At the heart of the American industry, GM and Coca-Cola are trying to reassure investors about their ability to withstand the financial impacts of a war with Iran, amidst rising energy and packaging costs threatening margins.
The soaring oil prices since the beginning of the conflict have increased production costs in sectors under pressure due to US tariffs. This rise is forcing companies to consider price hikes, at a time when consumption is showing signs of weakness.
An analysis by Reuters of company statements since the start of the war reveals that 24 companies have withdrawn or lowered their forecasts, 35 have reported price increases, and 35 others have warned of a negative financial impact.
However, several executives adopted a confident tone on Tuesday, relying on their hedging strategies, existing supply contracts, demand resilience, or their ability to offset costs elsewhere.
Coca-Cola is among the major companies expressing optimism, counting on sustained demand for its sodas. Its CFO, John Murphy, clarified that the company, like PepsiCo, had locked in some advantageous rates before the current disruptions began.
Despite this optimism, some challenges remain, particularly the rise in aluminum and plastic costs for certain finished products. Mr. Murphy stated that the company is “working diligently with its bottling partners to manage the consequences of the situation…in the Middle East.”
This optimism has partially spread to Wall Street, with analysts revising their S&P 500 profit growth forecasts for the first quarter to 16.1% on April 24, compared to 14.3% on February 27, before the conflict began.
The results season has been extraordinarily strong, with optimistic signals from the CEOs being crucial.
Some, like United Parcel Service (UPS), are more cautious, reiterating their annual revenue target while warning that fuel price hikes could eventually weigh on demand.
Meanwhile, companies like General Motors are confident in their ability to weather the storm, having experienced such situations before.
GM expects raw material, chip, and logistics inflation to reduce its annual results by $1.5 to $2 billion, although it has raised its annual profit forecasts due to the resilience of the American market and expected customs duty refunds.
Procter & Gamble, however, warned last week that the surge in oil prices could impact its fiscal year 2027 profit by about $1 billion.
Airlines remain most exposed, with jet fuel prices nearly doubling since late February, squeezing carriers between rising costs and already sold tickets.
JetBlue Airways plans to slow hiring, reduce capacity, and increase fares to mitigate the impact, following a larger than expected first-quarter loss.
Despite efforts to minimize the impact, the risk of deeper margin impacts and cost pressure limit remains concerning.
“If energy prices continue to rise, practically all sectors of the economy will be affected. Manufacturing costs are increasing, fueling consumer inflation, resulting in less vigorous consumption,” explained Peter Cardillo, chief market economist at Spartan Capital Securities in New York.
“In other words, consumers are reducing their spending.”
