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.
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