Public health incidents have little impact on Caterpillar China, but are expected to remain under pressure in 2Q as a whole; Cummins China ’s revenue fell 19%, and demand has risen sharply since resumption of work, but high demand is not necessarily sustainable; ABB China orders fell 16%, March Since the repair, but not optimistic about the overall 2Q; Rockwell China's March V-shaped recovery, it is expected that the overall 2Q will still decline by 20%; PPG China fell by 30%, especially for automotive demand, capacity utilization rate returned to 75% (May 2nd)
? Caterpillar (CAT.US, China's revenue in 2019 accounted for 5.1%), public health incidents have little impact on the Chinese market; but 2Q is expected to be affected by public health incidents or greater. The company's sales revenue in the first quarter of 2020 reached 10.6 billion US dollars, a year-on-year decrease of 21%. The decline in sales was the main drag, including the decline in end-user demand and changes in dealer inventory
In terms of business, the sales of Energy & Transportation business in the first quarter decreased by 17% year-on-year, mainly due to the drag of oil and gas business. Resource Industries (Resource Industries) sales revenue in the first quarter fell 24% year-on-year. Construction Industry (Construction Industries) business sales revenue fell 27% year-on-year, user sales fell 18% compared with the same period last year, of which the Asia-Pacific region fell 28% due to the influence of the Chinese market.
At present, public health incidents have little impact on the Chinese market, and the company ’s factories in China have all been started to ensure a good product supply. Management expects that dealer inventory will drop significantly by the end of the year, with a decline of 1.1 billion to 1.5 billion US dollars. The impact of the public health incident on the company in the second quarter will be more serious, but management did not give a specific forecast, because the dealer inventory increased by 500 million US dollars in the second quarter of last year, which makes the short-term comparison less accurate.
? Cummins (CMI.US, China's revenue in 2019 accounted for 9.6%), 1Q China's revenue fell by 19%; demand has risen sharply since resumption of work at the end of the first quarter, but high demand may not be sustainable. The company's revenue in the first quarter was US $ 5 billion, down 17% year-on-year. Affected by public health incidents, China ’s first-quarter revenue (including joint ventures) was US $ 1.1 billion, down 19% year-on-year. Due to public health incidents, most of the company ’s factories experienced 4-6 week shutdowns in the first quarter, but by the end of the first quarter , The company's Chinese factory has been fully restored. At the same time, as original equipment manufacturers (OEMs) are preparing for future demand rebounds, the company's demand since the resumption of work has risen sharply. Specifically, the demand for medium and heavy trucks in the Chinese market fell by 17% year-on-year in the first quarter, and the market share rose to 12.4% year-on-year. Sales of light trucks in the Chinese market fell 32% year-on-year, with a market share of 8%, which was the same as last year. Due to the strong demand from local consumers, the demand for excavators in China has dropped by only 8% year-on-year, and the market share has risen from 14% in the same period last year to 15%. Although the demand has declined from last year, it is still at a high level. In addition, the demand for power generation equipment in the Chinese market fell by 12% in the first quarter.
Looking forward, the company believes that China's high level of demand is only a short-term phenomenon. The current level and duration of high demand will be affected by the Chinese government's stimulus policy on Chinese demand, and it will also be related to factors that affect the Chinese economy, such as imports and exports. .
? ABB (ABBN-CH, China's revenue in 2019 accounted for 14.5%). China orders fell by 16% in 1Q and have been repaired since March; however, they are not optimistic about the overall expectations for the second quarter. The company's sales revenue in the first quarter of 2020 reached US $ 6.22 billion, a year-on-year decrease of 7%, and EBITDA decreased by 100 basis points year-on-year to 10.2%.
In the first quarter, both the supply and demand sides of the company were greatly affected by the external environment, and the demand side was mainly affected by the slowdown in global economic growth, especially the automotive sector and the consumer-oriented sector, but the transportation sector and the processing industry sector showed strong demand resilience. From the perspective of the supply side, although most of the factory production has not been affected, transportation regulations and restrictions on tourist attractions have affected the supply chain of some products.
By region, orders in the Americas region increased by 2% year-on-year and orders in the European region increased by 5% year-on-year, mainly driven by the Nordic countries that were less affected by public health events. Orders in Asia, the Middle East, and Africa decreased by 7% year-on-year, of which orders in China dropped significantly by 16%. However, from March to April, the business in China showed a good recovery momentum.
The management is not very optimistic about the company's business in the second quarter. The management expects that the decline in the second quarter will include the robot business in addition to the car-related business. In addition, the mechanical automation business that performed well in the first quarter is also expected to decline in the second quarter. The management expects that the company's main business will fall by more than 30% in the second quarter, and the profit margin will also be challenged.
? Rockwell Automation (ROK.US, China's revenue in 2019 accounted for 5.1%), the Chinese market recovered in March V-shaped; the company expects the overall 2Q will continue to decline by 20%. The company's revenue in the first quarter (the second fiscal quarter of 2020) increased by 1.5% year-on-year, of which endogenous revenue fell by 0.2%. In terms of sub-sectors, the discrete market segment (Discrete Market Segment) business achieved high single-digit growth, of which the automotive business increased by 20% year-on-year and double-digit growth. At the same time, the company's electric vehicle projects have continued to grow. Hybrid market segment (Hybrid Market Segment) business remained flat in the second fiscal quarter, with the largest food and beverage business only achieving low single-digit growth, including packaging business growth. Life sciences business declined year-on-year compared to last year. Process market (Process Market) business dropped by single digits, of which oil and gas business also dropped by single digits.
By region, the company's growth in North America and Latin America was offset by an 18% decline in Chinese business. However, although the Chinese business performed poorly in January and February, there was a very strong “V-shaped” recovery in March, and the Chinese business continued to recover from April to the present. Looking forward, the company uses the product order trends of China and Italy as the main forecast indicators. It is expected that the company's sales in the third fiscal quarter will decline by approximately 20% year-on-year, but the fourth fiscal quarter will show a quarter-on-quarter growth.
? PPG Industrial Group (PPG.US, China's revenue in 2019 accounted for 3.5%), 1Q China sales fell by 30%, especially automotive demand; repaired since March, capacity utilization rate returned to 75%. In the first quarter, the company's overall net income fell by about 5% year-on-year (excluding the impact of exchange rate factors), and sales fell by 8%, of which about 6% was caused by public health events.
In China, sales fell by about 30% in the first quarter, and the demand in most end markets declined significantly. Among them, automobile manufacturers (Automotive OEM) sales in China fell by about 50%. However, since March, the company's demand in China has seen a clear recovery. Specifically, the company's factories in China have been running for several weeks, and the capacity utilization rate has reached 70% to 80%, which is close to 2019 levels, reflecting In response to the current recovery of Chinese customer demand. As China's demand continues to improve, the company expects the Chinese business to resume growth in the second half of the year.
Looking ahead, considering that the factory will continue to be closed for most of April and May, and it may be gradually resumed at the end of the second quarter, the company expects that the total sales of coatings in the second quarter will fall by 30% -35%.
Demand for cloud services and PCs has driven Intel ’s growth, and China ’s ODM has resumed production; Volvo China ’s China Truck and Construction Machinery has fallen sharply, improving after March, and joint venture production has resumed; Air Liquide ’s industrial gas has fallen sharply but recovered to 85% in March. Business is still growing; SKF China resumes production, but management remains cautious and believes that the recovery remains to be seen; despite the decrease in the number of doctors and the drag on medical insurance prices, Eli Lilly still experienced a 30% growth in China in the first quarter, and a certain headwind is expected in the second half (April 30)
? Intel (INTC.US, 27.0% of China's revenue in 2019), demand for cloud services and PCs is driving growth; China's ODM resumes production. In the context of uncertain external environment, the company still achieved good performance in the first quarter of 2020. In the first quarter, the company's operating income reached 19.8 billion US dollars, an increase of 23% year-on-year, and earnings per share (EPS) reached 1.45 US dollars, a year-on-year increase 63%, exceeding expectations by $ 0.15. In terms of business, the data-centric business achieved an operating income of 10.1 billion US dollars, a year-on-year increase of 34%, of which 70% growth was contributed by the expansion of cloud services and communication services. Personal computer center (PC-centric) business revenue increased by 9.8 billion US dollars, an increase of 14% year-on-year, mainly due to the increase in remote work and online learning brought about by public health incidents to drive PC demand, short-term demand for PC offset the global offset The impact of the economic slowdown. In the first quarter, the company's balance sheet was good. In order to ensure sufficient liquidity, the company increased debt financing by 10.3 billion U.S. dollars in the first quarter and stopped share repurchases.
After the outbreak of health incidents in January, the company's original design manufacturer (ODM) partner companies in the Chinese market were forced to extend the shutdown time, but these partners have now begun to resume production.
Looking forward, management expects operating revenue to reach US $ 18.5 billion in the second quarter, up 12% year-on-year, of which data-centric business increased by 25% year-on-year, and personal computer-centric business remained stable or slightly increased. EPS reached US $ 1.10, a year-on-year increase of 4%. Management believes that the challenges posed by public health incidents also create great opportunities.
? Volvo (VOLV. B-SE, China's revenue in 2019 accounted for 6.6%), China Zhongka and Construction Machinery fell sharply, but improved after March; production at the joint venture resumed. The spread of public health incidents once interrupted the global supply chain and suspended most of the company's business. The company's net revenue fell by 15% year-on-year in the first quarter of 2020.
In terms of products, in terms of trucks, the outbreak of public health events has affected demand and supply since mid-March. In the first quarter, net income fell by 15% year-on-year, orders in Asia fell by 7%, and delivery fell by 15%. From the perspective of sorting out the market environment, the number of new registrations of heavy trucks in the first quarter of the Chinese market fell by 16% year-on-year, while that of China Card fell by 30%. In addition, mainly due to public health incidents that led to the suspension of production, as of February this year, the Chinese joint venture Dongfeng Commercial Vehicle (DFCV) delivery volume fell by 26% year-on-year, but DFCV has resumed work in late March and has now returned to normal production. In terms of construction machinery, net equipment revenue fell 20% in the first quarter, net orders in Asia decreased by 5%, and delivery declined by 7%. In terms of the overall market environment, the sales of construction machinery in the Chinese market fell sharply by 44% as of February. However, due to the active measures taken by the Chinese government to develop infrastructure, the market began to pick up in March, with a month-on-month growth of 2%. Looking forward, the management stated that given the short-term supply constraints in many parts of the world and the uncertainties in the demand situation, there is no guidance for 2020 performance.
? France Air Liquide (AI-FR, China ’s revenue accounted for 4.7% in 2019), industrial bottled gas fell sharply but has recovered to 85% in March; the electronics business is still growing. In the first quarter of 2020, the company's sales in the Asia-Pacific region fell 0.9% year-on-year. In terms of business, in the Large Industry segment, sales in the Asia-Pacific region fell by 2.1% year-on-year, mainly due to the drop in air demand caused by the shutdown of public health events, but the company said it has gradually resumed production. The Industrial Merchant business was most affected by public health incidents. Sales in China decreased by 11.3% year-on-year, mainly due to the sharp decline in the quantity of bottled gas. However, at the end of March, the loading volume had returned to 85% of the original level. The overall sales of the Electronics business in the Asia Pacific region increased by 4.9% year-on-year in the first quarter, benefiting from the strong growth of advanced materials and carrier gas in the China, Japan and Singapore markets. Among them, sales in China increased by 4.6% year-on-year. The company remains active in investment, with an investment amount exceeding 700 million euros, a year-on-year increase of 40%. Similarly, the company's cash flow is stable, accounting for 22.3% of total sales.
? SKF (SKF.US, China ’s revenue in 2019 accounted for 16.5%). Production in China has resumed, but management remains cautious and believes that the degree of recovery remains to be seen. The company's endogenous revenue in the first quarter of 2020 decreased by 8.6% year-on-year. In terms of business, although the endogenous sales revenue decreased by 7%, the industrial business still performed well, with a profit margin of 15.5%, and the profit margin of the automation business (5.7%), mainly affected by Europe, North America, and Asia. The impact of business decline. In terms of regions, the North American market experienced the largest decline, with revenue falling by 11.7% over the same period last year, and sales revenue in Asia decreased by 10.4%.
With the joint efforts of the team in China, production activities in China resumed on February 10th, but the management does not believe that the business in China will soon return to the right track. The current recovery of the Chinese market is mainly caused by the lifting of the previous blockade restrictions The catch-up effect has led to weak export demand and inconvenient transportation. These factors still affect the business in the Chinese market, and management is cautious on the Chinese market. Looking forward, management expects the company's financial net assets to decrease by US $ 250 million in the second quarter, the annual tax rate will be around 29%, and factories and equipment will increase by US $ 3.3 billion.
? Lilly (LLY.US, China's revenue in 2019 accounted for 5.4%). Despite the decrease in the number of doctors and the drag of medical insurance prices, China still grew by 30% in the first quarter; there may be some headwinds in the second half of the year. The company's first quarter revenue increased by 15% year-on-year, of which sales volume increased by 22%. The company's new drug revenue accounts for more than half of the first quarter revenue, and is expected to continue to drive the company's revenue growth. China ’s first quarter revenue increased by 30% year-on-year under fixed exchange rate calculations, of which sales volume increased by 93%, but the sales promotion effect was partially included by Tyvyt (PD-1 monoclonal antibody) and Libita (Alimta, anti-tumor drug) The price discount caused by the medical insurance plan is offset. Except for Tyvyt and Alimta, the company's business in China declined significantly in the first quarter, mainly due to the decrease in the number of new doctors due to the spread of public health incidents in China in the first quarter.
Looking forward, the company expects that the amount of new prescriptions will continue to decline and will peak in the second quarter, and with the combined impact of the inventory level recovery and the reduction of new prescriptions, the second half of the performance may be dragged down. In addition, as the company provides products for 40 million patients worldwide, the company remains confident in its long-term prospects for revenue growth and (55.45, -1.95, -3.40%) profit growth.
