Stocks Other Than Ford That Could be Hurt by Woes in Europe
Ford (NYSE: F) announced Thursday that it expects losses in foreign markets to grow. The ongoing recession in Europe, combined with increasing competitiveness, prompted the automaker to lower its guidance.
Ford is not the only company facing issues in Europe. Nike (NYSE: NKE) just posted an earnings miss, ending a streak of four positive surprises. Lower sales in Europe were among the things that dragged down results.
Alcoa (NYSE: AA) kicks off the new earnings season when it reports second-quarter results on July 9. Coca-Cola (NYSE: KO) and Intel (NASDAQ: INTC) report their results in mid July. All three are part of a notorious and growing club: companies that could be burned by conditions in Europe.
Alcoa posted a surprise profit in the first quarter. However, for Alcoa, Europe was the only region that failed to show growth in shipments. Overall, sales declined in Europe for the quarter.
Alcoa has a strong presence in Europe. The company states: "In 2009, the approximately 19,000 European Alcoa employees represented 27% of Alcoa's $18.4 billion revenues."
The consensus forecast of analysts is that Alcoa's second-quarter revenues will total $5.8 billion. That would be an 11.2 percent decline from the same period of last year.
Coca-Cola could suffer too. Currently, Germany is Coke's biggest consumer in Europe. The country accounts for approximately 3 percent of worldwide sales. The iconic beverage giant said in April that sales in Germany fell 12 percent by volume in the first quarter. That was on top of a 15 percent decline in the fourth quarter of last year.
Analysts, on average, predict that Coke's second-quarter revenues will total $13.0 billion. That would be only a 2.2 percent rise year-over-year, and compares to a rise in the first quarter of about 6 percent.
Finally, Intel, like fellow tech sector bellwether IBM (NYSE: IBM), reported sales growth of less than 1 percent in the first quarter, due in part to slumping sales in Europe from the previous quarter. That 1 percent was the smallest increase for Intel since the third quarter of 2009.
However, if analysts are correct, things may be a bit brighter for the second quarter. Revenue is expected to come in at $13.6 billion. That would be 4.4 percent higher than a year ago, up from $12.9 billion in the first quarter.
Alcoa and Coca-Cola were up less than 2 percent mid day Friday, while Intel was up about 2.5 percent. Ford was down more than 5 percent.
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