Inflation Pressure Is Real and Other Earnings Nuggets
GE, 3M and UPS led a busy day for industrial earnings. Here are the key takeaways.
Results are rebounding at many industrial companies, but costs are on the rise. That explains the conservative outlook for the rest of 2021.
Photographer: Jin Lee/Bloomberg
On this busy day for industrial earnings, it’s clear a recovery is taking form but it’s also clear that the pandemic is still very much a thing. Traditional industrial markets — including automotive parts and equipment for elective health-care procedures — are bouncing back, but that’s causing raw material, logistics and labor costs to rise. The hard-hit aviation sector is showing some early signs of improvement as more planes return to service and need maintenance work, but it’s slow going for engine makers General Electric Co. and Raytheon Technologies Corp. Meanwhile, businesses that benefited from the pandemic — such as 3M Co.’s N95 masks and United Parcel Service Inc.’s delivery services — are continuing to boom as the virus lingers and certain Covid habits prove sticky.
Amid all of these conflicting signals, this group of industry bellwethers largely declined to commit to a more optimistic outlook for the rest of the year. Raytheon was the only company to raise its full-year earnings and sales guidance, and the move was more incremental than game-changing. And so investors were forced to read between the lines. Here are my takeaways from Tuesday’s batch of industrial results: