Two vendors, Assystem and Semcon, have put on hold their financial guidance for 2020. This is only the beginning.

Two vendors, Assystem and Semcon, have put on hold their financial guidance for 2020. This is only the beginning.
Since we published our last note on the impact of Covid-19 on ER&D spending, the situation has changed with Covid-19, having now spread to Europe and soon the US. Already, The European Central Bank is predicting a GDP decline of 5% in 2020, based on the impact of three months of confinement.
Akka has not provided a guidance for 2020. The company expects to suffer in H1, from automotive, aerospace and Covid-19
The US Federal Reserve yesterday lowered “the target range for the federal funds” by 50 bps to 1%-1.25%. Although the “fundamentals of the US economy remain strong,” “the coronavirus poses evolving risks to economic activity,” communicated the Fed.
Currently, Covid-19 has only affected China significantly, although having spread in South Korea, Japan, and Northern Italy.
Several ER&D vendors have been impacted so far: Ricardo has warned that the situation in the Chinese automotive market would have a “material” effect on its profit.