Focus shifts from broader macroeconomic factors to specific profitability drivers

While the prevailing macroeconomic sentiment remains cautious coming out of the Q1 2024 earnings season, our take is that companies seem less focused on forward-looking macroeconomic factors such as interest rates and more attuned to persisting headwinds related to wage inflation and tight labour markets. The influence of pricing power is also less discernible in corporate earnings. Instead, the subject of supply chain management is now more sharply in focus, with companies planning for resilience.

Supply chain dynamics take centre stage 

As most post-pandemic constraints finally ease, supply chains are stabilising, providing some welcome relief from the related operational headwinds that have persisted in recent years. Companies now have greater visibility, although restocking remains conservative and in line with demand trends. Our key observation is that, despite easing, supply chain dynamics are no less important, and while less likely to impact performance adversely, they do continue to play an important role in business decisions, with practices such as nearshoring and AI-enhanced risk management offering opportunities to gain a competitive advantage. We explore this theme in more detail in this quarter’s Pulse.

H2 2024: Self-help initiatives to support results

Looking ahead to the second half of the year, most companies are cautiously optimistic. Our analysis shows that the focus remains on prudent capex management and careful yet agile capital deployment to take advantage of margin-enhancing projects and opportunities that bolster skills and positioning. The themes of self-help and resource optimisation also remain important for guidance delivery and expectation management, with digitalisation as a fundamental lever for improving efficiencies and productivity and effective talent management essential for ensuring stability and resilience. The strategic reallocation of marketing efforts towards targeted projects and new geographies is also high on the agenda for many companies as they look to enhance operating leverage, with technological developments, innovation, and the adoption of AI key levers for driving operational excellence and supporting the delivery of certain sustainability goals.

Quarterly Pulse: Q1 2024 Earnings at a Glance 

Dive into the heart of the Q1 2024 corporate earnings season with our Quarterly Pulse, where we distil the quarter’s communications into actionable insights enhanced by in-depth understanding and day-to-day client engagement. Here’s what’s inside the Pulse:

  • Insights: Get the summary of our perspective.
  • Key themes: : A closer look at supply chains and what investor calls reveal about changes in dynamics.
  • Sector focus: Uncover the dynamic shifts driving our insights.

Stay ahead – unlock the narrative behind the numbers!