Fincredible MacroTalk January 5: Omicron Disruptions
Management commentary on COVID-19 and the Omicron variant from $MSM $UNH $CTAS $AIR $FDX $MU $NKE $MRK $PFE $TMO $MRNA.
COVID-19 cases have soared since the first sighting of the Omicron variant. In the chart below we can see the parabolic rise in cases since mid-December.
The Omicron variant appears to be less deadly and harmful than previous variants. Nevertheless, it is still a concern for consumers, governments, and corporations. There’s hope that we might be seeing the light at the end of the tunnel in terms of COVID-19 disruptions, but we’re not in the clear yet. In this post, we’ve used quotes from company earnings calls to highlight the impact the Omicron variant has been having on businesses, as well as the plans some pharmaceutical companies have in store for 2022 to combat the virus.
All quotes are sourced from Fincredible.
Some companies like UnitedHealth Group, Cintas Corp, MSC Industrial, and AAR Corp have said they’re not seeing further disruptions due to the Omicron variant, and that they expect continued improvements in 2022 relative to the past year.
“While it's still early days with the presence of the Omicron variant and a related rise in COVID case counts, so far, customers and suppliers are working through it. There is a different tone from the early stages of the pandemic in 2020. And while we're seeing increases in the number of cases in our own facilities, those who are infected are returning to work more quickly. And between the vaccine, more proactive testing and PPE requirements, we've not experienced challenges to the degree that we did in 2020 in the earlier stages of the pandemic. Based upon what we're seeing now, we expect most portions of the industrial economy to power through this surge without massive shutdowns or material disruptions to operations.”
Erik David Gershwind, CEO
“While the pandemic-related impacts remain difficult to predict, given the current trends, we would expect a lower unfavorable COVID impact than experienced in '21. And Still, as the dramatic variation over the last 20 months is demonstrated to all prudent management suggests we should offer an outlook respectful of the fact that the current situation is without precedent.”
John Rex, CFO
“At this point, our -- we haven't seen a change in our customer base as a result of Omicron. It's a little early to tell, certainly. But nevertheless, it's -- I would say it's business as usual at this point with our customers, and we're looking forward to the back half of the year.”
Todd M. Schneider, CEO
“As of now, the Omicron variant has not impacted our customers' maintenance plans. As such, we expect MRO activities to remain at the current levels, which are near full capacity. Parts supply, which is our most international activity, is more likely to be impacted by the reinstatement of global travel restrictions, which could further extend the time line for full recovery. That said, we expect the impact of each new variant to diminish as we move forward.”
John McClain Holmes, CEO
While the situation appears to be improving, FedEx, Micron, and Nike reminded investors that the effects of COVID are likely to persist in 2022. There might be improvements, but a return to pre-pandemic trends is not expected anytime soon.
“With new variants of COVID causing uncertainty in the global recovery, we believe that air cargo capacity will remain constrained through calendar year 2022, and a full recovery is not anticipated until at least 2024.”
Brie A. Carere, Vice-President
“These costs that we're seeing in terms of COVID mitigation and some inflationary pressure. Those are likely to continue through the year. Hard to say when they abate, but we do expect that they will continue through the year.”
David A. Zinsner, CFO
“We expect the operating environment to remain volatile as COVID variants continue to cause disruption to business operations. Our fiscal '22 financial outlook reflects inventory supply significantly lagging consumer demand across NIKE's portfolio of brands.”
Matthew Friend, CFO
“We expect to see more normal seasonality for GARDASIL with the third quarter reflecting the highest in sales. Our teams have been working to ensure we have the right processes in place to appropriately allocate doses to areas of increased demand, particularly as COVID variants continue to impact certain geographies.”
Franklin K. Clyburn, Executive Vice President
The pioneers in the fight against Covid-19 have struggled with their forecasts for 2022. There is still a lot of uncertainty regarding the need for additional booster shots, as well as treatments for the disease.
“While we have the capacity to produce 4 billion doses in 2022, at this point, we expect to recognize revenues for 1.7 billion doses in 2022, representing COVID vaccine direct sales and alliance revenues approximately $29 billion. Continue to engage with governments regarding potential future orders for 2022, including doses for which certain governments have the option to order and take deliveries in 2022. And going forward, we will continue to be prudent in our capital allocation activities with the opportunities for deployment shown here on this slide.”
Frank D'Amelio, CFO
“Our base business is performing very well, and we are playing a leading role in our industry's response to COVID-19; and we continue to build on our trusted partner status with innovative new products and expanded capabilities to further enhance our unique customer value proposition. All of this gives me great confidence in a very bright future as we continue to create sustainable value for all of our stakeholders.”
Marc Casper, CEO
“Merck has sought out opportunities to apply its scientific expertise in the global fight against COV-19, and we are very pleased to now be in a position to make a meaningful difference. As you are aware, at a planned interim analysis of our Phase III trial in at-risk nonhospitalized adult patients with mild to moderate COVID-19, molnupiravir reduced the risk of hospitalization or death by approximately 50% compared with placebo.”
Robert M. Davis, CEO
“We believe that 2022 revenues could be between $17 billion and $22 billion. We, of course, continue to have discussions for 2022 APAs with governments and international organizations, including COVAX, the Pan American Health Organization, or PAHO, and the African Union.”
Stephane Bancel, CEO
“A comprehensive vaccination strategy remains the best sustainable means to confront this COVID-19 pandemic. Timely intervention following symptoms onset with an oral agent that can be self-administered at home may provide an additional meaningful option for patients, health care systems and public health, which could make a significant and positive impact on the pandemic.”
Dean Y. Li, Executive Vice President
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