Procter & Gamble Will Raise Prices in September -- Update
April 20 2021 - 5:24PM
Dow Jones News
By Sharon Terlep
Procter & Gamble Co. this fall will start charging more for
household staples from diapers to tampons, the latest and biggest
consumer-products company to announce price increases.
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 P&G said could be a precursor to
broader increases, follows a similar move last month by rival
Kimberly-Clark Corp.
"This is one of the bigger increases in commodity costs that
we've seen over the period of time that I've been involved with
this, which is a fairly long period of time," said P&G
Operating Chief Jon Moeller, a 33-year company veteran.
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.
Global supply chains, already struggling 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 in raw materials that in turn sent
prices for polyethylene, polypropylene and other chemical compounds
to their highest levels in years.
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.
P&G announced the price increase as it disclosed financial
results for the quarter ended March 31. The company said organic
sales -- a measure that strips out deals and currency moves -- 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 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,"
Mr. Moeller said. "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.
During the quarter, P&G's net sales rose 5% to $18.1
billion. 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 17:09 ET (21:09 GMT)
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