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Rising energy prices will hurt companies’ profit margins: IMA Asia

Electrical energy pylons are seen in entrance of the cooling towers of the coal-fired energy station of German power large RWE in Weisweiler, western Germany, on January 26, 2021.

Ina Fassbender | AFP | Getty Photographs

Rising power costs will enhance enterprise prices and slim revenue margins of firms all over the world, a administration advisor mentioned Wednesday.

Costs of power commodities — together with oil, pure gasoline and coal — soared in current weeks as provide stays tight and demand rebounds from a Covid-induced slowdown. That has contributed to energy and gas shortages from Europe to Asia.

“It is a large drawback for firms. It should slim their revenue margins as a result of as their enter prices go up, the query is how shortly can they increase their promoting value,” Richard Martin, managing director of IMA Asia, informed CNBC’s “Squawk Box Asia.”

Inventory picks and investing developments from CNBC Professional:

India, China could also be in danger

Firms within the U.S. have a greater likelihood of defending their revenue margins because of a “very buoyant” client market, mentioned Martin, including that it’ll enable them to boost promoting costs shortly.

However these in different nations face grimmer prospects, mentioned the advisor.

“In lots of nations all over the world, we do not have such a buoyant client market. China is one, in actual fact numerous East Asia is in that space. And because the prices go up, the revenue margins go down,” mentioned Martin.

India can also be in danger. Martin famous that the Indian inventory market has been on a tear, however the South Asian nation will wrestle to go on prices to customers.

https://www.cnbc.com/2021/10/13/rising-energy-prices-will-hurt-companies-profit-margins-ima-asia.html | Rising power costs will damage firms’ revenue margins: IMA Asia

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