A Running List Of The Companies Blaming Trade Policy For Stifled Earnings, Guidance

The Trump administration's trade decisions seem to be the theme of the quarter.

Of the first 146 S&P 500 companies to report second-quarter earnings, more than 40 percent mentioned tariffs on their conference calls, according to CNBC.

While Nucor Corporation NUE and CSX Corporation CSX celebrated the positive impact of trade policy on finished steel and ore, most corporations lamented the tariffs. Hasbro, Inc. HAS, for example, warned of “just how terrible” a tariff or trade war would be.

Here's a roundup of companies that attributed poor earnings, weak guidance or headwind expectations to the Trump trade approach.

General Motors

General Motors Company GM missed earnings-per-share estimates while beating sales forecasts. Management said rising steel and aluminum prices most significantly challenged margins and forced a guidance cut.

“We were very much on track to delivering that 10-percent [margin] expectation until some of these commodity price impacts started to build as we got into the second quarter and as we extrapolate that throughout the year,” CFO Chuck Stevens said on a media call, noting an indirect impact through suppliers. “ ... At least as we think about 2018, the primary drivers are index commodities, and about 30 to 35 percent of our raw materials index, so as prices go up, that's an automatic pass-through.”

Stevens said that, in GM’s model, tariffs aren’t expected to impact the U.S. auto industry this year. Yet non-tariff actions could trickle down. China’s devaluation of the renminbi, seen to be a direct response to U.S. trade policy, was cited by GM as suppressive to China results.

Fiat Chrysler

Citing similar trouble in China, Fiat Chrysler Automobiles NV FCAU reported a year-over-year decline in its bottom line despite improving sales and shipments. It also trimmed full-year sales guidance.

“[We're] not overly concerned today, but we obviously need to keep an eye on commodity prices as we move into 2019,” CFO Richard Palmer said in a conference call. FCA is developing contingency plans to diminish the impact of tariffs.

Ford

Ford Motor Company F missed bottom-line estimates despite a revenue beat. Duties hurt the automaker’s China business, and CFO Bob Shanks said on an analyst call that tariffs, particularly those on steel and aluminum imports, should cost Ford $1.6 billion in North America this year.

Notably, immediately after the trio reported earnings, Trump struck a deal with the European Union not to raise tariffs on cars or trucks.

Stanley Black & Decker

Stanley Black & Decker, Inc. SWK reported sizable beats in its top- and bottom-lines but predicted steel, aluminum and Chinese import tariffs would create a $35-million headwind in 2018.

"We have initiated price increases for these implemented tariffs and look to further mitigate the remaining impact via the formal exclusion process where applicable,” CFO Donald Allan Jr. said on the earnings call. “ ... Prior to mitigating actions, we estimate the annual impact to be approximately $70 million to $80 million. Therefore, if you assume, and it is an assumption, a Sept. 1 implementation, the 2018 impact could be approximately $25 million."

3M

3M Co MMM missed revenue forecasts and lowered the upper end of its full-year bottom-line guidance, but exceeded EPS expectations. CFO Nick Gangestad said tariffs on steel, aluminum and Chinese imports, although a “fairly immaterial impact,” will cost the company about $10 million on an annualized basis.

"On the price of raw materials, we are likely seeing that our commodity prices and the increases we're seeing — they're likely at a peak level," Gangestad said. "Our selling price projections are consistent with that, and that's part of our anticipation that, in a more stable world going forward with commodities, we'll continue to have our selling prices more than offset what we're now seeing for commodity price increases."

Newell Brands

Newell Brands Inc NWL beat bottom-line forecasts but reported a 6-percent decline in core sales and sliced 2018 sales guidance nearly 40 percent to account for tariff pressure, among other circumstances.

"[W]e expect sequential improvement in our operating results in the back half of 2018 despite increased inflation, worsening foreign exchange and the negative impact of tariffs," CEO Michael Polk said.

PPG Industries

PPG Industries, Inc. PPG not only posted in-line EPS and a sales beat but also raised its dividend. Nonetheless, it conceded a cost impact from commodity price increases.

“In particular, we are closely monitoring our business in China for any possible impacts,” CEO Michael McGarry said on the earnings call. “Currently, the new tariffs are starting to add some modest cost to our raw materials.”

Alcoa

Alcoa Corp AA similarly beat estimates, no thanks to the $15-million in tariff costs imposed on imports from its Canadian and other foreign processing operations. Management cut annual EBITDA expectations, citing a $12 million to $14 million monthly cost impact from aluminum tariffs.

Tyson

Tyson Foods, Inc. TSN sliced 2018 EPS outlook from $6.55 to $6.70 to $5.70 to $6 to account for commodities headwinds and tariffs affecting pork and chicken prices.

"The combination of changing global trade policies here and abroad, and the uncertainty of any resolution, have created a challenging market environment of increased volatility, lower prices and oversupply of protein," CEO Tom Hayes said in a statement.

ConocoPhillips

ConocoPhillips COP beat bottom-line estimates and raised 2018 production guidance, but management said steel tariffs are becoming a “fairly significant” cost that will impact capital spending next year.

Danaher

Danaher Corporation DHR surpassed second-quarter expectations and raised full-year EPS guidance, but management factored in a slight headwind from tariffs.

“There is no one business at Danaher that has a significant impact, but it's a bunch of little impact across all the businesses and that adds up to that roughly sort of 1-cent-a-quarter impact,” CFO Daniel Comas said on the earnings call.

General Electric

General Electric Company GE beat top- and bottom-line estimates but intimated that, with 10 percent of its $29 billion in imports coming from China, and $7 billion in revenue dependent on China, its exposure to the trade war could eventually cause harm.

"We don't see a major impact yet financially, certainly not on our 2018 guidance," CEO John Flannery said in his earnings call. "We have a massively global business in every sense, both with the customers, supply chains, everything."

W.W. Grainger

W W Grainger Inc GWW beat estimates and raised projections, but anticipates trade-related cost increases.

"We expect that we will see some supplier inflation related to tariffs in the second half, and we are confident in our ability to pass on price increases,” CFO Thomas Okray said on the earnings call.

Kimberly Clark

Kimberly Clark Corp KMB beat EPS forecasts while missing revenue estimates and slicing its annual bottom-line and net sales guidance. Management blamed $200 million in higher raw material costs.

“When you have a commodity impact as large and as significant as it is right now, I think our customers understand that,” CFO Maria Henry told analysts.

Intuitive Surgical

Intuitive Surgical, Inc. ISRG beat top- and bottom-line estimates, although management qualitatively guided for a tariff-related hit that the company will absorb.

“We think that the estimated impact will be modest in terms of the increase in product cost for our systems,” CFO Marshall Mohr said on the call. “That's not a cost or a level that we're going to pass any of those costs on to customers at this point in time."

Coca-Cola

The Coca-Cola Co KO beat estimates but, partially due to increased metal prices, said it is raising prices on sodas in North America and foresees bottlers and retailers passing the increases to consumers.

Illinois Tool Works

Illinois Tool Works Inc. ITW achieved in-line EPS but missed sales estimates and issued full-year guidance below expectations. Management said tariffs represent between 10 percent and 15 percent of total projected cost inflation for 2018.

Union Pacific

Union Pacific Corporation UNP exceeded earnings estimates but acknowledged tariffs as a hindrance.

“We have seen some very specific impacts on us, but they're pretty granular, right?” CEO Lance Fritz said on the earnings call. “Inbound on some rail that we buy from Japan, there was a substantial 25-percent tariff on the last boat that was received. And then we've seen some other discrete impacts on customers."

Harley-Davidson

Harley-Davidson Inc HOG beat revenue and EPS estimates but lowered its full-year operating-margin projections from between 9.5 and 10.5 percent to between 9 percent and 10 percent. The first half of the year saw 14.4-percent margins.

"As a result of the recently enacted tariffs, we expect to incur approximately $45 million to $55 million of increased costs,” CFO John Olin said on an analyst call. “This includes incremental costs of approximately $15 million to $20 million for steel and aluminum, and approximately $30 million to $35 million for EU tariffs.”

McDonald’s

Mcdonalds Corp MCD beat estimates and reported a 4-percent comps increase, but CEO Steve Easterbrook suggested that “uncertainty of trade discussions” is contributing to negative consumer counts in China restaurants.

Whirlpool

Whirlpool Corporation WHR missed both top- and bottom-line estimates and cut guidance well below forecasts. Tariffs were seen to weigh on margins and inspire an increase in 2018 guidance for raw material costs from $300 million to $350 million.

"Global steel cost has risen substantially and, particularly in the U.S., they have reached unexplainable levels," CEO Marc Bitzer said during the firm's earnings call. " ... Uncertainty related to tariffs and global trade actions have also led to increased costs for certain strategic components and finished goods imports and exports.”

United Tech

United Technologies Corporation UTX reported beats across the board and even raised guidance, but it also reported higher costs attributable to tariffs. Tariffs on steel, aluminum and Chinese imports stifled the firm’s EPS guidance raise by 5 cents.

Anticipating an increase in steel and aluminum tariffs, CEO Gregory Hayes said 2019 will see a “much bigger impact” as the firm books commodities six to nine months in advance.

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