A Foxconn factory manufacturing iPhone for Apple in China (illustration). – Hon Siu Keung / EPN / NEWSCOM / SIPA
Apple, the last company whose activity is disrupted by the coronavirus. The American group announced on Monday that its second-quarter revenue forecast is unlikely to be met due to the epidemic caused by a new coronavirus that has appeared in China, a crucial country for the company.
In the press release, the tech giant cited the difficulties in sourcing the iPhone, which is made in China, and the demand for its products while its stores are closed in the country. “Work is starting to resume, but the return to normal conditions is taking longer than we had expected,” said the Californian group, referring to a “shortage of iPhone that will temporarily affect our income in the world”.
Slowly impacted global growth
At the end of January, when record results were published thanks to strong demand for the range of iPhone 11 released before the holidays, Apple had already pointed out that the serious health crisis was causing uncertainty. The group had therefore given a range of forecast sales for its second quarter wider than usual, between 63 and 67 billion dollars.
On the production side, Apple has subcontractors in the Wuhan region, the epicenter of the epidemic, as well as alternative suppliers. In terms of demand, the company says it has only decreased in China. “We are in the process of gradually reopening our stores and we will continue to do so as regularly and securely as possible,” said Apple, adding that its offices, call centers and online stores have never stopped function.
Since the outbreak of the disease in December in Wuhan (center), more than 1,900 people have died and more than 70,500 have been infected in China. IMF Managing Director Kristalina Georgieva put the impact at 0.1-0.2 points lower for global growth, but said it was still very difficult to assess the impact on the economy.
The luxury sector affected
Apple is not the first group to change its forecast due to viral pneumonia. Last week, Pernod Ricard revised down its annual objective of organic current operating income, because China is its second market, where it achieves 10% of its sales.
The luxury industry is particularly concerned. Kering (Gucci, Yves Saint Laurent, etc.) recorded a sharp drop in sales in mainland China and the Burberry clothing company warned of a “significant negative impact”.
Several car manufacturers are also affected by the closure of the city of Wuhan. The second Chinese manufacturer, Dongfeng, is located there, as are multiple subcontractors, as well as the French Renault and PSA. Japanese Toyota and German Volkswagen had to delay the resumption of production in their assembly plants.
High-end electric vehicle maker Tesla announced when its results were released in late January that its mega-factory in Shanghai would be shut down on the orders of the Chinese government, which would cause delays in production of the Model 3 and could slightly affect the group’s quarterly profits. Disney, for its part, estimated that its amusement parks in Shanghai and Hong Kong could lose $ 280 million in total, if they remain inaccessible for two months.
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