By Dave Sebastian and Colin Kellaher
Kimberly-Clark Corp. on Wednesday said it would raise selling prices across the bulk of its North America consumer-products business to help counter rising costs of raw materials.
The maker of Huggies diapers and Scott paper products said it would raise prices by a percentage in the mid- to high-single digits, and the increases will go into effect in late June.
The moves will affect its baby- and child-care, adult-care and Scott bathroom-tissue businesses, Kimberly-Clark said.
The Irving, Texas, company said the increases, which it will implement almost entirely through changes in list prices, are needed to help offset significant commodity cost inflation.
The company in January guided for a 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 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 due to 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."
Meanwhile, 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.
A raft of consumer-facing companies, including Cheerios maker General Mills Inc. and Olive Garden parent Darden Restaurants Inc., have also recently signaled concerns about rising commodity prices.
Write to Dave Sebastian at firstname.lastname@example.org and Colin Kellaher at email@example.com
(END) Dow Jones Newswires