Assessing investment riskacross the value chainDr Richard Mattison11 Nov 2011
Changing business models               “Rising resource prices,               fuelled by population growth,               ...
The futureSome observations: • One third of the world population living in conditions   of severe water shortage by 2025 •...
How does this affect economies?
Market conditions  “29% of profit warnings by companies in 2011 were as         a result of rising input costs” DELOITTE
Assessing risk: water
There will be ‘winners’
Case study: PUMA
Case study: PUMA
Managing risk in practice   “CalSTRS to be first to use breakthrough online solution providing financial  professionals wi...
Managing risk in practice
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Assessing investment risk across the value chain - Richard Mattison

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TBLI CONFERENCE™ EUROPE 2011- London - United Kingdom

TBLI CONFERENCE™ is the prime annual global networking and learning event on Environment, Social, Governance (ESG) and Impact Investing.

Published in: Economy & Finance, Technology
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  • Britvic: Britvicannounced that their expectations for raw material inflation for 2011 had risen for 5-6% to 9-11%, as rising oil prices had pushed PET prices for their bottles up by 20% in the month. Their share price subsequently fell by 20%.H&M: Fashion retailer Hennes & Mauritz AB (HM-B.SK) said Wednesday its second-quarter gross margin fell to 61.7% from 65.9% a year earlier, as soaring input costs, rising inflation and cautious consumers continue to weigh heavily on the European clothing market. MeadWestvaco Corp(packaging company): company's shares were down nearly 3 percent as investors fretted over rising raw material costs (our input costs -- energy, materials and freight -- were up $40 million)Kraft Foods lowered its 2011 earnings growth forecast in the face of what CEO Irene Rosenfeld called “significant input cost inflation and persistent consumer weakness in many markets." Kraft said it saw $489 million in additional input costs during its fourth quarter, and that it was expecting year-on-year inflation in its costs to be in the high single digits.PepsiCo CFO Hugh Johnson forecast an input cost inflation range for 2011 of 8-9.5%, equivalent to an additional $1.4-1.6 billion in costs. "There aren’t many years in my 23 years at PepsiCo that I remember seeing that range,” Johnson said.Similar outlooks have recently been offered by General Mills, Unilever, and many other consumer package goods companies.Apparel companies are also getting hammered, with the costs of both cotton and fuel soaring. Many soft goods companies air freight goods produced in Asia to the US market to improve responsiveness, making them sensitive to jet fuel costs. Nike, Jones Apparel Group, and VF Corp. are among the major apparel manufactures that have warned of margin pressures due to input cost increases.
  • Assessing investment risk across the value chain - Richard Mattison

    1. 1. Assessing investment riskacross the value chainDr Richard Mattison11 Nov 2011
    2. 2. Changing business models “Rising resource prices, fuelled by population growth, climate change and growing prosperity, is perhaps the most important economic event since the Industrial Revolution” Jeremy Grantham Co-founder of GMO (US$150billion investment fund)
    3. 3. The futureSome observations: • One third of the world population living in conditions of severe water shortage by 2025 • Higher food prices • Increasing costs of raw materials and energy • Population growth and shifts in consumer demands will further exacerbate these effects
    4. 4. How does this affect economies?
    5. 5. Market conditions “29% of profit warnings by companies in 2011 were as a result of rising input costs” DELOITTE
    6. 6. Assessing risk: water
    7. 7. There will be ‘winners’
    8. 8. Case study: PUMA
    9. 9. Case study: PUMA
    10. 10. Managing risk in practice “CalSTRS to be first to use breakthrough online solution providing financial professionals with performance data based on major environmental criteria.”
    11. 11. Managing risk in practice

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