A major US consumer goods maker announced plans to raise prices in the US even more or more extensively this year than previously planned. In addition to Hershey and Chlorox, Kimberly-Clark, which manufactures the paper product “Kleenex,” is included.
Manufacturers usually discuss price increases plans for the following year with retailers at the end of the year. However, executives said in a recent quarterly earnings report that they are taking a more aggressive approach this year to protect their profit margins.
Clorox announced on the 3rd that it plans to raise the price of its products by 85% by the end of June. The price has been raised from 70% of the previously planned products, and some brands are planning to raise the price multiple times.
In addition to the price increase announced in October last year, Kevin Jacobsen, Chief Financial Officer, said, “(Executives) are discussing with retailers” about the additional price increase to be implemented in the next two quarters. We are ready to raise prices further. We would like to see how inflation will change in the current fiscal year (until the end of June 2022). “
Chocolate maker Hershey announced that it will raise prices in the United States in the first half of 2010, in addition to the price increases that will be implemented in the first quarter until the end of March 2010. Despite planning a new price increase, the gross profit margin is expected to decline in 2010.
Kimberly-Clark announced last week that it will raise prices further following four price increases in 2009 against the backdrop of continued increases in pulp, labor and transportation costs.
Other processed food manufacturers have also canceled some of the discounts to consumers, and the impact of price increases is increasing.
According to data analysis company IRI, food products such as frozen snacks and refrigerated foods had the largest decrease in sales promotion to customers in the week leading up to January 23, compared to last year.
Due to the imbalance between supply and demand caused by the pandemic of the new coronavirus, prices of everything from big macs to household consumables have risen, and the US inflation rate in 2009 was the highest in less than 40 years.
Companies are suffering from increased costs for nuts, vegetable oils, surfactants and plastics as global supply chain problems continue, according to management’s comments after the earnings announcement. Transportation and labor costs are also rising.
According to Citigroup, the adjusted operating margin of eight major US listed beverage manufacturers dropped from an average of 26.4% in 20 to 25.7% in 2009. At a major US household goods company, the average pre-tax profit margin dropped from 19.6% to 19.4%. Kimberly-Clark, Clorox and Colgate-Palmolive all had lower profit margins. Even at food companies, the average rate of return dropped from 17.3% to 17.2%.
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