The world’s biggest companies have started sounding the alarm.

From Apple Inc. to Microsoft Corp., Danone and Diageo Plc, the U.K. maker of Johnnie Walker whiskey, the corporate world has seen a sharp increase in profit warnings about a financial hit from the coronavirus in the past two weeks.

But that may be just the tip of the iceberg, with the biggest blow to sales and supply chains mainly confined to China so far.

With the epidemic accelerating from South Korea to Iran, Italy and the rest of Europe, more S&P 500 companies are raising concerns about the outbreak going global, according to research by Bloomberg Economics. These include almost 220 firms with a combined market capitalization of more than $10 trillion from Jan. 22 to Feb. 27.

In the last week, as the S&P 500 slumped 11% in its worst week since the start of the 2008-2009 global financial crisis, Bloomberg Economics noted that the tone of comments has become more pessimistic, with more firms providing details on the potential drag.

“Now as we see the virus starting to spread to Europe and other parts of the world, what we really know is that it’s a very fluid, dynamic situation,” Levi Strauss & Co. Chief Executive Officer Chip Bergh said at a supply chain conference Feb. 25 near Dallas. The San Francisco-based jeans maker, which relies on China for about 3% of its sales, had warned a few weeks earlier that the virus would put a damper on that country’s growth in the near term.

Europe is already getting hit, with airlines, airports and hotel operators feeling the brunt of the impact so far as corporations restrict business travel and major events like the Geneva International Motor Show get canceled. Within a few hours on Friday, British Airways parent IAG SA, Finnair and discount specialist EasyJet Plc all warned about weaker demand.

As the World Health Organization raised the global risk for the new coronavirus to “very high” from “high,” companies from Nestle SA to Amazon.com Inc. are taking drastic measures to curtail business travel. Fear over the economic fallout has sent global markets plummeting, fueled by the pending question on everybody’s mind: Will the U.S., relatively spared so far, be next?

For most of February, the possibility that the earnings impact would spread beyond China was seen as an unlikely worst-case-scenario. For companies that weren’t making a lot of business in the country or had a diversified supply chain, the impact wouldn’t be material.

On earnings conference calls and interviews, dozens of executives provided a cautiously upbeat outlook in the long term for their industries — once the unspecified and possibly severe hit from the virus was over.

• InterContinental Hotels Group Plc’s CEO called the outbreak a “short-term blip”
• Vitol Group’s chief said the oil market was poised for recovery later this year
• Puma SE saw no long-term impact on the sportswear industry nor the brand
• French luxury giant L’Oréal SA was likewise optimistic that the slowdown would be temporary — just like it was during two previous viral outbreaks, SARS in 2003 and MERS in 2015

Impact Outside China

“We note that companies mostly are talking about the virus impact only from a China perspective and are not highlighting any possible hit to numbers from a larger spillover into the APAC region or even further,” Barclays European equity strategists said in a Feb. 21 research note.

Goldman Sachs Group Inc. raised the concern that same week, telling investors in a note that they may be underestimating the impact on corporate earnings. “In the context of relatively weak earnings growth, there’s probably too much complacency and we could see some negative earnings,” Peter Oppenheimer said in an interview with Bloomberg Television.

A week later, Goldman strategists, led by David J. Kostin, updated their U.S. earnings model to incorporate the likelihood that the virus becomes widespread. The bank now expects no profit growth for U.S. firms in 2020.

In a sign of how fast-moving the situation is, both Microsoft and Apple gave profit warnings only weeks after providing forecasts.

On Feb. 26, Microsoft, reduced its sales outlook for the current quarter, saying it didn’t expect to meet the guidance for its Windows personal-computer software and Surface device business because the supply chain is returning to normal at a slower pace than expected. Apple said Feb. 17 that it wouldn’t meet the quarterly revenue forecast it provided end of January because of work slowdowns and lower smartphone demand.

Tough to Quantify

A majority of companies that have warned about an impact say they haven’t been able quantify it, or said they didn’t factor the epidemic in their full-year guidance. These included Nike Inc., which was among the first global corporations to warn about a material impact at the beginning of the month; toy maker Mattel Inc.; appliances giant Royal Philips NV, and, more recently, British Airways parent IAG, which ditched its outlook Friday.

Among those that provided a figure was spirit maker Diageo, which said this week the virus would reduce its sales by as much as 325 million pounds ($417 million) this year after bars and restaurants were shut in many parts of China. As the virus spreads beyond China, sales in places like South Korea and Japan are also being affected, Diageo said.

Two months into the first quarter, it’s hard to estimate the earnings impact without more input from the companies. What’s clear is that it will be widespread among industries and uneven among companies. The travel, leisure and car sectors are among the most vulnerable. The outbreak may reduce luxury sales by as much as 40 billion euros in 2020 and reduce pretax earnings by about 13%, according to the survey of 28 top executives undertaken by Boston Consulting Group and Sanford C. Bernstein.

Following Apple’s warning on its China sales and supply chain, Fundstrat Global Advisors strategist Thomas J. Lee calculated that the impact on S&P 500 companies exposed to China — about half of them — could translate into a 5% to 15% hit on profit in the first quarter. That amounts to a potential negative impact of $1 to $3 of earnings per share, or $8 billion to $25 billion to net income, Lee wrote in a Feb. 18 note.

“What could go wrong? Coronavirus is largely a China-centric health story,” the strategist said. “This could spread to Europe and possibly U.S. This would be a greater hit.”