Business & Investment

Supply chain turmoil, rising costs afflict European interests

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Michael Musika and Macalena Munoz

(Bloomberg) —

Cost pressures, supply chain disruptions and disappointments in reopening will plague Europe’s third-quarter earnings season and disappoint investors more than uplift.

Strong numbers from giants like LVMH and SAP SE reassured European equity investors last week, but better news may be needed to keep the rally alive. Rising inflation and stagnant global recovery pose further challenges to market profits.


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Robert Grail, chief strategist at Merck Finck, a private bank in Germany, said:

Investors pay attention to the following when companies publish their results:

Logistic nightmare

Pandemic-related turmoil, post-Brexit customs inspections, and a shortage of truck drivers have caused havoc in the supply chain.

Clothing companies have warned ahead of a very important holiday season, online retailer Asos Plc warns that supply chain problems will be profitable, and Hennes & Mauritz AB and Boohoo Group Plc report delays in delivery. I am. After the announcement, the stock prices of Assos and Bhufu plummeted.


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Salman Ahmed, Global Head of Macro and Strategic Asset Allocation at Fidelity International, said:

Notable inventories are: Sportswear retailers Puma SE (revenue until October 27) and Adidas AG (November 10), online retailer Zalando SE (November 3), shipping company AP Moller-Maersk A / S (November) 2), Industrial Group Siemens AG (November 11).

Rising costs

Corporate costs are rising, due to supply bottlenecks, soaring commodity prices and a shortage of workers. Investors are watching carefully which companies need to swallow rising prices and which companies can pass them on to their clients.

Jose Antonio Montero de Espinosa, Head of European Equity for Santander Asset Management, said: “In the third quarter, we witnessed one of the highest inflation expectations in Europe.”


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Energy producers can be natural beneficiaries. The Stoxx 600 energy index has risen 19% in the last three months, making it one of Europe’s best performing sectors. Estimates of revenue growth in this sector have accelerated in recent weeks due to soaring oil and gas prices.

Notable inventories are: Dairy maker Danon SA (October 19), fertilizer maker Yala International ASA (October 20), household goods company Lekit Benkeiser Group Plc (October 26), brewer Unhoiser Bush Inveb SA (October 28), chemical maker Solvay SA (October 28), oil major Royal Dutch Shell Plc (October 28), TotalEnergies SE (October 28), BP Plc (November 2) Day).

Chip crunch

The blockade has forced many people to live in the digital realm, increasing the demand for gadgets. As a result, the demand for chips to power these devices has skyrocketed, and automakers have hit smartphone giants like Apple Inc.


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Judging by the signs of early warning from the automotive sector, the chip situation does not seem to be alleviated immediately. Parts supplier Faurecia SA and truck maker Traton SE cut their forecasts last month, but Volkswagen AG said it is facing a large backlog due to a chip shortage.

However, the chipmaker itself may benefit. A recent update from Taiwan Semiconductor Manufacturing Co., Ltd. showed that demand remained strong, with Bellweather’s forecasts for Asia in the fourth quarter exceeding some analysts’ estimates.

Notable inventory includes semiconductor equipment manufacturer ASML Holding NV (October 20), auto chip suppliers STMicroelectronics NV (October 28) and Infineon Technologies AG (November 10), and automaker Volkswagen AG (October 10). October 28th) and Stellantis NV included. (October 28)


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Read: Inflation is good news for priced technology: buy stock

Resume let down

Now that the regulations have been relaxed, it was a real-life check for companies that were boosted during the blockade. Remote software maker TeamViewer AG plummeted 25% in a single day after cutting forecasts due to sluggish demand from corporate customers. Online food delivery company Just Eat NV was another victim of decline after slowing order growth.

Cristina Benito, Head of Equity for Mapfre Asset Management’s Discretionary Portfolio, said:

Notable inventories are: Food delivery company Deliveroo Plc (October 20), computer hardware maker Logitech International SA (October 26), meal kit maker HelloFresh SE (November 2), mobile messaging software maker Sinch (November 2).


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Read: TeamViewer warns of European blockade Darling’s call to awaken

Overall, third-quarter earnings forecasts are high, with analysts forecasting growth of about 60% for Stoxx 600 companies. Still, the economic background is at a disadvantage, and analysts are slowing down the pace of raising profit estimates.

Bank of America Corporation strategist Mirasabois said in an email comment, “We believe the STOXX 600 EPS is recovering almost well and macro forecasts are only rising slightly by early next year. I will. “

© 2021 Bloomberg LP



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Supply chain turmoil, rising costs afflict European interests Supply chain turmoil, rising costs afflict European interests

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