Q3 sales publications are on their way, and with them the first signs of a slowdown among companies. Whereas three months ago, more than a third of companies were raising their targets for the end of the year, many are now revising their forecasts downwards.
The reasons include energy prices, inflation, persistently high interest rates, and China’s economic situation, which is slow to recover. Customers are squeezing their spending. While double-digit growth forecasts were commonplace a year ago, they are now becoming rare. By contrast, a forecast of 5% now seems a fine performance.
Global luxury giant LVMH posted for the first time sales below analysts’ expectations – still up 9% on an organic basis from the previous year though.
Chemical sector os also hit, in all countries. Franco-German lab supplies maker Sartorius AG lowered its full year forecast for sales and adjusted earnings margin on the back of lower volume expectations and product mix effects. Full year group sales revenue is expected to decline by around 17%, excluding business related to COVID-19. British Croda International PLC cut full-year profit guidance after reporting that weaker customer demand and destocking has hurt sales.The Yorkshire, England-based chemicals firm said adjusted pretax profit for 2023 is now forecasted to be down by as much as 40% from GBP496.1 million in 2022.
Travis Perkins, Britain’s biggest supplier of building materials, downgraded its annual profit forecast by as much as 27%, blaming ongoing tough conditions in the new-build Britiadjusted operating profit to be in the range of 175 million pounds ($215 million) to 195 million pounds, down from the 240 million pounds it had guided to in June, itself a 12% downgrade.
On the other hand, the oil & gas is lifting up their forecast again. The british oil major BP PLC lifted its guidance, now seen between $41 billion and $44 billion, up from $39 billion to $42 billion previously guided.
One company is overperforming against the grain of its sector: Publicis, the world’s largest advertising group by market value, increased its 2023 sales and margin forecasts as it beat expectations in the third quarter, defying a general slowdown in the ads industry. The maker of marketing campaigns for the likes of L’Oréal , Walmart and Heineken now expects organic net revenue to grow by 5.5% to 6% this year, against around 5% guided previously.Publicis previously raised its sales guidance in July.
The uncertainty today is geopolitical: the situation in the Middle East could push energy prices even higher.