Earnings season impacted by high inflation, interest rates
The rising inflation and interest rates have already reflected in the third-quarter earnings season, which started at the end of October, and in estimates for the last three months of this year. Executives point out that, as the increase in the costs of the production chain is passed on, consumer spending in different sectors is losing steam, especially among the lower-income segment, resulting in lower revenues.The increase in raw material costs pressured the margins of most companies between July and September. Shoe manufacturer Grendene highlighted in its latest results presentation the rise in PVC resin prices, driven by factors such as the shortage of containers and the energy crisis in China.Grendene’s chief investor relations officer Alceu de Albuquerque was incisive during the third-quarter earnings conference call, saying the last three months of this year should show "more malign inflation" reflecting the escalation in food, fuel and energy prices, impacting the company’s brands more exposed to the middle to lower classes.Alpargatas is another retailer that drew attention to cost pressure. CEO Roberto Funari stated in the earnings release that the rise in costs will generate deterioration in the gross margin. "We are not working with an optimistic scenario, we are working with the current scenario," he told analysts.Despite having reported results praised by the market, with a robust sales volume, Ambev and its parent company, AB InBev, expressed concern about the high cost of inputs and do not rule out new price adjustments in products. "In countries where more than one adjustment was made in the year, such as Brazil, what was seen is that general inflation followed the increases and demand remains strong," said AB InBev’s CEO Michel Doukeris, when analyzing the company results.Ambev works with a scenario in which pressure on the margins should continue, said Lucas Lira, the company’s chief financial officer, during a conference call. The company does not expect such a significant drop in costs. Even so, Ambev works with the perspective that in 2022, the increases will be more pressured by commodities, with the exchange rate, an important factor this year, starting to leave this scenario.Unidas is another company that intends to keep passing on costs to prices. "In car rental, rates are rising consistently. And we are passing the cost increases on to the rates," CEO Luis Fernando Memória Porto said during a conference call. "We...
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