REVEALED: The World's Biggest Companies Explain What's Happening To The Global Economy

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Earnings season is winding down, as more than 85 per cent of S&P 500 companies have already reported results.  Here are some highlights from FactSet:

  • 70% have reported earnings above analysts’ estimates.
  • The earnings growth rate is 4.3% led by financials (+53.8%).
  • Just 43% of companies are beating sales estimates, the lowest rate since Q1 2009.

Rather than dwell on company-specific performance, we wanted to see what these industry leaders were saying about the global economy.

We dug through earnings announcements, conference calls and presentations to get a sense of how companies navigated 2012’s choppy waters and what they expect to see over the next few months.

McDonald's expects healthcare costs under the recently upheld Supreme Court ruling to be more manageable than analysts are anticipating

'Our current estimate is healthcare is going to impact each individual restaurant in the range of $10,000 to $30,000 ... And on a just a dollar basis that $10,000 to $30,000, we have years like last year where commodity cost increases were even greater than that. So while this is a significant item and it's gaining a lot of attention as the P&L item we've managed through items of this magnitude in the past and I'm hopeful we can do that in future.'

Source: Seeking Alpha

Halliburton says Gulf drilling activity has finally returned to pre-BP disaster levels

'We continue to see activity recover and our 2Q margins are now at pre-moratorium levels. We are optimistic about the work that we have won in directional drilling, fluids, wireline, completions and other product service lines for the new deepwater rigs arriving in the Gulf over the next few quarters.'

Source: Seeking Alpha

Coca Cola believes businesses have not had to discount in the U.S. as consumers continue to spend

'We are -- have not engaged in anything relative to change into more promotional or anything. It's normal pricing and normal cycling. In fact, if anything, I would tell you that the pricing environment has stayed -- particularly in the U.S., has stayed very rational.'

Source: Seeking Alpha

Whirlpool says the recovering housing market will begin to benefit durable goods orders

'But I think looking forward, more in line with our strategy, there are many positives that we're starting to feel better about. We are positive about what we're seeing in the U.S. with housing trends. We're seeing a foundation beginning to form in that sector, which we think will benefit us over time.'

Source: Seeking Alpha

Athlete demand for sporting attire is surging, benefiting Under Armour

'The U.S. athletic business is in a very strong upcycle and our second quarter results speak to Under Armour's contribution to that growth. With revenues up 27% in the quarter, it's clear that our growing capacity to innovate and add value for the athlete is working.'

Source: Seeking Alpha

UPS thinks GDP estimates are too high for the second half of the year and believes the economy will grow by 1%

'In addition, employment gains have started to slow down, all of which had a negative impact on commercial volume growth. Given these trends, we think current second half economic forecasts for the U.S. are too high and that GDP growth will likely be closer to 1%.'

Source: Seeking Alpha

AT&T's corporate customers have stopped making major business decisions ahead of the election

'On the business side, we do have continued growth in strategic services, and that growth is encouraging to us, but we are seeing business has to be very careful, seems like whether they are hesitant about the elections, about tax law changes, about the federal deficit, they have abilities to spent or encouraged by that, but they are being very careful, we are seeing a lot of no decisions.'

Source: Seeking Alpha

School districts are investing heavily in new tablets, Apple says

'I think it's particularly helping in K-12. The adoption rate of iPad in education is something I'd never seen from any technology product in history. Usually, education tends to be a fairly conservative institution in terms of buying or K-12 does and we're not seeing that at all on the iPad.'

Source: Seeking Alpha

Buffalo Wild Wings says the drought is forcing it to increase prices

'So I think we're cautious about where commodities may go, especially with all the news that the drought is having. We don't think that the trends from larger bird or to larger birds is going to change in the near future. So the reason why we are taking the additional price increase in September will obviously monitor where that -- where prices are ...'

Source: Seeking Alpha

Ford believes the European auto crisis will not be short lived and structural problems will plague the industry

'Industry SAAR for the 19 markets that we track in Europe, decreased from 14.9 million to 14.3 million units ... We fully understand the seriousness of the situation in Europe and we view the challenges the industry faces as more structural than cyclical in nature.'

Source: Seeking Alpha

Visa is beginning to see new markets in East Africa, like Rwanda, come on line

'We are also making steady progress in Rwanda ... In that regard, we are working with the Rwandan government to increase access to and usage of electronic payments in that country. A key priority is financial inclusion and literacy using mobile technology. Additionally, Visa is now processing domestic payments and interbank ATM withdrawals, an important step forward for this emerging economy.'

Source: Seeking Alpha

LinkedIn shows businesses are on the hunt for top talent

'Hiring Solutions grew 107% to $122 million as industry leaders continue to turn to LinkedIn to engage prospective talent for their organisations and reach the right business audiences. Microsoft recently signed one of the largest deals in LinkedIn's history, a multiyear renewal that includes the full spectrum of our Hiring Solutions product portfolio, including listings for all their open jobs.'

Source: Seeking Alpha

GM says people are financing more purchases of new vehicles

'GM new vehicles as a percentage of GM Financial originations increased to 45%, and GM Financial's percentage of GM's U.S. consumer subprime financing and leasing is 21%. GM Financial had annualized net credit losses of only 1.5% for the quarter, a 0.9 percentage­point improvement from 2011. This credit performance is at a seasonal low and will likely weaken somewhat through the balance of the year.'

Source: Seeking Alpha

Kraft says teenagers can no longer afford to buy gum

'Gum, in particular, continues to be weak. In fact, in developed markets, the rate of decline was similar to 2011 levels. In Developing Markets though, gum is still growing, but at a slower pace. That said, given the high consumption among teenagers and the disproportionate impact of the economy on this group, we believe gum is unlikely to return to historical growth rates in the near term.'

Source: Seeking Alpha

Hyatt says hotels are packed, and they're going to raise prices

'Occupancy levels approached 80%. This is a return to peak levels. Rates continue to be strong, but are still below peak levels in nominal terms. Both corporate and leisure transient demand have led this recovery. This was one of the few quarters since the downturn began that we saw transient rate growth outpace room night growth. If current trends continue, we expect there to be more pricing power ahead which should help drive margin expansion overtime.'

Source: Seeking Alpha

Comcast says they're seeing record demand for internet and television

'We're seeing record numbers on every channel, on demand, on the Internet, and on mobile. This reality is a huge technical undertaking and I have to say I'm thrilled so far. I'm equally pleased to report solid operating results for the second quarter driven by another outstanding quarter in cable...High speed Internet and business service continue to add power to cable growth in the second quarter and we kept up the trend of improving year­over­year customer performance.'

Source: Seeking Alpha

Electronic Arts says people are switching to video games that are free to play

'Free-­to-­play is EA's fastest-­growing business model, with year-­over-­year revenues that are up 156%. And while this already makes up 17% of our overall revenue in Q1, the compounded annual growth rate is significantly outpacing the overall market. A clear trend line is emerging here. While I look at the quality of these games and the revenue they produce, I'm convinced that free­to­play will emerge as the leading business model for PC and mobile gaming.'

Source: Seeking Alpha

Archer-Daniels-Midland says there is a debate in Washington over ethanol given the drought

'On the Washington side, kind of 2 conversations are going on in Washington. One relates to ethanol continuing to be the lowest cost fuel in the world, strong job creation, strong important economics in the Midwest and yet, the drought discussions about who experiences the pain associated with higher prices and how that will continue to be rationed.'

Source: Seeking Alpha

Tyson Foods says the beef supply is going to shrink in the second half of 2013

'Looking to cattle supply into 2012, the calf crop was down, as expected, which will impact the late calendar 2013 and calendar 2014 fed beef supplies. Based on the last inventory report, we currently aren't seeing any definitive signs of heifer retention...Similar to last year, feeder cattle are coming into feedlots earlier as a reaction to the drought. We do see a supply drop­off in the back half of '13 as a result of the lower 2012 calf crop, and slaughter capacity will likely adjust to lower volumes.'

Source: Seeking Alpha

Cinemark says movie-goers are spending more at the concession stands

'Our U.S. concession revenues were $141.8 million, an increase of 1.4%. Concessions per patron were $3.38, an increase of 6%, primarily driven by incremental sales…International concession revenues were $59.6 million, an increase of 20.6%. Our International concessions per patron remained flat to prior year at $2.23. However, our concession per patron increased 10.8% in constant currency.'

Source: Seeking Alpha

Starbucks is going to take advantage of the slowdown in Europe

'The austerity in Greece and Spain, the underlying issues outside of London and the U.K., the change in political leadership in France, all of these things have added to the lack of consumer confidence and we have to navigate through that and we're going to take advantage of it. I want to say something I think it is very important. We have great confidence that we are going to be able to turn Europe around. No one should doubt whatsoever that we're not going to be able to do this. It's not going to be a sprint. This is a long slog.'

Source: Seeking Alpha

Expedia says travelling is getting more expensive

'Now to be clear, brand Expedia continues to face certain environmental challenges outside of our control. Airline load factors and air ticket prices continue to grow year­over­year which is not good for the leisure traveller. Hotels continue to report tighter occupancies and higher rates, which make it more difficult for us to grow our package business. These factors are likely to remain as headwinds for air and package products for the foreseeable future.'

Source: Seeking Alpha

Amazon.com says sales taxes won't deter consumers

Delta says the corporate clients are upping their travel budgets

'In terms of the corporate revenue outlook, we recently surveyed our corporate clients to gauge their forecasted travel spend for the balance of the year, and 84% responded that they anticipated either the same or increased travel spend on Delta despite the relatively weak economy and global pressures, so corporate revenues continue to perform well.'

Source: Seeking Alpha

Caterpillar says it's tough to reduce inventories as the world is slowing down

'We and our dealers are actively addressing inventory. During the second quarter, Cat dealers in China reduced machine inventories and that's a good thing. However, with weak end­user demand and dealers cutting inventory, it's resulted in a very low level of shipments from us to dealers, and that make it tougher to reduce inventory.'

Source: Seeking Alpha

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