Many major Western companies whose business is linked to China, such as Starbucks, Apple, DuPont, Estee Lauder, have warned in their quarterly earnings reports for the first quarter about the impact of the quarantine in China on their business, CNBC writes.

While DuPont, for example, expects the situation to improve in late May, the impact of quarantine restrictions is already being felt. Companies face a number of challenges beyond the restrictions due to China’s COVID-19, and corporate sentiment among firms in the S&P 500 index has fallen to its lowest level since the start of the second quarter of 2020. Not to forget the multi-year inflation in the U.S. and dollar strength and, of course, the conflict in Ukraine. But it is China that is an important manufacturing base, if not consumer market, that many companies are focusing on for their future growth.

Since March, mainland China has been battling the Omicron outbreak with rapid quarantine measures, self-isolation and travel restrictions. The same strategy helped it quickly return to growth in 2020 while the rest of the world struggled to contain the virus. But now the latest quarantine in Shanghai has been in place for more than a month, so far with no significant progress in resuming full production, while Beijing has temporarily closed some businesses in the service sector to control the recent spike in cases.

U.S. coffee chain giant Starbucks complained that it had been forced to suspend its forecasts. Its sales in China fell 23% in the first quarter compared to the same quarter last year. That’s far more than the 0.2% decline that analysts had expected, according to FactSet.

The company suspended its outlook for the rest of the fiscal year.

“Conditions in China are such that we have virtually no ability to predict our results for the next six months of the year,” said acting CEO Howard Schultz.

Smartphone giant Apple has a different problem: an ongoing quarantine in Shanghai that will hit its sales volume hard. Although nearly all final assembly plants in Shanghai are already resuming production, Apple said the quarantine is likely to affect sales in the current quarter by $4-8 billion – a significant increase from last quarter. Another factor is persistent chip shortages and falling consumer demand in China for its products.

A company such as DuPont, which sells diversified specialty products such as adhesives and building materials, is also welcome to lower its second-quarter forecast.

DuPont CFO Lori Koch said, “Key external uncertainties in the macroeconomic environment, namely the COVID-19-related shutdowns in China, will further exacerbate supply chain disruptions, resulting in slower volume growth and sequential margin contraction in the second quarter of 2022.”

2 DuPont manufacturing facilities in China fully quarantined back in March and are not expected to reopen until mid-May. She also said that in electronics, the inability to source raw materials from China has forced some of the company’s plants to operate at lower margin rates, which will affect profitability in the second quarter.

The company expects its second-quarter revenue to be between $3.2 billion and $3.3 billion, slightly below FactSet’s forecast of $3.33 billion. Earnings per share of 70 cents to 80 cents in the second quarter are also below FactSet’s estimate of 84 cents per share.

A similar problem is haunting cosmetics giant Estee Lauder, which has been forced to cut its forecasts for this fiscal year. Despite strong results in the previous quarter, Estee Lauder cut its full-year forecast due to COVID-19 restrictions in China and inflation.

“The resurgence of COVID-19 cases in many Chinese provinces has resulted in restrictions at the end of the third quarter of fiscal 2022 to prevent further spread of the virus, so retail traffic, travel and product distribution opportunities are temporarily restricted. The Company’s product distribution units in Shanghai operated with limited capacity to fulfill conventional and online orders beginning in mid-March 2022.”

The new forecast for the company’s current fiscal year, which ends June 30, calls for revenue growth of 7% to 9%, well below FactSet’s expectation of 14.5%. Estee Lauder’s earnings per share forecast is between $7.05 and $7.15 also below the $7.57 per share expected by analysts.

Food company Yum China expects a loss in the coming quarter unless the COVID-19 situation improves significantly in May and June, although analysts expect a second-quarter profit of 29 cents per share.

The company operates fast-food brands KFC and Pizza Hut in China and is also the majority shareholder in a joint venture with Italian coffee company Lavazza, which has opened there cafes in China in the past year.