Procter & Gamble Will Raise Prices in September
April 20 2021 - 7:31AM
Dow Jones News
By Sharon Terlep
Procter & Gamble Co. this fall will start charging more for
household staples from diapers to toilet paper, the latest and
biggest consumer-products company to announce price hikes.
The maker of Gillette razors and Tide detergent cited rising
costs for raw materials, such as resin and pulp, and higher
expenses to transport goods.
The announcement, which came as P&G disclosed its quarterly
financial results, follows a similar move last month by rival
Kimberly-Clark Corp.
P&G said organic sales grew 4% in the quarter ended March
31, with the biggest gains in the company's beauty and fabric and
home-care units.
The results mark P&G's slowest overall organic sales
increase since 2018, following a year in which the Covid-19
pandemic created high demand for products such as cleaning
supplies, paper towels and toilet paper.
"It's a different situation, as everywhere in the world
countries are in very different places as far as coming out of the
pandemic," operating chief Jon Moeller said in an interview. "There
is very strong consumption across the board."
While sales are cooling for some products, Mr. Moeller said,
demand is recovering for others, such as beauty products and
supplies sold directly to businesses that are reopening after
widespread shutdowns.
Mr. Moeller said P&G aims to improve and add features to
products, as the company increases prices so that consumers feel
they are getting more. The price increases, to take effect in
September, will be on baby products, adult diapers and
feminine-care brands and will be in the mid- to high-single-digit
percentage points, the company said.
The last time big consumer-products companies raised prices
significantly because of materials costs was 2018, when surging
pulp prices drove up the cost of diapers, toilet paper and other
products.
Kimberly-Clark, maker of Huggies diapers and Scott paper
products, said its 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.
Several food makers have raised prices as well. Hormel Foods
Corp. said in February that it raised prices on its turkey
products, such as Jennie-O ground turkey, in response to higher
grain costs. 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.
The Labor Department said last week that its consumer-price
index -- which measures what consumers pay for everyday items,
including groceries, clothing, recreational activities and vehicles
-- jumped 2.6% in the year ended March, the biggest 12-month
increase since August 2018.
During the quarter, P&G's net sales rose 5% to $18.1
billion, above the consensus forecast of $18 billion from analysts
polled by FactSet. Volume was flat for the first time in years,
while price and mix both increased 2%.
P&G posted net income of $3.27 billion, or $1.26 a share, up
from $2.92 billion, or $1.12 a share, a year earlier. Analysts
expected net income of $3.09 billion.
The company maintained its forecast of organic sales growth of
5% to 6% for the fiscal year that ends June 30.
Write to Sharon Terlep at sharon.terlep@wsj.com
(END) Dow Jones Newswires
April 20, 2021 07:16 ET (11:16 GMT)
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