On their quarterly earnings calls this week, many of the world’s corporate leaders addressed inflation, supply-chain issues, consumer spending and the continuing Covid-19 pandemic. Here’s a sampling of what they said:
Chief Executive Kevin Johnson
“Supply chain-driven inflationary costs were unexpectedly amplified by Omicron and rapidly accelerated in December,” Mr. Johnson said. “For the balance of the year, we expect these costs to increase versus our previous estimate. Like most economists, we anticipate supply-chain disruptions will continue for the foreseeable future. We have already taken pricing actions this fiscal year…and we have additional pricing actions planned through the balance of this year.” (Feb. 1)
United Parcel Service Inc.
Chief Executive Carol Tomé
“In terms of current trends, the first week of January, I’m like, where are the customers? Everybody seemed to be at home because of Omicron, but the business has come back roaring. So we’re feeling really good about the guidance that we’ve just given.” (Feb. 1)
Chief Financial Officer Kevin Jacobsen
“If I look at our history, this is the fourth inflationary cycle we’ve gone through in the last 10 years. If you look at the three previous times we’ve done this, we’ve been able to fully price and drive our cost-savings program to offset the cost inflation, rebuild margins. It historically has taken us about 12 to 18 months to do that. I would tell you, though, in this case—because of the extreme level of inflation we’re dealing with—I expect it to take longer.” (Feb. 3)
UPS said the Omicron wave of Covid-19 in the U.S. appeared to keep customers away in early January, but the shipping giant said its business has since ‘come back roaring.’
Sony Group Corp.
Chief Financial Officer Hiroki Totoki
“We continue to be unable to fully meet market demand in multiple categories due to severe limitations on the supply of components. We expect this situation to continue to impact us in the fourth quarter ending March 31.” (Feb. 2)
Advanced Micro Devices Inc.
Chief Executive Lisa Su
“We have been in a mode of ‘demand is larger than supply,’ although we made a lot of progress through 2021. And I expect to make more progress; really incremental capacity will come online through 2022, especially in the second half…But we’re definitely working on getting more supply as we go through the year, and I think you should see it loosen up a bit.” (Feb. 1)
General Motors Co.
Chief Executive Mary Barra
“What we’re sharing is what we see with the work that we’ve done with all of the semiconductor manufacturers and our plans for this year,” Ms. Barra said. We’re “definitely seeing improvement in first quarter over fourth quarter. We saw fourth quarter better than third quarter. And we really see, with the plans we have in place now, by the time we get to third and fourth quarter, we’re going to be really starting to see the semiconductor constraints diminish.” (Feb. 1)
Ford Motor Co.
Chief Executive Jim Farley
“Perhaps the biggest gift for all the pain we’re going through now in semiconductors is that we have very painfully learned the lesson that we cannot manage the supply chain for these key components as we have. In fact, you could argue that in the change of transition to these digital electric vehicles that supply chain could be one of the biggest advantages a particular company has or doesn’t have.” (Feb. 3)
Many made-in-China goods are now produced in Taiwan, creating an export boom to the U.S. as tensions rise between Washington and Beijing. WSJ visits a Taiwanese factory to see how geopolitics are complicating the business environment. Photo composite: Sharon Shi
com Inc. Chief Financial Officer Brian Olsavsky
“There’s specific things that I think we all see in the supply chain where we’re waiting for products. But as far as Amazon is concerned, we did a lot to combat the supply-chain issues we saw in Q4 or anticipated in Q4. We bought a lot of product ahead. We worked with vendors to secure inventory early, in some cases paid earlier, which had a working capital impact.” (Feb. 3)
Honeywell International Inc.
Chief Financial Officer
“We expect supply-chain impacts to remain as challenging in the first half of the year as they were in the third and fourth quarter, and they’ll start to abate as the Aero supply base ramps up and capacity for electronic components comes online in third quarter. Inflation will continue to be a significant headwind. However, agile pricing actions will dampen the impacts to margin throughout the year.” (Feb. 3)
Chief Executive Michele Buck
“We have a lot of actions in place to drive continuous improvement relative to our own supply…We think that we will make continuous improvement. But under no circumstances would we really be out of the woods totally. We will continue to have pressure throughout the year. Our goal is to just to continue to make improvement. (Feb. 3)
Waste Management Inc.
Chief Executive James Fish Jr.
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“I would tell you that that inflation that we started to see in Q3 did catch, I think, the entire world off guard. But nobody expected coming into the year that we’d have 40-year high inflation. So, Q3 was playing a bit of catch up. Q4, we started to really catch up, but there is a lag in terms of how much pricing we can get to cover inflation. And honestly, we probably—we’ll be happy just to get to a point where we cover that cost.” (Feb. 2)
Brinker International Inc.
Chief Financial Officer Joe Taylor
“There is a belief we’ll have a downward cycle at some point. Not calling time frame on that, but we do still believe commodities are cyclical. And whether or not it’s the back half of this calendar year or getting into next fiscal year, there’s probably some relief on the absolutes of those. The labor side of the equation is more structural.” (Feb. 2)
Toothpaste maker Colgate-Palmolive said it saw raw-material prices rise throughout 2021 and is accounting for that trend in its approach this year.
Carolina Cabral Fernandez/Bloomberg News
Chief Executive Ryan Lance
“We’re seeing a bit more inflation as a result of the strengthening commodity price that we see, and I’d say it’s primarily in the Permian Basin…Around the whole world, though, we see much lower inflation.” (Feb. 3)
Meta Platforms Inc.
Chief Operating Officer Sheryl Sandberg
“We’ve also heard from advertisers about other macro trends that contributed to the headwinds in Q4, including global supply-chain disruptions, labor shortages and inflationary pressures.” (Feb. 2)
Chief Executive Noel Wallace
“Obviously, we saw a significant acceleration in raw-material prices following the first quarter in 2021. That continued to escalate as we went through the year. And certainly, based on where we thought we were in the third quarter, we saw significant increases moving into the fourth quarter…So all of that is now built into how we’re thinking about 2022. And we expect raw materials, quite frankly, to peak in the first quarter.” (Jan. 28)
Chief Financial Officer Ruth Porat
“Overall, we did see strength as we’re going through the year as I indicated. There was broad-based advertiser strength. There was strong consumer online activity, and those were really the primary drivers.” (Feb. 1)
Ralph Lauren Corp.
Chief Operating Officer Jane Nielsen
“This holiday specifically, what drove our outsized performance was really our consumers, which shopped early and shopped at full price. So we got ahead of the curve on the holiday, and we maintained that momentum through the holiday without pulling significant promotional levers. We were much less promotional this year than we were last year.” (Feb. 3)
Ralph Lauren said consumers largely shopped early and paid full price for its items during the holiday season, leading the retailer to rely much less on promotions than previously.
Budrul Chukrut/Zuma Press
Capri Holdings Ltd.
“Our full-price selling is up dramatically…The health of the consumer entering our brand, both new and existing, is really quite strong.” (Feb. 2)
Scotts Miracle-Gro Co.
Chief Executive Jim Hagedorn
“Our most recent consumer-sentiment data…tells us consumers continue to see gardening as important to their lifestyles. It also tells us they plan for their spending levels to be consistent with last year, an important fact given the overall amount of inflation in the economy.” (Feb. 1)
Chief Financial Officer Bob O’Shaughnessy
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“Obviously, inflation is real. And maybe principal among that, interestingly, is lumber, which had trended down. We’re getting a little bit of a tailwind in the first half of the year, but pricing has moved right back up. And so that’s influenced the back half of the year. But I would tell you…we’re projecting 6% to 8% increase in input costs for the house.” (Feb. 1)
Illinois Tool Works Inc.
Chief Financial Officer Michael Larsen
“We’ve also not really seen anything to suggest that those inflationary pressures are slowing down. But to be honest with you, it’s a really uncertain environment here…so it’s really difficult to predict what we’ll end up for the year.” (Feb. 3)
Match Group Inc.
Chief Executive Shar Dubey
“There is still a hesitancy among new users who have never tried dating apps before to break into the category.…So, unlike categories like, say, online groceries, for instance, where [the] pandemic pulled forward new users, for us, nonusers breaking into the category, even at a normal cadence, it’s still to come. And we feel optimistic that if Omicron truly is what causes the shift from a pandemic to endemic, and if things do indeed return to more normal in spring and summer, we are well-positioned to be able to capitalize on it.” (Feb. 2)
Quotes were obtained from transcripts provided by FactSet.
Write to George Stahl at [email protected]
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