The ASX share market has seen plenty of volatility over the last couple of years as the market gets used to inflation and higher interest rates.
Plenty of businesses are suffering from a significant increase in costs across fuel, wages, debt, rent and so on. ASX shares that have talked about higher expenditure include Coles Group Ltd (ASX: COL), Qantas Airways Limited (ASX: QAN) and Commonwealth Bank of Australia (ASX: CBA).
Some businesses can't really do anything about inflation, they just have to take it on the chin.
There are a few ASX shares that have proven that they can pass on inflation to customers and clients, which can protect (and even grow) their earnings.
Telstra Group Ltd (ASX: TLS)
As the largest telco business in Australia, its supposedly superior network allows it to pass on higher subscription fees without much loss of subscribers.
Since the onset of higher inflation, Telstra is regularly passing on price increases to households. Mobile subscribers are being hit with a rise at the same pace as CPI inflation.
The business reported in its FY23 result, that mobile postpaid handheld average revenue per user (ARPU) grew by 5.4% year over year to $51.15 per month, while prepaid handheld revenue increased 16.5% year over year to $1.08 billion.
Thanks to the revenue growth and a focus on costs, the ASX share was able to grow total income by 5.4% to $23.2 billion, net profit after tax (NPAT) grew 13.1% to $2.1 billion and earnings per share (EPS) climbed 16% to 16.7 cents.
Commsec projections suggest that the business could deliver more profit growth in FY24.
APA Group (ASX: APA)
APA is one of the largest infrastructure ASX shares. It owns a large natural gas pipeline across Australia, the business owns other gas-related assets (such as storage, processing etc), and it's actively growing its exposure to renewable energy generation and electricity transmission.
A vast majority of APA's revenue is linked to inflation, so in the last couple of years, APA's top line has been boosted. In the FY23 result, it delivered 5.1% segment revenue growth to $2.35 billion and statutory net profit rose 10.4% to $287 million.
After the 20% fall in the APA share price this year, the company now seems much better value and could pay a 6.6% distribution yield in FY24.
Life360 Inc (ASX: 360)
Life360 is an ASX tech share that provides platforms for families to stay connected. It includes communications, driving safety and location sharing.
It's proving to be popular – for the three months to June 2023, it said the global monthly active users had increased 29% year over year to 54 million, with US monthly active users up by 24% to 33.6 million.
During the period, it increased prices for subscribers significantly. This saw average revenue per paying circle (ARPPC) rise by 31% to US$119.25.
Profitability is rapidly increasing – in the second quarter of 2023, it made 'adjusted' earnings before interest, tax, depreciation and amortisation (EBITDA) of $5.7 million, the second quarter of positive adjusted EBTIDA, and it generated positive operating cash flow of $3.7 million.
The business is in a strong position to be able to increase prices and not lose much momentum.
