LONDON, April 22 (Reuters) – Consumer goods, travel and mining companies warned on Wednesday that the US and Israeli war against Iran is raising costs, disrupting supply chains and hurting consumer confidence, clouding the outlook.
The cautious tone so far in the quarterly earnings season highlights the pressure on companies that were already struggling with U.S.-imposed tariffs, higher input costs and weak demand even before the conflict began in late February.
While some companies maintained full-year forecasts, executives highlighted rising transportation and raw material costs, particularly linked to the disruption in the Strait of Hormuz, and the sharp reduction in business visibility.
AkzoNobel, maker of Dulux paints, said the conflict was increasing supply costs, although higher prices and cost savings helped it beat market expectations.
“Our basket of commodities will increase by somewhere in the range of 17% to 19% given the disruption of the Strait of Hormuz,” Chief Executive Greg Poux-Guillaume told Reuters, adding that the full impact would be felt over the next two quarters.
AkzoNobel sells branded products ranging from decorative paints to specialty coatings used on cargo ships and Formula 1 cars, giving it greater leeway to pass on price increases than its peers more exposed to commodity chemicals.
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Its shares were up more than 2% this morning.
Disrupted shipping lanes and higher transportation and input costs have emerged as a recurring theme of earnings season, weighing most heavily on consumer goods groups with global supply chains.
Investors and economists are watching to see whether companies can continue to absorb the shock or whether prolonged uncertainty over energy, transportation and geopolitics will force more companies to raise prices further or reduce their forecasts.
Much depends on how long the conflict lasts and whether the Strait of Hormuz — a conduit for about a fifth of global oil and liquefied natural gas flows — will be fully reopened, easing supply constraints that have driven up prices.
This Wednesday morning, stock indexes rose in New York, while Brent oil prices hovered above US$100, after US President Donald Trump said he would indefinitely extend the ceasefire with Iran.
Still, investor optimism remained fragile, with the strait largely closed and no sign of new U.S.-Iran talks.
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BABY FORMULA SHIPMENTS DISCONTINUED
According to a Reuters analysis of company statements since the start of the war, 21 of them withdrew or reduced their financial projections, 32 signaled price increases and 31 warned of the financial impact of the conflict — a pattern that is repeated across sectors, from consumer goods to aerospace.
French food group Danone highlighted on Wednesday how pressures are seeping into supply chains, reporting first-quarter sales growth that exceeded expectations but slowed sharply from the end of last year. Danone cited war-related disruptions along with a baby formula recall in Europe. Shipments of baby formula imported from Europe transiting through the Middle East have also been affected.
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Even so, Danone maintained its full-year guidance, saying the healthcare-focused portfolio provided resilience in an environment that remained ‘volatile and uncertain’.
Reckitt, maker of Dettol soaps, missed comparable net revenue expectations for its core business on Wednesday and warned of lower margins in the first half, citing high oil prices and lower demand for cold and flu products.
Its shares fell more than 5%, reaching levels not seen since October 2024.
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Travel companies are among the hardest hit, as higher jet fuel prices force airlines and tour operators to raise fares, add fuel surcharges or keep aircraft on the ground. Furthermore, geopolitical tension diminishes consumer confidence.
German tourism group TUI cut its full-year underlying operating profit (Ebit) forecast and suspended its revenue forecast, citing limited visibility due to the war.
“The ongoing conflict in the Middle East and uncertainty surrounding its duration continue to limit near-term visibility and drive consumer caution,” the group said in a statement.
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North American carrier United Airlines signaled pressure on demand, forecasting profits for the second quarter and the full year below Wall Street estimates.
Natural resource companies are also feeling the pressure. Mining company South32 has cut the full-year forecast for its Australian manganese unit after heavy rain and tropical cyclone Narelle disrupted operations. The company warned that tensions in the Middle East were increasing cost pressures through higher freight rates and raw material prices.
“We have implemented measures across all of our operations to mitigate potential supply chain impacts arising from the conflict in the Middle East,” South32 said, adding that while it was not experiencing diesel shortages, it was monitoring the situation closely.
GE CITES UNCERTAINTY
Results from earlier this week show how the Iran war is adding a new layer of uncertainty, even for companies that started the year with solid order numbers and pricing power.
On Tuesday, GE Aerospace Chief Executive Larry Culp said the company would have raised its guidance if not for the current uncertainty. 3M warned that the higher cost of oil could result in increased product prices.
GE Aerospace said its outlook assumes Brent crude oil prices remain elevated through the third quarter before easing through the end of the year. The company also takes into account short-term constraints on fuel availability.
