Supply-chain bottlenecks persist, with shortages of components
and surging prices of critical raw materials squeezing
manufacturers around the world. Below is a selection of commentary
from this week on how leading European companies have fared and
their prospects ahead:
Airbus Deliveries Could Be Disrupted by Supply Chain Issues in
2021
Supply chain issues are still a risk to Airbus's deliveries in
the short term, Morgan Stanley says. "Management was clear on the
nature of the issues here--less reliable timing and quality from
suppliers has led to rework requirements at Airbus," the bank says.
Despite concerns about the supply chain, overall the European plane
maker seems to benefit from strong demand for new narrowbody
aircraft, it says. Airbus expects deliver 600 commercial jets this
year. (olivia.bugault@wsj.com)
Valeo's Cost Discipline Should Offer Some Consolation Amid Chip
Woes
Valeo cut its guidance due to sectorwide pressures stemming from
the chip-shortage, but its remarkable execution so far this year
should go some way toward alleviating investors' concerns,
Berenberg analysts say. Reflecting lower global car production, the
French auto supplier cut its 2021 sales guidance, but its adjusted
Ebitda margin target is still above consensus views and the
company's own adverse scenario, Berenberg says. The brokerage says
the guidance cut was largely priced in by the market already, and
that it shouldn't detract from Valeo's good performance in a
challenging environment, especially on costs.
(cristina.roca@wsj.com; @_cristinaroca)
Component Shortages to Get Worse Before They Get Better, Nokia
CEO Says
Component shortages are expected to get worse before they get
better, Nokia CEO Pekka Lundmark told reporters on a call after the
company's third quarter earnings. The global semiconductor
situation is expected to worsen in the final quarter of the year,
and although the issues will be resolved, it's very difficult to
say when, Mr. Lundmark said. However, the 5G market is still
growing and he expects it to take a few years to peak. Unlike the
4G market, which peaked and then fell away, he expects the 5G
market to peak and remain elevated as new industrial applications
are developed. These new industrial uses will fuel 5G investments
for years to come, until 6G hits the commercial market, which Nokia
estimates could be around 2030. (dominic.chopping@wsj.com)
Volkswagen 3Q Looks Better Than Anticipated Amid Supply-Chain
Headwinds
German car maker Volkswagen has reported a third quarter that
looks better than anticipated, Bernstein analysts say. "In light of
the severe supply-chain disruptions and how VW prepared the market
for Q3, actual results are a relief (break-even free cash flow),"
they say. Volkswagen's namesake VW brand seems to take the biggest
hit from the semiconductor shortages, and the current headwinds put
the company's fixed costs in the spotlight, which are exceptionally
high, the analysts say. "Results won't impact our FY21 numbers and
we expect the very negative recent investor sentiment to lighten
towards the end of year," they say. Preference shares in Volkswagen
trade 2.2% lower at EUR199.48. (kim.richters@wsj.com)
BASF 3Q Was Mixed Amid High Demand, Supply-Chain Woes
BASF's third-quarter results were mixed, with continuing strong
demand but multiple segments struggling under supply-chain
constraints and higher input prices, Stifel says. Production and
supply-chain disruptions, as well as hurricanes in the U.S., had a
negative impact on product availability, particularly hitting the
materials segment, Stifel says. However, even there, volume was 7%
up year-on-year, with the surface technologies division the only
segment with declining volumes, as the automotive industry slumped
under the semiconductor shortage, Stifel says. BASF increased its
2021 guidance for EBIT before special items to EUR7.5 billion-EUR8
billion from EUR7 billion-EUR7.5 billion, or around EUR1.0
billion-EUR1.5 billion in 4Q. That translates to a range of
outcomes from -10% to +35% year-on-year, Stifel says, which keeps
its buy rating. (edward.frankl@dowjones.com)
Sulzer's Full-Year Targets Aren't at Risk From Supply
Squeezes
Swiss industrial-machinery maker Sulzer remains positive about
hitting its full-year targets despite supply-chain pressures, and
has good prospects as a consolidator in the flow-control sector,
Morgan Stanley says after the company's nine-month results.
Management struck an upbeat tone at the post-results conference
call as it reiterated 2021 guidance, though it warned supply-chain
pressures could mean sales come in at the lower end of the guided
range, MS says. Pressures are more acute for customers than the
company itself but the constraints are nevertheless causing some
delays--though costlier raw materials have been offset with price
increases, the bank adds. Shares slip 0.4% to CHF91.30.
(joshua.kirby@wsj.com; @joshualeokirby)
Electrolux 4Q Seen Weighed by Supply-Chain Issues
Electrolux reported a 0.3% fall in organic growth on the year,
explained by the 10% hit to revenues from restrictions at the
supplier level, Kepler Cheuvreux says. The company now sees
headwinds from external factors of SEK4.5 billion from SEK3
billion-SEK3.5 billion, and said it needs further price increases
to compensate for the higher costs. Electrolux also warns 4Q will
be even more challenging than 3Q in terms of the supplier situation
and hopes that things will improve in 2022. "Operating profit
developed better than lower consensus expectations, but with a
warning for fourth quarter operating profit we still expect
downward pressure on the consensus and the share price today."
Shares trade 1.2% higher at SEK200. (dominic.chopping@wsj.com)
Schneider Electric's Growth Improved in 3Q
Schneider Electric's 3Q results show that growth accelerated on
quarter, and the company has pointed to improvement in late-cycle
markets, Citi says. The French engineering company's supply-chain
constraints will continue for another two to three quarters, but
the impact looks less severe than for its peer ABB, which cut its
guidance last week. Schneider instead retains its full-year outlook
of 11%-13% in organic revenue growth, but if 3Q comparisons with
2019 continue to 4Q, consensus is likely to move to the upper end
of the guidance range. Third-quarter sales of EUR7.22 billion were
a touch ahead of consensus, with organic growth of 8.8% well above
expectations of 7.9%, Citi says. The bank keeps its neutral rating
on the stock with a EUR140 target price. Shares rise 2.4% to
EUR146.32. (edward.frankl@dowjones.com; @Ed_Frankl)
Puma Seen as Coping Well With Global Supply-Chain Disruption
Puma's narrowed full-year guidance for EBIT indicates that the
German sporting-goods company is handling the global supply-chain
disruption well, Jefferies analysts say, adding, however, that the
headwind will get worse in the last quarter of the year. Puma's 3Q
is considered very strong, with its brand healthy in Western
markets and resilient in the Asia-Pacific region where it is
affected by coronavirus restrictions, the analysts say. "China
likely has remained amply dilutive to the region, with the group
noting the "very difficult market situation," reflecting a much
greater preponderance of new cases and restrictions relative to
1H," Jefferies says. Shares in Puma trade 2.8% higher at EUR105.40.
(kim.richters@wsj.com)
(END) Dow Jones Newswires
October 29, 2021 09:12 ET (13:12 GMT)
Copyright (c) 2021 Dow Jones & Company, Inc.
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