Earnings Statements Find Big Corporations Including Coca-Cola Worrying About Inflation Into 2022
One-fourth of the S&P 500 have now reported second-quarter earnings. Overall, earnings are expected to grow 76% year-over-year for the period, according to Refinitiv, and as reported by CNBC. This is also the best growth since 2009. Going into the next fiscal quarter, companies including paints and coatings supplier PPG Industries, beverage producer Coca-Cola and industrial supplies distributor Fastenal have reported growing price pressures.
“This inflation cycle is much higher than anyone anticipated and we’re continuing on a business by business basis, working to secure further selling price increases,” PPG’s Chief Executive Officer Michael McGarry said on the company’s July 20 earnings call, as reported by Business Insider.
Coca-Cola also said on Wednesday that it’s feeling the impact of inflated pricing of commodities and materials. Business surveys show higher input costs as the supply of materials and labor falls behind demand.
“In 2022, there are more pressures coming at us, and we are working closely with our bottling partners to mitigate some of those pressures,” Coke Chief Financial Officer John Murphy said in an interview Wednesday, as noted by Insider. “It’s difficult to tell how far into 2022 those pressures persist.”
Federal Reserve officials said that the central banking system is taking action to ensure a strong economic recovery. Fed Chair Jerome Powell announced last week that recent spikes in inflation, including airfares, cars and hotel visits, will decline. Insider also added that while Powell told the Senate banking committee that the Fed thinks these are temporary, they don’t know when they will subside or what will take their place.
Tight supply chains, longer delivery times and shipping challenges are pushing up business costs which are passed along to customers. Companies are also experiencing labor shortages and increases in wages and compensation costs while offering some type of incentive to entice workers.
At the same time, other experts seem to think inflation could be worse than people think. “I think it will be a little bit worse than what the Fed thinks,” JPMorgan Chase CEO Jamie Dimon said on the July 13 earnings call, reports Insider. “I don’t think it’s all going to be temporary, but that doesn’t matter if we have very strong growth.”
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Last updated: July 23, 2021