02 Jul 20 Winners (and losers) in the time of Covid-19

The Covid-19 pandemic posed a major challenge for most industries in the first quarter of 2020. The impact has been moderate to severe for all sectors, with many required to face up to challenges and having to adapt. In the worst cases, companies have had to shut shop. Many resorted to cost-cutting measures such as decreasing marketing spend, switching to low cost vendors, downsizing, or imposing pay cuts.

We looked at Q1 2020 YoY (year-on-year) revenue growth of leaders in each industry and compared their tailwinds and headwinds. Some of the worst affected industries were automotive, auto parts, chemicals, oil & gas, apparels, construction equipment, and steel & iron-ore. They all had something in common, such as a lack of demand, supply chain disruptions or plant shutdowns. In the oil & gas industry, there was a huge gap between demand and supply leading to a collapse in prices.

On the contrary, pharmaceuticals, food & beverages, packaging and semiconductors were less affected as they delivered essentials. For semiconductors, an increased demand for work-from-home technologies led to a growth in average revenue. A trend we observed across these industries was a boost in e-commerce sales.

Most of the companies that we analysed have a negative or uncertain outlook for the second quarter of the year as they expect a drastic decline in revenues. This is understandable since most lockdowns began in March. Many withdrew their guidance for 2020 along with other watchful measures. A few companies had a moderate to positive outlook as their segments had performed well in the first quarter.

As the Covid-19 curve begins to flatten, there are signs of improvement with economic activity restarting. Although the impact is going to be felt throughout 2020, we hope the economic situation improves in the third quarter of 2020.