Listening to the US earnings call for the first quarter is very clear: supply chain problems have plagued US companies.

American tractor manufacturer John Deere (John Deere) said expected For the rest of this year, the pressure on the supply chain has continued to increase, and we are working closely with suppliers to ensure the safety of parts.Coatings manufacturer PPG Industries pointed out the supply chain challenges of some of its products, including epoxy coatings, and stated “We are doing it by ourselves”, Even if it does better than some competitors.

The automotive industry has Reported There is a shortage of everything from plastics to seats, especially semiconductors.

These bottlenecks stem from issues such as lack of raw materials, port congestion and labor shortages, which slow down the production or delivery of goods to the market.

Global logistics company CH Robinson said that ship berths at US West Coast ports wait 15 to 20 days, and there is no waiting period in the normal market. For each truck, there are more than seven goods to be carried, and under normal circumstances it is three.

The strong demand in the United States has exacerbated this situation. Driven by strong fiscal and monetary stimulus and rapid vaccination, the United States has recovered faster than other advanced economies.

Supply Management Institute April survey According to the purchasing managers of the United States, the backlog of orders is the highest on record since 1993. In April, the average lead time for purchasing production materials increased by 4 days to 79 days, the highest level since ISM began collecting this data in 2000. year 1987.

These supply chain issues complicate the company’s ability to plan inventory, deliver products on time, and increase business costs.

According to data from data provider FactSet, they have aroused people’s concerns about inflationary pressures and overheating the economy, and prompted at least nearly 190 S&P 500 companies to quote inflation rates in their first-quarter earnings calls. In an ISM survey of purchasing managers in April, eight in ten manufacturers said they paid higher material prices.

Dier said that labor is one of the biggest challenges, “whether it is a warehouse, a truck driver or a port worker.” Some companies in similar positions are trying to attract people with higher salaries and signing bonuses.

Bill McMahon, Chief Investment Officer of Active Equity Strategy at Charles Schwab Investment Management, said: “If people need to get back to work, then I think profit margins will become a very important issue. Because that will dominate the cost structure of most companies.”

According to FactSet’s data, 86% of the S&P 500 index constituents still reported better-than-expected earnings per share in the first quarter. So far, 95% of companies have reported performance, and “mixed” earnings (combining the performance of reported companies and those of unreported companies) increased by 51.9% in the first quarter over the same period last year. If so, it will be the highest EPS growth in 11 years.

Moreover, profits have not been eroded. The mixed net profit margin (profit generated as a percentage of revenue) for the first quarter was 12.8%, which, if held, would be the highest level since FactSet began tracking this indicator in 2008.

Companies have been able to protect their profits by purchasing from other places.

Melanie Nuce, senior vice president of corporate development at GS1 US, a non-profit information standards organization, said: “However, it is not as simple as turning off the power in one area and then turning it on in another area.” She pointed out that in the supply chain , The company “is required to have more crystal balls than ever before.”

The company is maintaining profits by cutting costs, increasing production or increasing prices. Colgate-Palmolive, Kimberly-Clark, Mondelez and Whirlpool are all companies that plan to reduce these costs to customers.

Transferring these costs is not easy or easy, but Patrick Palfrey, senior equity strategist at Credit Suisse, said: “The honest truth is that inflation is a huge benefit to the company.”

“In fact, higher input costs will always be passed on to the end customer, so we see an increase in revenue. Companies need to spend a quarter of the cost to pass on these costs, but they do pass it on to them.

Therefore, Fed Chairman Jay Powell (Jay Powell) is Not clear Regarding when the bottleneck will be resolved, the company’s profit margin is expected to remain good.

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