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Firms crippled by coronavirus report miserable Q2 results

July 30, 2020

VW, Renault, Airbus and Deutsche Bahn have reported severe losses for the second quarter of 2020, when the coronavirus had forced many countries to lock down. For one company in the US, the pandemic has proven a boon.

A parked Airbus A380 pictured in Toulouse, France, on July 5th, 2020. A large red "STOP" sign is in the foreground.
Image: picture-alliance/abaca/H. Lionel

Loss after economic loss rolled in on Thursday as global companies and national governments reported record-low financial results for the second quarter of 2020, when the coronavirus pandemic ground economies around the world a halt. 

In Germany, gross domestic product fell 10.1% in the economic period lasting from April to June, government figures showed, the worst decline in over 50 years. 

In the US, the economy shrank 9.5% in the second quarter from the first, or by 33% on an annualized basis, the sharpest fall since the 1940s. Mexico, the second largest economy in Latin America, also reported a double-digit contraction of 17.3%, its greatest decline in GDP on record.

Read more:  Opinion: Germany's economy can't count on bouncing back fast

Flagship German firms flounder

Germany's embattled rail operator Deutsche Bahn reported its worst quarterly performance ever, with CEO Richard Lutz confirming a loss of €3.7 billion ($4.4 billion). 

"The virus has abruptly put the brakes on our successful growth course and plunged Deutsche Bahn into the worst financial crisis in its history," Lutz said. 

In March and April, Deutsche Bahn at times had only 10% of its normal passenger volume, while at the same time maintaining 90% of its trains at the request of the German government. 

German carmaker Volkswagen (VW) reported a pre-tax loss of €1.4 billion for the first half of 2020, compared to a pre-tax profit of €9.6 billion for the same period the year before. Vehicle sales between January and June were down 27% compared to 2019. 

European plane manufacturer Airbus saw a pre-tax loss of €1.2 billion in the second quarter, down from a pre-tax profit of €1.98 billion for the same quarter in 2019. 

With coronavirus restrictions massively reducing air travel, last month the aerospace firm announced plans to cut 15,000 jobs worldwide and to wind down production by 40% for two years. 

Read more:  The premature end of the 747 and A380 flying giants

Energy prices hit oil company

French carmaker Renault suffered massive losses of €7.4 billion in the first half of the year, versus a profit of €1 billion last year. 

"The health crisis we are currently going through has massively impacted the group's first half results and added to our pre-existing difficulties,'' said deputy CEO Clotilde Delbos.

The plunge in the price of crude oil brought about by the pandemic left French oil company Total reporting its first net loss in five years. The energy company registered a loss of $8.4 billion in the second quarter. 

Lockdowns imposed by countries to curb the spread of the coronavirus have caused a significant drop in the demand for oil and a subsequent plunge in prices. 

Read more:  BP cuts 10,000 jobs after oil price collapse

Delivery giant UPS a winner in the US

German-based travel company TUI said it will close 166 of just over 500 travel agencies in the UK and Ireland due to low demand caused by the pandemic. 

Package delivery company United Parcel Service Inc. (UPS), meanwhile, has profited from an increase in online shopping during the pandemic. 

The American company reported that an increase in online shopping during the pandemic had caused shipping volume to jump 23% to more than 21 million packages a day in the second quarter. Shipments from business to US customers increased by 65%. 

"Our results were better than we expected, driven in part by the changes in demand that emerged from the pandemic, including a surge in residential volume, COVID-19 related healthcare shipments and strong outbound demand from Asia,'' CEO Carol Tome said. 

Read more:  Coronavirus: How Germany's economy would cope with a second wave

The coronavirus recession explained

kp/msh (AFP, AP, dpa, Reuters)