Blog: Chill out this results season, says McKinsey
Chris Mercer | 29 January 2013
As the food sector gears up for another results season, McKinsey analysts think everyone needs to take a step back from the coalface.
It's that time of year when boardrooms are getting twitchy about having the right numbers, if not to impress then at least to keep the analysts off their backs. Anyone who missed consensus estimates for even one quarter these days can expect a conference call grilling and share price wobble.
Scrutiny of results is crucial for analysts, journalists and the market in general to gather more information on what is happening, of course.
According to global analyst group McKinsey, however, everybody needs to cool it. McKinsey believes the pressure for short-term gratification is becoming so great that some boardroom executives are jeopardising the long-term health of their business.
"It’s not uncommon, for example, for companies to offer customers steep discounts in the final days of a reporting period in order to stoke sales numbers," write Tim Koller, Rishi Raj and Abhishek Saxena in McKinsey Quarterly.
Yet, they argue, this is not necessary. "In the near term, falling short of consensus-earnings estimates is seldom catastrophic," they say. Even companies which regularly beat consensus don't necessarily gain a higher share price.
According to the three analysts, the only thing that matters is avoiding consensus misses on a consistent basis.
Food for thought as the flurry of food sector results draws near.
While you're waiting for that, why not take part in the just-food 2013 Confidence Survey? This week is your last chance to have a say on the issue affecting your business in 2013. We'll be presenting findings next month.
Danone completed its US$12.5bn acquisition of WhiteWave Foods this week. The move will roughly double Danone's presence in North America, where WhiteWave is a top four dairy player. ...
Premier Foods plc revealed today (28 March) it has secured a deal with its pension scheme trustees that will see the UK food maker reduce its pension burden....
Hain Celestial, under the scrutiny of the investment community in recent months and facing some challenges in its domestic market, has announced another shuffling of its management pack....
FrieslandCampina, which today served up higher profits but lower sales for 2016, is ready to offload the last non-dairy business owned by the Dutch cooperative giant....
- Danone's Q1: four things to learn
- Interview: Sir Kensington's on sale to Unilever
- Column: Why snacking is the new meal
- Interview: "Disruptive" snack brand Hippeas
- Nestle Q1 update: four things to learn
- Tyson shops Sara Lee bakery, Kettle and Van's
- Nestle to cut UK confectionery jobs
- Icelandic to sell Saucy Fish Co. owner Seachill
- Tyson to buy burger-to-entree firm AdvancePierre
- TreeHouse Foods sells soup, baby food units