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But record profits is non-sense. Profit goes up with inflation in nominal terms, so you need to compare real terms. From the article you pointed to: 'Mr Kier
by Khaine 4y ago
But record profits is non-sense. Profit goes up with inflation in nominal terms, so you need to compare real terms. From the article you pointed to:
'Mr Kierath said it was important to note the companies' profits fell in the last six months of 2021, so these results were rebounding off an unusually low base.'
Ergo, they look good because they were depressed in the prior reporting season. Ergo, it's just corporations bashing, because people are mad inflation is going up.
If you look at Woolworth's profits over time, it would look to be going back to normal levels[1] after a dip due to COVID.
[1] https://www.statista.com/statistics/1116200/australia-net-profit-after-tax-woolworths-group/ https://www.statista.com/statistics/1116200/australia-net-pr...
- hackerforever 4y agoThis isn't convincing, why should company profits be immune from inflation but wages stagnate and fall below the rate of inflation as has happened this year? Corporations bashing is definitely warranted in this case.
- Khaine 4y agoBecause companies are profit making entities? They are going to do what they need to, to make a profit. Which is why when inputs rise, they typically pass those costs on to consumers. You will note that Dominos share price fell by ~30% because they noted that demand had been down as they tried to pass on the increased cost of inputs. If you are an investor, you will want a return on your capital. Would you invest in a business, where the return is lower than what you can get in a bond? If your profits fall too far, unless you can convince investors that its temporary, they are likely to withdraw their funds, and then your business will end. Prices are also less sticky than wages which means they rise and fall in response to supply and demand, whereas wages are more sticky.