Some of the world’s largest companies, like Coca-Cola, are in a predicament as they try to fully assess the impact of the US tariffs on their operations.
This comes as US President Donald Trump’s administration imposed tariffs against some major trading partners, which is now giving executives of some of the big companies a hard time explaining their adverse impacts on financial results. The US imposed a universal 10% tariff on imports to the US and a 145% tariff on imports from China.
Coca-Cola toned down earnings projections due to tariff uncertainties
Although the Trump administration has been postponing some other tariffs to allow companies a chance to negotiate, the situation remains dire due to uncertainties. According to the Associated Press (AP), the only certainty is that executives will use a variation of the phrase “uncertain times” in its variations, at least once as they speak to analysts.
Some of these executives are making estimates based on only what they know currently, while others are pulling their outlooks altogether.
This comes as the announcement of tariffs has left businesses and consumers uncertain amid a constantly shifting landscape, as in the past few months, the market has seen new tariffs being announced while in some cases withdrawn within days.
As for Coca-Cola, although it indicated the impact of the tariffs will be “manageable”, the company watered down its projections on full-year profit with adjusted earnings now set to grow 7% to 9%, down from 8% to 10% previously. In 2024, the beverage-making giant earned $2.88 per share.
Coca-Cola, together with other beverage makers, were slapped with a 25% tariff on aluminium they use for cans, among other items. According to AP, Coca-Cola has said it could shift aluminium suppliers and rely more heavily on plastic or glass bottles and take other measures to counteract the tariffs. Peers and bitter rival, PepsiCo, lowered full-year earnings projections due to the impact of the tariffs.
Other companies reassess their 2025 expectations
According to AP, other big firms like Heinz, General Motors and JetBlue Airways are also not spared from the impacts of the tariffs. Some of them are taking a relook at their projections for 2025 due to the uncertain environment.
“We’re closely monitoring the potential impacts from macroeconomic pressures such as tariffs and inflation.”
Kraft Heinz CEO Carlos Abrams-Rivera.
Heinz, together with other food companies, is under pressure as inflation continues to affect consumer disposable incomes. With the imposition of tariffs, chances are also high that businesses will raise prices on consumer staples and food products, further fuelling inflation.
At JetBlue, its president, Marty St. George, revealed the airline recorded a decline in bookings in February compared to January. The situation further deteriorated in March.
The company pulled its earnings forecasts due to concerns about a slowdown in consumer demand due to waning confidence. As a result, the company is considering capacity reduction, retiring its fleet, as well as other cost containment measures to preserve cash and boost its profitability.
Elsewhere, automaker General Motors is reportedly pushing back its conference call to discuss its guidance and quarterly results until Thursday to allow the company to assess potential changes to the Trump tariffs.
This comes as the White House indicated the President was going to sign an executive order to relax some of the tariffs on autos and auto parts.
For UPS, its CEO, Carol Tome, told analysts at a conference call that the company remodelled various scenarios for how the year might unfold.
China will always remain a concern for the company, as many of the small businesses the company deals with rely on China for their goods.
“It’s China that’s the real uncertainty, I think, facing the economy,” said Tome.
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