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United Continental, Newell Brands cut forecasts in wake of Harvey
September 6, 2017 / 11:12 AM / 14 days ago

United Continental, Newell Brands cut forecasts in wake of Harvey

(Reuters) - United Continental Holdings Inc (UAL.N) and Sharpie maker Newell Brands Inc (NWL.N) became the latest U.S. companies to blame Hurricane Harvey for disappointing forecasts.

Newell cut its adjusted profit outlook for the year, citing higher costs due to a shortage of resin used in its products after suppliers shut factories in the affected areas, sending its shares down 5.5 percent.

United’s shares fell 5.5 percent after the third-biggest U.S. carrier said Harvey was the largest operational disruption in its history. The company lowered its projected third-quarter flight capacity and passenger unit revenue.

Harvey became the most powerful hurricane to hit Texas in more than half a century, after making landfall on Aug. 25, affecting operations at companies ranging from crude oil refiners and insurers to automakers and retailers.

While still recovering from Harvey, many U.S. companies are bracing for more disruptions as Hurricane Irma approaches the U.S. mainland.

Houston-based apparel retailer Francesca’s Holdings Corp (FRAN.O), which has 61 stores in Texas, also forecast a quarterly profit well below analysts’ estimates on Wednesday and said supply-chain disruptions were affecting all its boutiques.

Shares of Francesca‘s, which said it expected it would take a couple of weeks before things normalize, fell 7 percent.

Other companies such as cleaning solutions provider Ecolab Inc (ECL.N) and Texas-based home furnishings retailer At Home Group Inc (HOME.N) have also said Harvey will hurt results.

Companies like P&G (PG.N), Kimberly Clark (KMB.N) and Clorox (CLX.N) could also take a hit, RBC Capital Markets analyst Nik Modi wrote in a note earlier on Wednesday.

Newell said on Wednesday nearly all its resin suppliers with facilities in Texas and Louisiana had shut their plants for more than a week and some were yet to resume operations.

The resin shortage is expected to persist through the fourth quarter and result in higher prices through 2018.

The company said its search for alternative suppliers met with some success, but costs were significantly higher.

About 70 percent of Newell’s suppliers are in the impacted regions, according to estimates from J.P.Morgan.

Newell said it expects an adjusted profit of $2.95 to $3.05 per share in 2017, down from $3.00 to $3.20.

United said it expects third-quarter passenger unit revenue to be down 3 percent to 5 percent. It had previously expected the closely watched performance metric to be flat.

The company expects flight capacity in the quarter to be between 3 percent and 3.5 percent, down from its earlier forecast of 4 percent.

Reporting by Sruthi Ramakrishnan; Editing by Savio D'Souza and Saumyadeb Chakrabarty

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