CEOs have ‘no clue’ on coronavirus impact, investor says

Earnings


Top management at global companies are clueless on the full extent of the coronavirus impact and how it will affect their companies in the coming months, a portfolio manager told CNBC Wednesday.

Many firms have highlighted that their operations will suffer as a result of the virus and some have taken precautionary measures. But Pieter Taselaar, founding partner at Lucerne Capital Management, an investment firm focused on continental Europe, said the world was only “in the midst” of the outbreak.

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“I think all the statements by management are backward looking. All the earnings releases and outlooks are sort of incorporating maybe one month of coronavirus and we are really in the midst of it maybe … it may last another six months. And even management have no clue of what is going to happen,” he told CNBC’s “Street Signs” Wednesday.

Company bosses have warned about the impact of outbreak in recent earnings reports but have many have sounded an optimistic tone. Ilham Kadri, chief executive officer of Solvay, an international chemicals company based in Belgium, told CNBC Wednesday that “we expect impact only in quarter one by 4% (in revenues).” Carlos Tavares, chief executive of the carmaker PSA, also told CNBC that “our situation, so far, is good.”

Meanwhile, the largest German airline Lufthansa announced Wednesday that it’s implementing a number of measures to reduce the impact of the virus, including allowing employees to take unpaid leave. Lufthansa also said that it’s too early to estimate the full impact of the virus. European airlines were trading down by about 3% in Wednesday’s trading session.

Taselaar, from Lucerne Capital Management, said that he is not hopeful on 2020 in terms of company earnings.

“You’re probably looking at a lost earnings year for a lot of companies,” he told CNBC.



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