Earnings Season Q2 2022: C-Suite Execs Weigh in on Inflation

Inflation – it’s a topic that’s been brought up in almost every earnings call this year, as C-Suite executives continue to prioritize how they’ll lead their respective companies within our volatile market.

Geopolitical conflicts between Ukraine and Russia, as well as China and Taiwan, COVID-19, and labor shortages, have drastically affected global supply chains, forcing many industry leaders to overhaul their business models and prepare for the unexpected. However, other sectors have experienced little to no change in their outlook, leaving investors to question what they can expect from Q3 of 2022.

Within the AlphaSense platform, users have access to millions of documents, including earning transcripts, that can give you a deeper understanding of market-happenings within seconds. Below, we used AlphaSense to learn how C-Suite executives across various industries and sectors are responding to price increases.

Communication Services

Overall, C-Suite leadership from various companies within the industry shared optimism, or a lack of concern, regarding inflation and its impact on how it would affect their overall earnings. Historically, higher prices have not dramatically impacted the products, services, or even content they produce – with the only exception being the labor shortage and consequential demand for higher wages.

“I think it would be incorrect to say that the inflation has not had an impact on our business. It is a bit difficult to identify what is the exact impact that comes from the inflation, but I don’t think I can isolate the impact, but I do definitely feel that the inflation does also have an impact on the customer spending.”

– Nakul Sehgal, Chief Financial Officer of Total Access Communication Public Co Ltd.

“The punchline for us, however, is that we’ve been able to manage well through the current environment of higher inflation and declining consumer confidence. Anyone who has followed our industry knows that we are highly resistant to economic volatility, since connectivity is one of the most important services consumers buy.”

– Michael Thomas Fries, Vice Chairman, President & CEO of Liberty Global PLC

“We’re not seeing any impact of the macro environment on our business yet…if you look theoretically at how inflation impacts our business, there are a number of different ways that it should theoretically impact our business. But I think what’s probably happening is any impact on increase in cost due to inflation is being offset by some of the big guys like Netflix spending less.”

– Jeffrey S. Shell, Chief Executive Officer of NBC Universal of Comcast Corp

“So inflation is obviously very top of mind for consumers and for businesses alike these days. This composition of broadcast, cable, theatrical, streaming, et cetera is a relative advantage in periods of high inflation. I’d also point out that historically, entertainment, including streaming and theatrical entertainment, has fared well when consumer confidence is soft since it provides a great value for consumers trying to avoid high-cost other ways.”

– Robert Marc Bakish, President, CEO & Director of Paramount Global

“We’re very happy with our media business overall. And it’s been very successful, both with its existing clients and the new business opportunities that’ve been presented. When you look at history, inflation has always been good for that element or part of the business. And we don’t see anything materially changing at the moment.”

– John D. Wren, Chairman & CEO of Omnicom Group Inc

“I’m also concerned about inflation and the macroeconomic factors that will affect both our customers and our partners. However, I believe we’re well positioned to manage in these challenging economic conditions. Additionally, just our broader sector has traditionally managed challenging economic environments very well, I don’t see that changing.”

– Laurent C. Therivel, President, CEO & Director of United States Cellular Corporation

“We all see [that when we experience] high interest rates and inflation, everyone starts talking about whether we’re in a recession or not in a recession. I think it’s safe to say that a lot of customers are probably spending more time scrutinizing their budgets. We have some customers that might extend some of their sales cycles as they extend and navigate through this macro. On the other hand, we have other customers that are very opportunistic and aggressive with incremental, and they want to take advantage of this choppiness to gain market share.”

– Michael Cotoia, CEO & Director of TechTarget Inc

“Inflation is continuing to affect us. That we have to remain competitive on wages in a tight labor market is easy to see, but inflation also has impacted us in other areas of the business. This includes operational expenses, and as mentioned before, even spill over into media costs. Lastly, even though COVID restrictions have eased, we have now battled several spikes that affected our business. This pandemic still represents uncertainties with regards to a number of factors, including staffing for us and our publisher partners and advertiser clients.”

– Vasundara Srenivas, Chief Financial Officer of Digital Media Solutions Inc

“The other thing I’ll say from an inflation perspective, there’s been great work to lock in a lot of our significant costs into long-term contracts…so we’ve been able to get a lot of those costs fixed.”

– Peter Osvaldik, Executive VP & CFO of T-Mobile US Inc

Consumer Discretionary

A huge area of focus for this sector, unsurprisingly, is consumer behavior. Since the start of the pandemic, companies have had to block and tackle the evolution of consumer wants and desires. Price increases are top of mind for the C-Suite executives of this industry, as increases in gas, freight, and wages could trickle into consumer purchasing behavior.

“Uncertainty and volatility have defined our landscape since the onset of COVID and continued through a war in Ukraine, supply chain issues and significant inflation. Our teams have executed well in that environment and are poised to do so again over the remainder of the year as it develops.”

– Richard J. Kramer, Chairman of the Board, CEO & President of Goodyear Tire & Rubber Co.

“On inflation, I’d start by just saying it continues to be persistent. So I think inflation is going to hold and continue to be consistent really through the CPI kind of retail level, certainly through the balance of this year.”

– Harry A. Lawton, President, CEO & Director of Tractor Supply Co.

“While we don’t know how inflation might impact consumer behavior going forward, we are closely monitoring elasticities and customer trends across our respective categories and geographies and remain encouraged by the underlying strength we see in the business. The growth in our comp average ticket was driven primarily by inflation across several product categories as well as demand for new and innovative products.”

– Edward P. Decker, President, CEO & Director of Home Depot

“We are closely monitoring potential consumer headwinds, including the effect of historically high inflation and its impact on gas prices, freight and wages. During the second quarter, our automotive business experienced slightly higher product cost inflation compared to the mid-single-digit experienced in the first quarter. The pricing environment remains rational, and we do not expect any significant shifts in product inflation in our industrial business through the balance of 2022.”

– William P. Stengel President of Genuine Parts Co.

“I would take this with a grain of salt, I think inflation will decline towards the end of this year. We’re certainly seeing prices of commodities trending. We have to anticipate the probable inflation rate long term. When or if we see indications that the inflation rate is declining, then we would not need to increase our car prices. It’s possible that there could be a slight decrease in car prices, but this is fundamentally dependent on macroeconomic inflation.”

– Elon R. Musk, CEO & Director of Tesla

“Building on last year’s strong performance, we delivered a positive 38% 2-year comp in building products, which continues to reflect the persistent underlying strength in consumer demand for larger core home improvement projects and, to a lesser extent, commodity inflation. Inflation is going to continue to be a bit of a tailwind for us as well.”

– William P. Boltz, Executive Vice President of Merchandising of Lowe’s Companies Inc.

Consumer Staples

If the pandemic left us with one everlasting trend, it would have to be the expansion of remote work. Consumers are operating from home now more than ever, which means the way they handle budgeting and purchasing decisions has changed. Many consumer staples C-Suite leaders are discussing: food-at-home, flexible ways of working, pricing, and freight rates.

“We’re laser-focused on looking at what’s happening from an inflation standpoint, how we’re going to offset that from a pricing standpoint, how we’re going to build our brands and how we’re going to innovate. Again, we feel good about our plans for the coming year. We do believe that we’re going to be able to scale effectively and grow share in a majority of our major categories again in fiscal ’23.”

– Jonathon J. Nudi, Group President of North America Retail of General Mills

“[Regarding price/mix] we don’t want to get behind passing cost increases. We don’t want to arrive at a recession with a big buildup of cost increases that has not gone through, but nor do we get ahead and anticipate inflation by pricing ahead of it. And so that the rate increases are kind of in the ballpark of inflation would be the normal expected kind of trajectory.”

– James Robert B. Quincey, Chairman & CEO of Coca-Cola Co.

“While consumer mobility has undoubtedly improved from the early days of the pandemic, the fact is that more people continue to work from home and take advantage of more flexible ways of working, coupled with tighter management of household budgets in the face of high levels of food inflation. We expect food-at-home sales to remain strong.”

– James Alexander Miller Douglas, CEO & Director of United Natural Food Inc

“The global supply chain is showing some improvement, and lead times as well as ocean freight rates are starting to stabilize and beginning to show signs of decline. Although these are promising developments, we do not anticipate a step change improvement in either lead times or ocean freight rates in the short term, but our freight inflation outlook for the fiscal year has not materially changed. The war [in Ukraine] is also driving further pressure on material cost inflation, but we anticipate most of that incremental cost to materialize to the P&L starting in fiscal ’23.”

– Randal D. Lewis, Executive VP & COO of Spectrum Brands Holding Inc.

“While we’ve experienced high levels of inflation in our international markets over the years, U.S. inflation being this high and moving so quickly, both in food and general merchandise, is unusual. We’ll control what we can control, reduce our inventory level and keep prices as low as we can, especially on opening price point food items while improving our profit performance.”

– C. Douglas McMillon, President, CEO & Director of Walmart Inc.

“Over 70% of customers say that inflation is a serious concern for them and real incomes are forecast to fall by almost 4% this year. We set ourselves the goal of being able to offset the impact of cost inflation on our business each year and ideally create additional headroom that will allow us to invest in competitiveness and growth.”

– Ken Murphy, Group CEO & Executive Director of Tesco PLC

Energy

As Ukraine and Russia are major suppliers of energy resources for global markets, C-Suite leadership expressed that price increases are somewhat dependent on the longevity of the war. Preparing for headwinds in Q3, Q4 and the 2023 fiscal year entails raising prices for consumers and increasing production onshore to relieve pressure on offshore supply dependency and offset the financial setbacks brought about inflationary pressures.

“Basing our return on capital framework on a percentage of operating cash flow instead of free cash flow has been an intentional decision. It reflects the confidence we have in our high-quality asset base and the strength of our commitment to shareholders. This is an especially important distinction in an inflationary environment, where capital inflation will necessarily reduce the cash available for peer companies to return to investors based on the inherent design of their frameworks. It won’t for us.”

– Lee M. Tillman, Chairman, President & CEO of Marathon Oil Corp

“Our development costs are down about 25% since 2019, and we expect to keep them flat this year by offsetting inflation with productivity improvements. On the onshore U.S., we’ve seen cost inflation this year in the single digits. We’ve been able to mitigate a part of that through good planning, smart procurement and good relationships with suppliers.”

– Pierre R. Breber, VP & CFO of Chevron Corporation

“The upper price pressure on steel, fuel and labor continues due to ongoing supply constraints initiated by COVID and extended by the war in Ukraine. The impact of this has resulted in inflationary headwinds that have meaningfully exceeded our initial expectations earlier this year, making it increasingly challenging to maintain flat well cost.”

– Lloyd W. Helms, COO & President of EOG Resources Inc.

“U.S. inflation hit a 40-year high during the quarter and we experienced the impact of higher prices across our major cost categories of labor, parts and lube oil, though due to the pace and magnitude of this current high inflation, we experienced margin compression in the quarter, we are confident in our ability to mitigate these impacts. We expect capacity across the industry will remain limited in light of continued capital discipline and extending lead times for new large horsepower units, which has already allowed us to increase spot prices to record levels. In the coming quarters, we intend to reclaim the increasing costs we’re currently experiencing as we raise pricing on our installed base of operating horsepower, which we expect to translate into improved financial performance in 2023.”

– D. Bradley Childers, President, CEO & Director of Archrock, Inc.

“As it relates to the broader energy transition, I don’t believe it’s an either/or decision between renewables and natural gas, rather we’ll require an all-of-the-above approach to keep cost and inflation in check and to have energy security. Oil and gas production is inextricably linked to nearly everything in our lives. Food production, medicine, transportation, shelter, manufacturing, heating and cooling, to name a few.”

– Jeffrey L. Ventura, President, CEO & Director of Range Resources Corp

“I think where we are more concerned would be with 2023 work programs and budgets, which are obviously still not agreed and defined, but we would expect the biggest elements of that cost inflation to probably come through on the rigs and the ancillary services around the drilling of wells, I think, is probably principally where we see cost inflation risk. How big is that? I’m not informed enough to quantify because we’re not in the market tendering for 2023 yet.”

– John Andrew Hamilton, Chief Executive Officer of Panoro Energy ASA

Financials

“For both our professional liability and general liability product lines, the impact of economic and social inflation has created more uncertainty around the ultimate losses that will be incurred to settle claims on these long-tail product lines. We are cautiously and consistently applying our conservative reserving philosophy as we and the entire insurance industry contend with the potential economic impacts of various forms of inflation.”

– Jeremy Andrew Noble, Senior VP & CFO of Markel Corp

“When we first spoke about the anticipated post-pandemic loss disruptions, we highlighted a couple of key points: first, the rate increases with lag inflation increases; second, the time to return to equilibrium would be driven most significantly by how long it took loss inflation to stabilize; and third, with the pressure on loss costs in any given quarter was likely to move around. Initially, it was driven most significantly by frequency and used car prices. The current quarter’s increase in severity trend was driven largely by increased repair and remediation times and, to a lesser degree, bodily injury-related costs. To combat these effects, we again push forward to both our rate and non-rate profit restoration initiatives.”

– Joseph Patrick Lacher, Non-Executive Chairman, CEO & President of Kemper Corp

“The sources of inflation are not new to us. We’ve been tackling inflation on many fronts, including technology in cars, physical damage, theft and injuries for at least 3 years. And our outlook was very clear coming in the pandemic. We said, look, frequency and driving is dropping. But when we come out of this, you’ll see inflation picking up again. Not only have we priced for that historically, but the approach we’ve taken during the pandemic was inspired by that view, by that outlook.”

– Charles J. G. Brindamour, CEO & Director of Intact Financial Corp

“But I can foresee that there will be a significant reduction in inflation in the coming 6 to 12 months and that we might be able to avoid the truly damaging wage price inflation spiral that was so problematic in the 1970s. To accomplish this best of all possible world’s outcome, the Federal Reserve will have to be steadfast in their fight against inflation, and federal spending will have to remain in check. And as long as I’m prognosticating, I don’t foresee a deep and debilitating recession. Rather, I can imagine that the slowdown will be relatively shallow, which would be consistent with a full employment recession.”

– James S. Tisch, President, CEO & Director of Loews Corp

“Inflation, which is a challenge for so many people across the U.K. is for us a minimal second order impact. In short, L&G’s mix of business and its resilient balance sheet, again, put us in a very strong position to manage headwinds from the broader economy.”

– Nigel David Wilson, Group CEO & Executive Director of Legal and General Group PLC

“We know that inflation is significantly more impacting for low-income customers, and they have lower levels of borrowing from us. We also see the majority of our lending within secured business lines with average loan-to-value ratios at historic lows, around 40% in both our retail and commercial businesses. At the same time, our unsecured businesses are focused on prime customers, and we’re not seeing any deterioration in their trends.”

– Charles Alan Nunn, Group Chief Executive & Executive Director of Lloyds Banking Group PLC

Healthcare

Healthcare C-Suite leadership spent a good bit of this earnings season acknowledging inflation and its inevitable impact on the industry. Specifically, concerns are focused on the areas of: high freight costs, capacity constraints, and wage inflation. Many companies in the industry seemed comfortable (to an extent) with passing inflation costs onto customers.

“I think very similar to what probably every business around the world and particularly in the U.S. would have seen we recognized and we took the position very early on well over a year ago, again, that there was going to be no company that escapes inflation and no company that escapes supply chain challenges, and we’ve been taking action to that extent.”

– Thomas E. Polen, President, CEO & Chairman of Becton Dickinson & Co.

“We certainly hope it’s not long-term inflation unlike where if you have wage inflation, you generally expect it will continue. If you add contractual inflation with your key suppliers around reagents and other things that might be longer term as well or certainly a couple of years. We don’t know how long this spike is going to last. But I can tell you, it’s probably like $0.05 to $0.08 a quarter in the first half, and we’re not expecting that to change.”

– An Executive at Quest Diagnostics Inc.

“So for the most part, we’re able to pass inflation through to our customers. Having said that, we’re super mindful of the environment where we want to make sure there’s value on the shelf at all times for our customers. And we think about that in terms of how we price. But it’s a great time for our store brands. Our store brands on average are 20% to 40% below our national brand. So it’s a great time for consumers to find value in our store brands. We do have a lot of substitutability across categories.”

– Michelle A. Peluso, Executive VP, Chief Customer Officer & Co-President of Retail at CVS Health Corp

“I think we still see very high freight costs due to the capacity constraints which are still there. And we also see an impact from, I would say, due to the challenges in the supply chain being forced to change the way we transport stuff to our customers. You normally would use sea freight, but then you need to use airfreight to be on time. We still also have certain shortages in parts which lead to buying at spot prices. And then you also see now kicking in also, I would say, the underlying inflationary things with more difficult pricing.”

– Jochen Schmitz, CFO & Member of Management Board at Siemens Healthineers AG

Industrials

Most C-Suite executives mentioned increasing the costs of their end products to offset inflation brought on by the global material shortage–a tactic used by various industry leaders. However, many companies have engaged in contractual agreements with their suppliers as a way to prevent the increases in costs they would otherwise face from inflation. Though this protection may waver depending on the duration of these constraints causing inflation.

“Pricing discussions with customers are ongoing, and we remain focused on eliminating pass-through lag, which is detrimental in an inflationary environment. We have maintained an open dialogue with all customers and have been proactive in addressing future inflationary impacts, including securing new contracts to provide additional flexibility and inflation protection. We remain committed to continuously improving our cost structure. This is especially important given the recessionary threat over the next 12 to 18 months.”

– Warren A. Veltman, President, CEO & Director at NN Inc

“Cost inflation, semiconductor shortage, supply chain issues, exacerbated by China lockdowns, burdened the development of our profits. Given this challenging environment, we have a sharp focus on increasing prices across the business lines to offset the inflation, streamline our product offering, and drive strong efficiency.”

– Urs Scheidegger, Chief Financial Officer of Schindler Holding Ltd.

“While demand conditions remain solid in the markets we serve, our ongoing execution was fundamental to driving this performance, allowing us to continue to manage through accelerating inflation and supply chain challenges. As we’ve talked about in prior calls, inflation continues to impact energy costs, nearly all material input costs as well as transportation. In each of the 3 businesses, positive prices more than offset the inflation headwinds in the quarter. Overall, second quarter operating margins reached 20%, an expansion of 200 basis points versus the same period last year.”

– Kenneth S. Parks, Executive VP & CFO of Owen Corning Inc

“As noted on our first quarter call, we have seen inflation continue to accelerate. Factory and distribution costs were up approximately $35 million, driven primarily by inflation on labor, outbound freight rates and packaging materials, with additional impact coming from volume deleveraging, start-up costs for new plants and increased health care costs. Now we’ve done a lot on the productivity side to help get in front of some of the labor cost inflation, but material inflation continues to be a headwind for us, material and logistics in particular. And they’ve built a little bit even beyond our expectations when we laid out our guidance for material last quarter. We are seeing early signs that the material inflation has plateaued, and we see the opportunity for material that we’re placing orders as we get later into Q3 and Q4, may begin to moderate a little bit.”

– Russell T. Tiejema, Executive VP & CFO of Masonite International Corp.

“Inflation. We’re well protected from a contractual point of view, but it does make life more complicated. And particularly, dare I say, this sort of inflation where 6 months ago, we were at 2%. Now we’re at 9%, and we’re forecast to be back at 2% at the end of ’23. I mean how do people plan their lives and resources? And on energy and stuff, when do you fix prices going forward? It brings complexity into the business.”

– Rupert C. Soames, Group CEO & Executive Director of Serco Group PLC

Information Technology

IT C-Suite leaders are hyper-focused on macroeconomic dynamics plaguing their industry, particularly: the geopolitical environment, inflation, interest rates, slowing economic growth, currency, and continued COVID impacts disrupting supply chains and business activity.

“​​What we see is that the whole industry is not significantly growing compared to the first half of last year. We stress the point that the bookings and billings were up 5% gross, but the net value is closer to 0 because there was also higher inflation than normal. The main reason behind that the chip supply is still constrained, and it slows down the potential higher sales. The whole industry is also sitting on higher order backlogs, and it’s demonstrating long lead times, long order horizons. So this all needs to be, let’s say, looked at or considered when thinking about the industry and also the development of the industry.”

– Hardy Mehl, CFO, COO & Member of Management Board of Basler AG

“Even as a consumer, you feel the macroeconomic environment, you feel inflation, you feel pricing pressures. I would combine that with some of the other markers that we see across the industry with PC shipments down double digit, not that we’re entirely connected to that, but it’s just another marker that shows us what’s happening in our industry. It honestly fuels us –we’ve got to be much, much more intentional.”

– Natalie Marie Derse, EVP, CFO & Principal Accounting Officer of Norton LifeLock Inc

“Look, I think we are in the middle of a very tough geopolitical environment and that geopolitical environment has ramifications through the macroeconomic environment. I think it’s going to be hard pressed to see inflation going a lot lower this year. I think the Fed will do everything it can. But I think that with the Fed doing everything it can and the ECB doing the same, it also raises the level of risk that we dip into recession as well. I think recession is more likely in Europe than it is here but I’d still put the odds as at least 50-50 here in the U.S. So I’m not sure that it’s much worse than when we were talking in the first quarter but I wouldn’t say that there’s lots of shining light coming through either.”

– Daniel H. Schulman, President, CEO & Director of Paypal Holdings Inc.

“As we look at the balance of fiscal year ’23, we’re watching a few macroeconomic dynamics, including the geopolitical environment, inflation, interest rates, slowing economic growth, currency and continued COVID impacts disrupting supply chains and business activity. While we believe these macro dynamics will have some impact on overall IT investment spending, with what we know today, our updated framework has revenue growth of approximately 6% with both CSG and ISG growing for the year and earnings per share growth faster than revenue in the range of 12% or better.”

– Thomas W. Sweetm, Executive VP & CFO of Dell Technologies Inc

Materials

Similar to IT, the materials industry had their eyes on macroeconomic trends throughout Q2 2022 earnings transcripts. No industry is shy about discussing supply chain disruptions, but the materials industry is deeply interwoven within the global ecosystem. Currently, many of the leaders are strategizing on demand trends and pricing.

“We remain cautiously optimistic about business conditions in the third quarter of 2022. Although the effect of inflation, ongoing supply chain disruptions and geopolitical matters for both general macroeconomic uncertainty, we expect solid underlying demand trends to continue in the vast majority of the markets we serve. However, we expect shipment levels to be impacted by normal seasonal patterns, including a decline in shipping volumes due to planned customer shutdowns and vacation schedules.

– Arthur Ajemyan, CFO & Senior VP of Reliance Steel And Aluminum Co

“The global economy is facing several macroeconomic headwinds both from inflation and from interest rate hikes and [to] the COVID situation as well and the conflict between Russia and Ukraine. Commodity and steel prices have naturally been affected and there’s been a sharp correction in prices of both steel and input prices. The Indian steel industry also faced similar challenges, which were compounded by the imposition of the 15% export duty midway through the quarter. And all these have weighed down on steel spot spreads, and they’ve dropped sharply.”

– Thachat Viswanath Narendran, CEO, MD & Executive Director of Tata Steel Ltd

“Above all, the operating environment remains challenging and demanding with many disruptions. As a matter of fact, the high inflation, the Ukraine conflict leading to security of gas supply and supply chain disruptions as well as volatile conditions in China due to the pandemic and lockdown, all represent great challenges for our teams.”

– Thierry Le Henaff, Chairman & CEO of Arkema SA

Real Estate

While a stalled supply chain and shortage of materials has certainly slowed construction and sent developers back to the drawing board on what materials they’ll use to build, the industry is otherwise profiting. A lack of construction puts a higher price tag on all existing available structures–retail, commercial, and residential–and drives competition between consumers to get the best of what’s available.

“While it appears clear that the industry’s strong growth is primarily attributable to inflation, which we’re witnessing on both revenues and expenses, the fundamentals of our business, supply-demand, traffic and the attractiveness of renting versus owning a home remain outstanding and I’ve never been more optimistic about our business.”

– Mark O. Decker, President, CEO, Chief Investment Officer & Trustee of CenterSpace

“There’s definitely significant inflation in the construction industry at the moment, and we’re certainly factoring in costs rising at least by 10%. Overall, some material costs are rising higher. It’s interesting by virtue of the fact that actually in some of our buildings now as we go to a much more sustainable approach, and we’re moving away from steel to actually low-carbon content concrete. That’s protecting us against some of the ravages of inflation because inflation on steel is pretty extraordinary at the moment.”

– Graham Clemett, CEO & Director of Workspace Group PLC

“The level of competition for the best space is significant. So it’s the fact we’ve got 2 or 3 alternative occupiers effectively buying for the same space. They all want the best space, the highest space or the biggest roof terraces and the best views. And whilst that’s available, there’s competition for space… But I think in relative terms, the sector is well set. I think what this pulls us down is that inflation will do what it will do, and ultimately, have you got pricing power, and is underlying market growing. If it is, it’s a good hedge for inflation.”

– Mark Christopher Allan, CEO & Executive Director of Land Securities Group PLC

“In terms of COVID, I think we’ve seen the worst of it. The fifth wave was not as severe as initially thought. The rising interest rates continue to be a worry for us, and we continue watching that closely. Any disposals that we do, will use to reduce our debt levels. We remain worried, obviously, about the macroeconomics where fuel costs and the rise in inflation have an impact on our retailers and potential spend that is available to us.”

– Otis N. Tshabalala, CEO & Executive Director of Rebosis Property Fund Ltd.

“Even with the headwinds of the pandemic, the war in Ukraine, surging inflation and a doubling of interest rates, we’re still not seeing any downturn in demand for occupation. Structural trends driving tenant demand just continue. Traditional industrial businesses have increased their demand as a result of onshoring and businesses having to keep more stock in parts.”

– Paul Maurice Arenson, CEO & Executive Director of Industrials R.E.I.T Limited

Utilities

The impact inflation has on the overall industry is varied, as specific sectors have been disproportionately affected. For example, water suppliers have faced a variety of hurdles that stem from supply and labor shortages, while electric and gas companies are unable to find and retain talent.

“We’re not immune to inflation, but I think we’re relatively well-positioned. We’re seeing the impact of inflation more on the capital side, more on sort of materials than we are necessarily on labor. As it relates to sort of the broader kind of labor costs, our crews and our contractors that we use relates to sort of the broader kind of labor costs. Our crews and our contractors that we use all sort of follow our union agreements.”

– Jason P. Wells, Executive VP & CFO of Centerpoint Energy Inc

“The water industry is seeing the impacts of inflation from fuel to labor. Our leaders are working with their teams to blunt the effects of inflation by leveraging our scale and obtaining competitive pricing on key items while scouring budgets for opportunities to absorb increased costs without compromising on water quality or service or being good stewards of the environment.”

– Eric W. Thornburg, Chairman, President & CEO of SJW Group

“What our industry is working through is really the risk and management of inflation on projects where revenue contracts are signed already and where projects are expected to be built during the next 3 years.”

– Craig Cornelius, CEO & President of Clearway Energy Inc

“The global industry as a whole is seeing inflation and cost pressures. And these are compounded by supply chain issues, which, if not managed properly, can have an impact on project returns.”

– Mary Quaney, Group CEO & Director of Aker Horizons AS

Looking to dig even deeper into inflation pressure and its long-term implications? Watch our on-demand webinar with HSBC, Inflation Strains: The Outlook for the US Economy.