Here's What The World's Biggest Companies Are Telling Us About The Economy

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Earnings season unofficially kicks off next week, with Alcoa reporting quarterly results on Monday. But nearly two dozen major companies whose quarters ended in May have already released their earnings announcements.Rather than dwell on company-specific performance, we wanted to see what they were saying about the global economy.

We dug through earnings announcements, conference calls and presentations to get a sense of how 2012 is shaping up.

McCormick: Europeans are eating at home to save money

'In Europe, consumer confidence is low. Austerity measures are adding pressure, and economic and political uncertainty persists. Given this backdrop, our business in EMEA has been performing quite well. Category growth is robust, driven in part by people eating more at home as a way to economize. In our 2 largest markets, the U.K. and France, spice and seasoning category sales were up 8% and 4%, respectively, in the latest 52 weeks.'

Source: Seeking Alpha

Lennar: The US housing market has hit bottom

'The reversal of our deferred tax asset reserve this quarter is, as I noted before, really symbolic rather than a significant financial event. It represents that the company has really achieved a stabilised financial condition, consistent profitability and even a modicum of visibility as well. It also represents that the macro housing market has stabilised, has most likely bottomed and perhaps is beginning the road to recovery.'

Source: Seeking Alpha

Discover: People are paying off their credit cards on time

Carnival: People are still taking vacations, but they're buying them at a discount

'During this past spring, North American brands experienced slightly lower pricing than we originally forecasted. North American brand European itineraries experienced the largest declines in pricing, not just because of the slowing North American market but also because of the challenges in locally sourcing business from the softer European markets for these sailings.'

Source: Seeking Alpha

Walgreen: Online sales are booming, but hurting profit margins

'Actually E-Commerce is not that those margins are eroding; it's that those gross profit margin percentages are lower than others, and those businesses are actually growing very fast. So those are just only mix issues.'

Source: Seeking Alpha

Red Hat: Businesses are actually beginning to shift to the cloud

'We are truly in a paradigm shift around computing from client server to cloud. And open source components are the default choice, right? So it's not that we are an alternative in the way we were in the client server world. It's the default choice. And so there's large share gain associated with that when Linux and JBoss are the default choices in that next generation of computing.'

Source: Seeking Alpha

ConAgra: Consumers are being frugal at the grocery store and are eating more leftovers

'The big challenge continues to be shopper behaviour and its impact on industry volumes. Specifically, shoppers continue to be extremely value­conscious with their choices at the grocery store. You've heard from us and others that shoppers are sticking to a list, expecting significant value for everything and keeping food inventories at home to a minimum. They're being frugal and eating more leftovers. All in all, a pretty difficult environment for fiscal 2012, and we're being realistic about the environment going forward.'

Source: Seeking Alpha

Paychex: Payrolls growth slowed, but was better than expected

'So look, just a little bit more colour on checks per payroll. Again, it's not completely same-store sales, but we do take a subset of our client base and then compare it against the average for checks per payroll, and typically is pretty close. I think, Sara, what we're seeing is moderation in that number. I think that it's come down. It moderated more slowly than we expected, frankly, at this stage. And it really is a function of what happens with hiring of employees within our client base, which is tough to gauge. It's been better than we expected.'

Source: Seeking Alpha

Adobe: Big data and predictive marketing are starting to develop

'There was significant customer interest in our Digital Marketing Suite's predictive marketing capabilities to reduce the complexity of uncovering hidden behavioural patterns in big data. Predictive marketing is the next frontier in this space, and we're collaborating with our customers to push the envelope in this area.'

Source: Seeking Alpha

Nike: Chinese growth has significantly decelerated

'Our futures orders for China grew 2% in constant currency, a significant slowdown versus last quarter. While we expect revenue growth to moderate in the near term, we remain very enthusiastic about the long-term growth potential in China.'

Source: Seeking Alpha

FedEx: Businesses are trading down to save money

'Any time you see softness in the economy, you see some mode shift where customers reevaluate their supply chains and look to see if they could rely on a slower mode of transportation in some cases or the lack of a time­definite service. So we do see some of that. We work with customers to put their products in the right network that's going to benefit them and, of course, benefit FedEx as well. So it's hard to put a specific number on that because it gets down to the requirements of individual customers in terms of what their needs are.'

Source: Seeking Alpha

Oracle: The app economy is really taking off

'Applications had a fantastic quarter, growing to $1.3 billion, up 27%, this on 16% growth last year. All the regions, including EMEA, reported double-digit growth in applications, with North America reporting an amazing 38% growth.'

Source: Seeking Alpha

Darden Restaurants: High gas prices hurt Lobsterfest

'Lobsterfest is a signature promotion for Red Lobster and it obviously has a premium price. Given the challenging economic environment and sharp increase in gasoline prices that coincided with this promotion, a premium price offer like Lobsterfest was less well­suited for the period. Lobsterfest is best done during the Lenten season, and we believe the promotion continues to be an important way to differentiate Red Lobster from the competition generally and more specifically helps us keep the brand connected to guests who can afford to spend a little more, and as a result, keep them coming back.'

Source: Seeking Alpha

Accenture: Clients are starting to invest in tech improvements to boost profits

'Technology consulting bookings were back up this quarter to a record level and reflected continued demand for network transformation, data centre consolidation and IT strategy and transformation services for both driving cost savings and increasing the business value of IT spend. Systems integration bookings, steady overall and showing real strength in the Americas, continued to reflect client demand to implement, modernize and advance enterprise­wide ERP systems.'

Source: Seeking Alpha

Monsanto: The corn and seed business is exploding in Latin America

'You can see why we focus on our international business as a powerhouse of growth in 2013. That all begins in Latin America on Slide 11 as the corn opportunity is driving some of the most pronounced growth rates in the company right now. And we're on the front edge of trait penetration ... And if you take Latin America as a whole, the beauty of this trait curve is it's not a one-shot benefit. Coming behind today's upgrades are multi-trait stacks that gain a runway that we expect carries out over the next half decade.'

Source: Seeking Alpha

CarMax: Customer credit quality is starting to deteriorate again

'We typically experience our highest subprime volume in the fourth quarter due to tax refund season. However, this year originations by our subprime lenders ramped in Q4 and remained relatively strong through Q1. As I mentioned last quarter, we are seeing some deterioration in the credit quality of applicants, but the majority of the increase is the result of our subprime partners providing more attractive offers to our customers.'

Source: Seeking Alpha

Family Dollar: Consumers are actually buying more food at dollar stores

'Food is a significant driver of shopping trips. And over the last several years, we have invested significantly in this category to capture more of our customers' mid­-September, our new supply chain partner, McLane, will begin to service our stores. And we will enhance our selection of refrigerated and frozen food even further.'

Source: Seeking Alpha

Jabil Circuit: Big businesses are waiting to make their big enterprise expenditures

'On the enterprise infrastructure, not a dramatic slowdown. In fact, some customers are actually expecting some revenue growth. I'd say earlier this year we were thinking that this second half of calendar 2012 would be a little bit more robust for enterprise infrastructure customers, just because the spending levels have been so low. And typically what we see is a pattern of underinvestment and in a macro environment that has at least some growth, that spending tends to bounce back, and there's a catch up period.'

Source: Seeking Alpha

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