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Companies React To Uncertainty Surrounding The Economic Impact Of COVID-19

Max Molinari

Max is an Equity Analyst with ASR Wealth Advisers. He has studied a Bachelor of Business and a Bachelor of Laws at the University of Technology, Sydney. Max currently holds RG146 qualifications.

The uncertainty surrounding the economic impact of COVID-19 continues to perplex businesses, with a number of major companies withdrawing their earnings guidance.

 

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Downer EDI Limited (ASX: DOW) withdrew its earnings guidance for the 2020 financial year. CEO Grant Fenn reinforced the company’s strong balance sheet position and that “the vast majority of Downer’s services are expected to remain strong as the business is predominantly government and critical infrastructure”.

 

Boral Ltd (ASX: BLD) has withdrawn its earnings guidance for FY2020. Managing Director, Mike Kane said, “we expect market conditions will worsen as a result of temporary lockdowns and restrictions imposed to contain the spread of the virus. However, given the high level of uncertainty regarding the spread and duration of COVID-19, the negative impact on earnings cannot be estimated at this point”.

 

After considering the decline in consumer sentiment and economic outlook as well having experienced business interruption from a national shutdown in Malaysia, BlueScope Steel Limited (ASX: BSL) believes it is prudent to withdraw its outlook for 2H FY2020. However, Managing Director and CEO Mark Vassella reinforced, “we are in a strong position to withstand these uncertain times and for when the virus risk recedes and economies rebound”.

 

Lovisa Holdings Limited (ASX: LOV) provided a trading update on the status of the company’s supply chain and current conditions. They announced that the production capacity at both their suppliers and distribution hub in China have returned to normal levels (however expect to experience delays in freight movements out of China). Furthermore, the company reinforced that all stores in France and Spain have been closed since Sunday 14th March, all stores in Malaysia have been closed since Wednesday 18th March and that they have 25 stores closed or closing across the USA.

 


 

Disclaimer:


This article has been prepared by the Australian Stock Report Pty Ltd (AFSL: 301 682. ABN: 94 106 863 978)
(“ASR”). ASR is part of Amalgamated Australian Investment Group Limited (AAIG) (ABN: 81 140 208 288 Level 13, 130 Pitt Street, Sydney NSW 2000).
This article is provided for informational purpose only and does not purport to contain all matters relevant to any particular investment or financial instrument. Any market commentary in this communication is not intended to constitute “research” as defined by applicable regulations. Whilst information published on or accessed via this website is believed to be reliable, as far as permitted by law, we make no representations as to its ongoing availability, accuracy or completeness. Any quotes or prices used herein are current at the time of preparation. This document and its contents are proprietary information and products of our firm and may not be reproduced or otherwise disseminated in whole or in part without our written consent unless required to by judicial or administrative proceeding. The ultimate decision to proceed with any transaction rests solely with you. We are not acting as your advisor in relation to any information contained herein. Any projections are estimates only and may not be realised in the future.
ASR has no position in any of the stocks mentioned.

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