Danish companies urged to reinstate guidance for investors
Regulator pushes for information on 2020 outlook despite Covid-19 uncertainties
Danish companies have been some of the few to reinstate full-year guidance with their second-quarter results as Denmark’s financial regulator pushed them to tell investors how the rest of 2020 could be despite the coronavirus pandemic.
Companies from shipping group AP Moller-Maersk and brewer Carlsberg to wind turbine maker Vestas and jeweller Pandora have reintroduced their outlook for this year’s sales or profits in recent weeks.
The Danish Financial Supervisory Authority told companies to give guidance wherever possible when reporting second-quarter results even if great uncertainty remained over how Covid-19 could affect the economy and individual industries.
“Markets need information from companies, especially in times of uncertainties,” said Anne Bruun, director of capital market regulation at the FSA in Copenhagen. “It is not possible to suspend your guidance ‘forever’.”
Businesses around the world are grappling with how coronavirus is changing demand for their products and consumer behaviour as well as whether a second wave of the pandemic could come this autumn.
Many Danish companies have reinstated their guidance but with a bigger range of outcomes than before to reflect the uncertainty, a flexibility the Danish FSA gave them.
Maersk, the world’s largest container shipping line, suspended its guidance for full-year operating profits of about $5.5bn in mid-March. On Wednesday, it raised its guidance to $6bn-$7bn and warned it could be changed should countries lock down a second time owing to Covid-19.
Soren Skou, Maersk’s chief executive, said he did not want to give guidance “only because the FSA wants us to” but stressed that the company was now halfway through its crucial third quarter giving a “reasonable idea” of how the first nine months will turn out.
Alexander Lacik, chief executive of Pandora, noted that none of his rivals had provided guidance but added that the Danish jeweller’s outlook was “relatively wide”. It forecast a drop in full-year underlying sales of 14-20 per cent while its operating profit margin should be 16-19 per cent, causing its shares to fall 7.5 per cent on Tuesday.
“The guidance is built on the fact that we don’t see any more major lockdowns. We do anticipate that there will be some flare-ups, but nothing that will last for long. If there are major national lockdowns, we will need to revise. Every business person is hoping for the best, but planning for the worst,” he added.
Danish companies have also been helped by reporting relatively late, with some of them putting out second-quarter results more than a month after Swedish groups, helping give them better visibility on the third quarter.
Cees t’ Hart, chief executive of Carlsberg, said the brewer had “an important part of the summer under our belt” so felt “confident” on its outlook even as it disappointed investors. “If there’s a huge second wave, we have another issue,” he added.
Ms Bruun said the regulator believed that if companies kept silent on their guidance for too long it would “harm the market”. She added: “Covid-19 is still creating uncertainty, but that is the kind of reality companies are working in with political or economic uncertainties around the world.”