Wuhan virus: Facebook, Nissan evacuating, Starbucks stores shut
WILMINGTON (BLOOMBERG) – Facebook is restricting employee travel to China, while other big companies including and Nissan and Starbucks are taking measures to shield employees in areas hardest hit by a deadly viral outbreak.
The social media network’s employees based in China, and those who recently returned from trips to the country, are also being told to work from home, people familiar with the matter said, asking not to be identified discussing private communications.
Here is how some of the biggest companies are responding, as well as early analysts’ estimates of the impact:
Jan 28: Facebook
Travel limits, which went into effect Monday (Jan 27), halt non-essential travel to China by all Facebook employees, said the person, adding that if workers have to visit the country, they will need specific approval. The company declined to comment.
Jan. 27: Carnival and Royal Caribbean Cruises
Carnival’s Costa Cruises brand, working with the Chinese government, decided to suspend nine voyages leaving China from Jan 25 to Feb 4. In a separate statement, Royal Caribbean said it suspended Jan 27 and Jan 31 sailings. Both pledged to provide refunds to customers. China is a small but growing market for American cruise companies, and analysts project further cancellations could hurt earnings.
Starbucks, McDonald’s and Domino’s Pizza
Of the three US restaurant chains, Starbucks is the most exposed to the outbreak, as measured by percentage of worldwide revenue and operating income, according to Guggenheim analyst Matthew DiFrisco. “China represents a high growth region and a meaningful contributor to the longer-term global revenue growth goals for all three companies,” DiFrisco said in a note. The Seattle-based chain, with about 4,100 cafes in China, said a week prior that it’s closing some locations, without providing more details.
Tesla, Nio
About 8 million cars were sold last year in the roughly 40 Chinese cities that have 10 or more diagnosed coronavirus cases, or 36.8 per cent of total retail volumes in the country, Bernstein analysts estimate. Those cities accounted for 82.5 per cent of Tesla’s retail volumes, and 68 per cent of NIO’s, the analysts wrote in a note. “The latter looks especially vulnerable to a prolonged slump in EV sales,” they said. “We expect EV sales in China to be worse hit than the broader market. Consumer adoption of EVs in China is highly concentrated in the top cities where license plate restrictions and other policies enforce EV purchases.”
Imax
The Mississauga, Ontario-based company, known for its large-format screen technology, has said it’s delaying movie releases at its theatres in China in the wake of the outbreak. The impact of lost revenue from the Chinese New Year will cost Imax at least US$60 million (S$81 million) in global box office sales, according to MKM Partners. If the epidemic lasts for a few more weeks, “it is not unreasonable to project” a shortfall of US$200 million in the first quarter, MKM Partners analysts said in a note.
Nissan
The automaker plans to evacuate most of its expatriates and their family members from Wuhan using a chartered plane dispatched by the Japanese government, a company spokeswoman said in an email.
GMO Internet
The Japan-based internet infrastructure provider has told about 4,000 employees in the country to work from home after the confirmation of novel coronavirus cases in Japan, the Nikkei newspaper reported without saying where it got the information. GMO Internet employees in Shanghai and other parts of China will return to Japan, the Nikkei report said.
Jan. 26: Honda
The automaker will evacuate from Wuhan about 30 Japanese workers and family using a government charter aircraft, family members and employees visiting on business trips, Teruhiko Tatebe, a Tokyo-based spokesman, said by phone. The carmaker has informed the Japanese government that it wishes to utilise a charter jet to evacuate Japanese citizens. A handful of staff needed to maintain local operations will remain in the city.
Jan. 25: Groupe PSA
The French maker of Peugeot cars and other brands said it will evacuate its expatriate staff and their families from the Wuhan area. A total of 38 people will leave, the company said in a statement.
Hennes & Mauritz
The clothing retailer better known as H&M has closed a total of 13 stores in the region. Svenska Dagbladet reported. China is the company’s 5th biggest market in terms of revenue, with 524 stores as of Aug 31.
Ikea closed its warehouse in Wuhan on Thursday, according to the same report.
Jan 24: Remy Cointreau
The French cognac maker abandoned its forecasts for this year after a slump in Hong Kong dented sales in the Christmas period and as the viral outbreak threatens business in China, the source of 20 per cent of its profit, according to Jefferies estimates. “Clearly we are concerned,” Chief Financial Officer Luca Marotta said of the coronavirus on an earnings conference call. “We do not have any scenarios on a quantified basis. It is evolving hour after hour.”
McDonald’s
The fast-food giant, which had about 3,000 stores in China at the end of 2018, temporarily closed locations across five cities of the Hubei province due to the virus, including Wuhan. The Chicago-based company is taking extra preventative measures in the rest of the country, including taking the temperature of workers upon arrival and giving out hand sanitisers to diners.
Walt Disney
The world’s largest theme park operator said it would close its Disneyland resort in Shanghai effective Jan 25. The company is offering refunds to guests who bought theme park tickets or reserved rooms in its hotels. “We will continue to carefully monitor the situation and be in close contact with the local government, and we will announce the reopening date upon confirmation,” it said in a statement.
Delta Air Lines
The Atlanta-based carrier issued a travel waiver that allows passengers travelling to, from or through Beijing and Shanghai between Jan 24 and Jan 31 to change their itinerary once without having to pay a fee.
Wynn Resorts
The Chinese Lunar New Year is peak time for profits at casino operators. Authorities in Macau, the world’s largest gambling market, are requiring casinos to screen guests for high temperatures and make their staff wear respirator masks. Many Chinese tourists are also heading to Las Vegas to celebrate. “Although as of this date there are no reported cases of the coronavirus in Las Vegas that we are aware of, we will be in close contact with the Southern Nevada Health District who is monitoring the situation along with the CDC,” the company said in a statement. “We will implement any health directive they issue.”
Keppel Corp
The Singapore-based owner of the largest oil-rig builder, which has about 170 employees in Wuhan and operations across China, said it hadn’t seen a direct impact either. “We have advised our operations there and our staff there to take the necessary precautions. We are watching this very closely,” CEO Loh Chin Hua said on an earnings call.
The moves by companies highlight Wuhan’s importance as a manufacturing, shipping and business hub. The central Chinese city has more than 500 factories and other facilities, placing it 13th among 2,000 Chinese cities in Bloomberg’s supply chain database. It’s the capital of Hubei province, which has 1,016 such facilities, making it seventh of 32 such jurisdictions.
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