TRG | The Bottom Line – 2/25

Heading into the week, TRG reached out to our valued construction & industrial contacts to assess the potential impact of a Russian clash with Ukraine. As responses came in, political posturing turned into an attack on Ukraine. As is often the case with these events, the domino effects may yet to be seen as the situation unfolds. From a practical standpoint, the first focus has been managing the spike in energy prices, which impacts all companies regardless of whether operations are “just” U.S.-centric. While the S&P 500 has slipped ~6% since February 1, crude oil has moved up 10% over the same time period. A sampling of quotes from companies this week on the potential impact:

“Pretty negligible impact to us. Aside from the turmoil contributing to overall macro instability (which could impact consumer confidence and purchasing if prolonged), no exposure in our operations to Russia, and de minimus exposure to Europe (most of our exposure over there is in the UK) from a sales/demand standpoint or from any manufacturing exposed to Russian-sourced natural gas.” – Global Household Goods Producer

“I believe the biggest impacts would come from the potential for energy/petroleum cost inflation. We don’t do a material amount of business in [Russia and Ukraine].” – Global Office Furniture Mfg

“The impacts for us should be the same as those that would be widely felt by companies across the country, such as fuel price increases and further exasperation of the inflationary environment we are already in. We do not have any operations in the Russian/Ukrainian region.” – Domestic Building Product Distributor

“We aren’t expecting much impact from a customer standpoint, but it will be interesting to see what happens to demand if energy prices skyrocket and the consumer has less to spend on R&R.” – Domestic Building Products Mfg