Carlsberg and Heineken withdraw guidance

With supermarket sales of alcohol having risen during the lockdown time you may have been forgiven for thinking that all food and beverage stock would be pretty safe harbours to weather the storm in. Well, think again. A number of Stoxx 600 companies have withdrawn their 2020 guidance. According to Bloomberg the 12-month forward EPS for the European benchmark has dropped almost 16% since the start of March.

Carlsberg and Heineken join well over 100 Stoxx 600 companies withdrawing their guidance due to the uncertainty brought about by COVID19. Yes, home sales of alcohol may be up, but restaurant, bars, and clubs sales will have dropped to nearly zero. Here is the list of sectors that the forward guidance have been scrapped for. Media and Tourism based companies have been hardest hit which is unsurprising.

Future earnings across the world are going to show large drops. Expect these earning drops to start showing and earnings from Europe and the US will quickly start grabbing headlines and start weighing on global indexes again. Remember that we are in a bear market. This means that as these poor earnings break equity markets are likely to find fresh sellers. This should carry on for a good 3-4 months and we are only looking for a recovery around summer of this year. Until then we can favour sellers on pullbacks. The only exception is if we have news of a vaccine or effective treatment for COVID19. That would result in the so called ‘V’ recovery.