The outbreak of coronavirus deepens its impact on global business

The outbreak of coronavirus deepens its impact on global business

The airline lost $ 25 billion in revenue. China auto sales fell 92 percent. Barrier for 387 suppliers of Procter & Gumball in China.

As the outbreak of the coronavirus pervades the global economy and disrupts the supply chain, international companies across almost every industry face one final reality: business will not operate as usual.

And investors have accepted the matter. US stocks fell for the second straight day on Friday. Shares of energy, airlines and technology companies have hit a broader market on Wall Street, as S&P closed less than one percent, pushing it into the worst day of the month. Oil and gas prices have also fallen, with American barrels of crude dropping about 1 percent. Markets have become more volatile since the outbreak, but American investors have been under threat. ই Since January, after the Chinese authorities identified the virus, the S&P 500 has been up more than 3 percent since closing sales this morning. – Matt Phillips

The International Air Transport Association this week warned of a severe slowdown in earnings among global carriers related to a trip to Asia due to the virus.

The outbreak of the virus could reduce global airlines’ revenue by about $ 20 billion a year, resulting in a smaller industrial contraction than the 202.

According to the Association’s analysis, virtually all casualties are expected to hit airlines in the Asia-Pacific region, which faces a 5 percent drop in passenger demand for the year.

Some airlines have begun to acknowledge the effects of the outbreak on Thursday, separately warning Air France-KLM Group and Qantas Group of Australia of a potential financial injury.

Qantas said that coronavirus May reduce its profits From June 1 to the end of June 26, $ 6 million to $ 1 million for the fiscal year ended, Air France-KLM estimated earnings loss of $ 216 million from February to April this year.

More than 20 international airlines have suspended or restricted routes ending in Ohan and other major Chinese cities, the epicenter of the outbreak.

  • Updated February 10, 2020

    • What is coronavirus?
      It is a fancy virus named for the crown-like spikes that extend from its surface. Coronavirus can infect both animals and humans and can cause various respiratory disorders, ranging from common colds to more dangerous conditions such as severe acute respiratory syndrome or SARS.
    • How infectious is the virus?
      According to preliminary research, it appears to be infectious in essence, the equivalent of sarcasm and was probably infused with air. Scientists estimate that every infected person can spread it somewhere between 1.5 and 3.5 without effective control measures.
    • How worried should I be?
      Although the virus is a serious public health concern, most people outside China are at very low risk and seasonal flu is a more immediate threat.
    • Who is working to contain the virus?
      World Health Organization officials praised China’s aggressive response to the virus by shutting down transport, schools and markets. This week, a team of WHO experts arrived in Beijing to provide assistance.
    • If i’m traveling
      The United States and Australia have been temporarily denying entry to non-citizens who have recently traveled to China and canceled several airlines.
    • How do I keep myself and others safe?
      The most important thing you do is to wash your hands frequently while you are at home while you are ill.

And Asian airlines are cutting planes elsewhere. Singapore Airlines says it will temporarily reduce flights to and from the city state The main destination Like New York, Paris, London, Tokyo, Seoul and Sydney.

Hong Kong carrier Cathay Pacific also canceled almost all flights to mainland China, and services are likely to decline elsewhere for the next two months. – Neeraj Chokashi and Amy Sang

Auto sales in China declined this month, with the Chinese Passenger Car Association saying sales at dealerships fell 12 percent in the first half of February compared to the same period last year.

China is the world’s largest car market by a wide margin. So a nose dive into the sales there has hurt the global industry.

The German luxury auto giant Daimler – which made Mercedes-Benz – warned in its annual report that the virus could cause a significant reduction in Chinese economic growth. The report says the virus “not only has an impact on unit sales growth, but can also adversely affect production, purchasing markets and supply chains.”

Jaguar Land Rover warned that Coronavirus could soon start producing problems at its assembly centers in Britain.

Like many car manufacturers, Jaguar Land Rover uses parts made in China. If the factories are closed or reduced capacity is completed, assembly lines from other regions of the world are expected to run short of the required components. – Keith Bradsher

While much of China is still in lockdown, traders are struggling to bring back workers and run factories.

In a release this week, Foxconn, the world’s largest contract electronics manufacturer and key player in Apple’s supply chain, indicated just how difficult it would be. Foxconn said its earnings would hurt the outbreak of the coronavirus, and would be “cautious” about starting a factory in China. In places like Vietnam and Mexico, plants outside the country were fully capable, the company said.

Revenue alerts came as Chinese leaders tried to restart the economy under the control of the virus. Concerns about Foxconn’s production also point to the widespread impact that the epidemic may have on electronic supply chains worldwide. A large part of the world’s electronics goes out of China’s factory, is filled with parts manufactured in China, and the suspension for longer can damage the overall supply. Some even warned that it could accelerate a dipole, which was occasionally requested by both Chinese and American leaders due to security concerns. – Paul Mozur

Procter & Gamble, Consumer Products said in a federal filing this week that the outbreak would “materially” affect the company’s quarterly results, disrupting supply and demand.

“China is our second largest market – sales and profits,” said the company’s executive zone, R. R. Moller, at a New York conference Thursday. “The amount of store traffic has been reduced, many shops are closed or are running for less than a few hours. Some demand has shifted online but the delivery operators and labor supply are limited. “

The company is relying on 387 suppliers in China, each experiencing difficulties resuming operations, Mr Mueller said. – Neeraj Chokoshi

The French government has said that they will call on companies to review their “over-reliance” on China for raw materials and parts as the outbreak reveals weaknesses in which French manufacturers have outsourced their supply chains.

French Finance Minister Bruno Le Maier has assembled the automakers, which have had problems with the pharmaceutical industry getting parts for brake pedals and obtaining 5 percent raw material for some drugs in China and Asia.

The government estimates that the outbreak will slow the economy down by about 0.1 percent this year. It is located at the center of the outbreak More than a third All French investments in China. – Liz Alderman

Chinese banks are reducing costs for companies and families in trying to soften the economic hit of the coronavirus.

The move has prompted policymakers from China’s central bank to shut down the economy for weeks after a nearly nationwide shutdown. On Thursday, People’s Bank of China said it lowered the prime rate of one-year loan lending from 6.5 percent to 8.5 percent, and the five-year lending rate increased from 5 percent to 5 percent. Has been reduced to 4 percent.

Economists are lowering their growth expectations for China this year as business is just starting to – somewhat halt – to get back to work. Some said the move would do little to counter the pervasive impact of the epidemic on China’s once-vibrant business community. – Alexandra Stevenson

German sportswear maker Adidas says its mainland China business was out of whack.

Sales in the region have dropped nearly 85 percent since the Chinese New Year on January 25, compared with the same period a year ago, the company said. Few buyers from South Korea and Japan also contributed to the drop in sales, a sharp decline in Chinese tourism that has affected the results The aviation and hospitality sectors as well as the fashion retail business.

Adidas sells its products from about 12,000 stores in China, of which about 500 own stores and the rest franchises. – Elizabeth Patton

Geneva Abdul contributed to the report.

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