Kimberly-Clark to Boost Prices as Commodity Costs Rise -- 2nd Update
March 31 2021 - 1:40PM
Dow Jones News
By Dave Sebastian and Annie Gasparro
Makers of everything from diapers to cereal are starting to feel
the strain of higher commodity prices, and some are passing the
added cost along to consumers.
Kimberly-Clark Corp. said Wednesday it plans to raise selling
prices across much of its North America consumer-products business
to help counter rising raw-material costs.
The maker of Huggies diapers and Scott paper products said the
percentage increases would be in the mid- to high-single digits and
take effect in late June. They will apply to the company's baby-
and child-care, adult-care and Scott bathroom-tissue
businesses.
Consumer-products companies are already firming up prices for
many staples as high demand for such items as paper towels,
cleaning products and packaged food has meant fewer discounts.
Cheerios maker General Mills Inc. said it will raise prices to
partly offset higher freight and manufacturing costs, in addition
to rising commodity prices. "Our competitors and retailers are
facing the same thing we are," General Mills Chief Executive Jeff
Harmening said.
Hormel Foods Corp. said in February it raised prices of its
turkey products, such as Jennie-O ground turkey, to counter sharply
higher grain costs. If the rally in the commodity markets were to
continue, the company would likely pass along further increases,
Chief Executive Jim Snee said. Hormel also raised prices of its
Skippy peanut butter.
J.M. Smucker Co. said it recently raised prices for its Jif
peanut butter and that it might do the same with pet snacks because
of higher shipping costs and other inflationary pressure. Smucker
Chief Executive Mark Smucker said retailers are passing increases
along to consumers. "We only raise prices when costs are
meaningfully higher, and we partner with the retailers to make sure
it's justified and that we move together, " he said.
Kimberly-Clark said its increases, which will be implemented
almost entirely through changes in list prices, are needed to help
offset significant commodity cost inflation.
The company in January warned of commodity inflation of $450
million to $600 million in 2021, expecting costs to rise for
materials like pulp, recycled fiber and resin. At that time, Chief
Executive Michael Hsu said the company wasn't planning for
broad-based increases to list prices.
The company said pulp and polymer resin are experiencing
shortages.
The last time the Kimberly-Clark raised prices significantly
enough to warrant a public statement was 2018 when surging pulp
prices drove up the cost of diapers, toilet paper and other
products.
"The pricing plans we outlined in January were based on the
commodity inflation outlook we provided at that time, so it's fair
to say that we wouldn't be announcing these price increases if the
commodity environment hadn't worsened," a company spokesman said
Wednesday.
Since then, global supply chains, which were already
experiencing a crunch due to the Covid-19 pandemic, have seen
additional disruptions. The February freeze that triggered mass
blackouts in Texas led to chemical plant shutdowns and caused a
shortage of the raw materials needed for everything from medical
face shields to smartphones. As a result, prices for polyethylene,
polypropylene and other chemical compounds reached their highest
levels in years in the U.S. as supplies tighten.
Inflation is poised to leap higher in the next few months
following on a sharp dip in prices a year ago, Federal Reserve
Chairman Jerome Powell said in March.
"We could also see upward pressure on prices if spending
rebounds quickly as the economy continues to reopen, particularly
if supply bottlenecks limit how quickly production can respond in
the near term," Mr. Powell said. "However, these one-time increases
in prices are likely to have only transient effects on
inflation."
Shipowners, exporters and importers are now racing to secure
berths and containers at ports while warning of delays and higher
costs for cargoes after engineers freed the Ever Given, a
1,300-foot container ship that had been stuck in the Suez Canal. In
the U.S., container ships anchored off the Southern California
coast are waiting for space at the ports of Los Angeles and Long
Beach. The ships are carrying tens of thousands of boxes holding
millions of dollars' worth of washing machines, medical equipment,
consumer electronics and other goods that make up global ocean
trade.
Sharon Terlep and Colin Kellaher contributed to this
article.
Write to Dave Sebastian at dave.sebastian@wsj.com and Annie
Gasparro at annie.gasparro@wsj.com
(END) Dow Jones Newswires
March 31, 2021 13:25 ET (17:25 GMT)
Copyright (c) 2021 Dow Jones & Company, Inc.
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