By Timothy Aeppel

(Reuters) – Surging inflation has hit U.S. producers Snap-on Inc (NYSE:) Inc in the last year but have not affected profits.

Just a few short months after turning 102, the toolmaker achieved its second highest quarterly operating profit margin of 20.3%. This is just slightly less than the 21% mark set in a previous quarter. By 19%, sales in the first quarter were above pre-pandemic peak.

Speaking to Reuters Chief Executive Nick Pinchuk said that the company had dealt with inflation headwinds through raising prices and curbing discounting, as well finding creative ways of cutting costs – such as redesigning products in order to overcome shortages or new materials.

He stated that “inflation is not our biggest problem.” “It’s the continual waves of disruptions to supply chains.”

Many businesses, even larger U.S. companies, have seen their profits rise amid chaos. Investors will be watching this week’s quarterly earnings reports closely to see if the trend continues.

It could be more difficult to maintain these gains. The Federal Reserve’s tightening monetary policy and the war in Ukraine pose additional challenges for companies. Companies are now facing rising interest rates. Tuesday will be the last day of normal business hours. General Electric (NYSE:) Co announced that China’s new restrictions and Europe’s war have caused more supply disruptions and increased inflation, putting Co’s profit forecast for the year at risk.

According to Refinitiv, IBES, businesses are expected to grow earnings by 9.9% in 2019.

At Snap-on, Pinchuk said he doesn’t see significant relief on inflation and supply snarls coming any time soon. These problems, Pinchuk said, were directly related to the pandemic. He expects that they will continue as long waves of illness are a barrier to trade and production.

For the moment, China’s shutdowns are what is most of our attention. Pinchuk stated that a manager had recently to ride a truck on the way to Shanghai from his office because many other modes of transport have been restricted.

He stated that if Shanghai is open soon, the people can catch up. Shutdowns have been spreading lately, with Beijing taking recent measures to stop activity.

Pinchuk said Snap-on is able to sell direct to customers, which gives them an edge in times of shortages. The trucks carry up to 4000 items and can visit businesses such as auto shops to directly sell to mechanics and technicians. This mobile sales fleet allows customers to order many more products.

Having this close link to end buyers allowed Snap-on to move quickly over the past year to curb promotions on items that are hard to produce, while encouraging sales of items that aren’t, said Pinchuk. This is known as invisible pricing.

In an effort to avoid manufacturing bottlenecks and shortages, the company also tried to quickly redesign its products. Let’s take toolboxes. This company used long-lasting stainless steel drawers to make these storage units. They could be easily molded and offered durability, without any special coatings or other treatments.

Snap-on switched to cold-press steel because of the scarcity and high price. This meant that the cost of painting and coating the metal was higher and more complicated.

Pinchuk said, “But this environment we are in.” “We are facing shortages and rising costs. We will work to break our systems to address it.