Not long ago in a land actually quite nearby lived two metals distributors. One was called IM Hassle and the other was called Defiance. Defiance, being the bigger distributor with more power told all of his poor subjects (and they were quite poor you see because the price they had to pay for their steel was starting to take a real toll on other expenditures), “We must pass cost increases to our customers!” But what were the subjects to do? They needed the metal for there were oil and gas plants to build, so they paid. And lo and behold Defiance was happy, for they had set record second quarter sales and profits.
But IM Hassle, on the other hand, well, they did not have a record quarter. Oh yes, sales increased, afterall, the subjects needed their metal (and some plastic). Yet IM Hassle’s profits declined from a year ago. And when IM Hassle went to their owners, and the public to explain what had happened they said, “Ye higher operating expenses and costs from carbon products pressured margins and eroded earnings,” according to their henchman.
And so the moral of our story is this: If you don’t do well, blame it on rising costs. If you do well, blame it on rising costs.