said the talks with lenders will relieve investors.
Food
- Norwegian fish farm operator Bakkafrost P/F said first-quarter earnings fell by 7.3% and cut its harvest volume outlook for 2020. It said it saw a significant disruption from Covid-19 toward the end of the quarter and that its sales distribution will face challenges from the changing dynamics caused by the virus. The shares fell as much as 1.4% but reversed to rise as much as 5.2%
Industrials
- Packaging firm SIG Combibloc Group AG said it expects its full-year sales growth to be at the low end of guidance owing to the hit from Covid-19. The second-quarter is likely to be weak, albeit tough to forecast, the company said as it reported a rise in first-quarter revenue but a 56% drop in net income. The shares dropped as much as 3.4%.
- Pfeiffer Vacuum Technology AG said it cannot make a reliable forecast for 2020 and it anticipates that its financial performance will come under pressure. It said first-quarter order intake grew but earnings and margins both declined. The shares rose as much as 2.9%.
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