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Rising energy prices will squeeze company profits, says business consultant

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

Ina Fassbender | AFP | Getty Photographs

Rising power costs will improve enterprise prices and slender revenue margins of firms around the globe, a administration advisor stated Wednesday.

Costs of power commodities — together with oil, pure fuel and coal — soared in latest 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 massive drawback for firms. It would slender their revenue margins as a result of as their enter prices go up, the query is how shortly can they elevate their promoting value,” Richard Martin, managing director of IMA Asia, informed CNBC’s “Squawk Box Asia.”

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India, China could also be in danger

Firms within the U.S. have a greater probability of defending their revenue margins because of a “very buoyant” shopper market, stated Martin, including that it’s going to enable them to boost promoting costs shortly.

However these in different international locations face grimmer prospects, stated the advisor.

“In lots of international locations around the globe, we do not have such a buoyant shopper market. China is one, actually a number of East Asia is in that space. And because the prices go up, the revenue margins go down,” stated 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 move on prices to customers.


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