Earnings Watch: Slowdown fears, trade wars hit quarterly sales at major industrial companies

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Fears of a global slowdown and ongoing trade tensions came to the fore on Thursday after a raft of industrial and manufacturing companies reported quarterly results that were clouded by such concerns.

“S&P 500 companies with higher foreign sales are delivering weaker results than their more domestically-oriented peers,” said Credit Suisse analysts in a note. “On the top-line, more globally-exposed names are lagging by 310 basis points (+0.2% vs. +3.3%), 740 basis points on the bottom-line (-8.4% vs. -1.0%).”

Paints and coatings maker PPG Industries Inc. PPG, +0.64%  said it expected global economic growth to remain “soft, impacting several end-use markets.”

See also: PPG sales edge higher in Q3 but miss estimates

“Many of our customers remain cautious about their ordering patterns and inventory levels,” PPG’s Chief Executive Michael McGarry said in a statement. PPG shares traded 0.4% higher on Thursday.

For the third quarter, PPG reported adjusted per-share profit above Wall Street expectations, but sales that fell short. The company’s quarterly earnings growth “came despite notable weakening in industrial production, which was broad,” McGarry said.

Alcoa Corp. AA, +6.02%  reported mixed third-quarter earnings late Wednesday and shares rose on news of a restructuring and asset sales for the aluminum and alumina producer. Alcoa shares recently rallied more than 6%, heading toward their highest close in two weeks and on pace for their largest one-day percent increase since Sept. 11.

But Alcoa also raised a red flag for global manufacturing, as it predicted lower demand for aluminum for the full year 2019, versus a previous estimate of demand growth.

“The change is driven by weakening macroeconomic conditions, trade tensions between the U.S. and China, and contracting manufacturing activity, especially in the global automotive sector,” Alcoa said.

Read more: Alcoa rings an alarm for global manufacturing

The bodies and parts of newer automobiles are increasingly made of aluminum alloys rather than steel. And more manufacturers, driven by consumers’ environmental concerns, are replacing plastic goods with aluminum.

Honeywell International Inc. HON, +2.77%  on Thursday reported a third-quarter profit that beat analyst predictions, but revenue that fell a tad short. Honeywell also raised its full-year outlook, which was helping shares zoom past 2% gains on Thursday trading.

Honeywell’s Chief Executive Darius Adamczyk mentioned “ongoing uncertainty in the macroeconomic environment.”

Related: IMF says global economy to grow at slowest pace since 2008 financial crisis

The company’s call with analysts after results struck the same cautious tone, with Chief Financial Officer Greg Lewis saying that the company continues to see “strength in several key markets,” but remains “somewhat cautious in our outlook, given the continued uncertainty in the macro environment.”

Sonoco Products Co. SON, -1.25%  also missed third-quarter sales expectations, pinning the miss on lower volumes and a stronger U.S. dollar, the packaging company said. Shares traded 0.9% lower.

Moreover, Sonoco lowered its guidance for fourth quarter and full-year profits, saying it “anticipates a more pronounced year-end slowdown in customer orders in certain served markets.”

Third-quarter sales at Snap-On Inc. SNA, -2.01%  disappointed as well, and the tool maker also mentioned foreign-exchange headwinds for the misstep. The stock was recently down 1.9% amid broad equity markets strength after the U.K. and EU struck a potential Brexit deal.