Growth in Europe rebounded sharply in the third quarter of the year, according to data published Friday, but hardly anyone was celebrating. Economic activity remains well below what it was a year ago as a surge in coronavirus cases and new lockdowns have raised the risk of another slowdown.
Gross domestic product in the 19 countries that use the euro rose 12.7 percent from July through September compared to the previous quarter, the European Union statistics office said. But economic output was 4.3 percent lower than the same time last year — a severe recession by any standard — and could sink further as Germany, France and other countries order restaurants and theaters to close and restrict travel.
European countries are increasingly desperate to contain the virus before it overwhelms hospitals. But the economic cost will be high, particularly in industries that depend on person-to-person contact. The longer the pandemic lasts, the greater the risk of mass bankruptcies among businesses like hotels, fitness studios and nail salons, leaving lasting scars on the economy.
“There is unfortunately still no evidence that you can simply turn on and off an economy like a light switch without causing more structural damage, maybe even a short circuit,” Carsten Brzeski, global head of macroeconomics at ING Bank, said in a note to clients.
Armed with cash, and offering services and products that stuck-at-home Americans needed, the biggest technology companies — Amazon, Apple, Alphabet, Microsoft and Facebook — weathered the early days of the pandemic better than most businesses.
The recovery may provide another catalyst to help them generate a level of wealth that hasn’t been seen in a single industry in generations.
With an entrenched audience of users and the financial resources to press their leads in areas like cloud computing, e-commerce and digital advertising, the companies demonstrated again that economic malaise, upstart competitors and feisty antitrust regulators have had little impact on their bottom line, The New York Times’s technology reporters, Daisuke Wakabayashi, Karen Weise, Jack Nicas and Mike Isaac, write.
Combined, the five companies reported a quarterly net profit of nearly $52 billion this week.
As concerns about another wave of coronavirus inflections swept the globe in recent months, shoppers again hit grocery stores and loaded up on pantry items, sending sales of Kraft Heinz’s food products soaring in the third quarter.
The maker of Heinz ketchup, Kraft macaroni & cheese and Oscar Mayer cold cuts said on Thursday that organic sales, which strip out currency movements, acquisitions and divestitures, rose 6.3 percent to $6.4 billion in the third quarter from a year ago. On a call with Wall Street analysts, the company’s chief executive, Miguel Patricio, said Kraft Heinz saw retail demand for its products accelerate again in the second half of September.
Kraft Heinz, which was struggling with its product mix and company structure before the pandemic, said net income fell 33.7 percent in the quarter to $597 million because of charges stemming from its September announcement to sell part of its cheese business, including Cracker Barrel and Polly-O to the French company Lactalis.
But like other large food manufacturers, Kraft Heinz has benefited from the broad shift by consumers to eating more meals at home during the pandemic. Expecting that trend to continue through the end of the year, Kraft Heinz boosted its outlook for all of 2020. Ahead of the close of the stock market, Kraft Heinz shares were up 3.8 percent to $30.34
The cereal giant Kellogg said sales of its cereals and snacks gained in the third quarter, but at a slower rate than the previous period. After soaring 9.2 percent in the second quarter, organic sales at Kellogg grew 4.5 percent in the third quarter to about $3.6 billion. Net income climbed to $348 million, up from $247 million a year ago.
Executives said consumers in the quarter snacked on Pringles chips, and loaded up shopping carts with Eggo waffles and Morningstar Farms meat-alternative foods, including a new line of plant-based burgers and chicken nuggets called “Incogmeato.”
In late-afternoon trading, shares of Kellogg were flat at $63.51.
Meanwhile, consumers’ love of tacos and burritos pushed Yum Brands revenues up 8 percent to $1.45 billion in the third quarter. Net income rose 11 percent to $283 million from a year earlier.
Taco Bell was the big winner for the company, with people buying larger meal packs for families and embracing a new product, the grilled cheese burrito.
Taco Bell, whose sales were hit by a reduction in breakfast and late-night meals since the pandemic started, reported same-store sales gains of 3 percent in the third quarter. Those gains offset losses at Yum Brands’ two other large chains, KFC and Pizza Hut. While both chains grew same-store sales in the United States, they reported declines in global sales as demand lagged.
Softness in international markets could continue to affect Yum Brands in the fourth quarter. While Europe makes up less than 10 percent of Pizza Hut’s sales and 5 percent of KFC’s, executives said they were keeping a close eye on the area as France moved to another national lockdown and Germany inched closer to one in response to rising coronavirus cases.
The U.S. and China markets rebounded faster than expected for the coffee chain Starbucks, resulting in just a in global same-store sales in the quarter as compared with the same period last year.
As more Starbucks opened to limited in-store dining in the United States and China, which make up 61 percent of the company’s total global stores, same-store sales improved significantly from the 40 percent drop in the prior quarter.
In this past quarter, revenues declined 8 percent to $6.2 billion while net earnings were slashed in half to $392 million.
On a call with analysts, the chief executive, Kevin Johnson, said the company was adjusting to changing consumer patterns. Traffic has moved from dense metro areas to the suburbs, and early-morning coffee runs have shifted to midmorning business, Mr. Johnson said.
Starbucks’ fall seasonal menu, specifically its “pumpkin platform,” was also a boon as Pumpkin Cream Cold Brew coffee outsold a longtime fan favorite, the Pumpkin Spice Latte.