A lot of internal discussions are underway about whether to update earnings guidance about the effect COVID-19 might have on a company’s business or financial outlook. A recent blog from communications firm Clermont Partners says so far, few companies have actually issued updated guidance about the expected financial impact from the health pandemic but they expect pre-announcements or guidance updates to accelerate.
For those debating about whether to update guidance, the blog provides considerations to think about before doing so, here are a few:
– Timing – when it’s time to communicate, tell investors what you know about near-term impacts and longer-term impacts
– Let investors know when they can expect to receive additional updates
– Severity – decide how much of an alarm bell you want to ring – once markets calm down it might be hard to reign expectations back
Another report from PwC looked at what finance leaders are focused on amidst the COVID-19 pandemic. The report was based on a survey of 50 finance leaders. It found most CFOs say their companies are impacted although the full extent remains unknown. The survey then takes a look at actions companies are taking. Here’s some of what it found:
– More than half of survey respondents said they are considering taking cost containment measures
– Approximately 44% are considering adjusting earnings guidance
– When asked about plans to change disclosures, 48% say they’re planning changes as a result of COVID-19 and 8% said the changes would be “significant”
– In terms of the extent of disclosure changes as a result of COVID-19 – 40% said somewhat and another 38% said it’s currently difficult to assess
-Lynn Jokela, TheCorporateCounsel.net March 19, 2020
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